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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg DAYBAC podcast, available every morning on Apple,

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Speaker 2: Spotify or wherever you listen. It's Thursday, the fifteenth of

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Speaker 2: February here in London. I'm Caroline Hepga and.

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Speaker 3: I'm Tom McKenzie. Coming up today. Britain falls into a

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Speaker 3: technical recession as the economy shrank at the end of

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Speaker 3: last year.

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Speaker 2: Israel quit cease FORI negotiations as fears grow about its

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Speaker 2: new Gaza offensive plast.

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Speaker 3: Vladimir Putin says Joe Biden would be a better US

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Speaker 3: president for Russia.

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Speaker 2: Let's start with a roundup of our top stories.

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Speaker 3: Britain fell into a technical recession in the second half

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Speaker 3: of twenty twenty three. GDP shranks zero point three percent

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Speaker 3: in the fourth quarter, pushing the UK into a shallow

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Speaker 3: economic dip. But Bloomberg's UK correspondent Lizzie Burden says the

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Speaker 3: milestone isn't a major worsening of the economic picture.

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Speaker 4: A toxic headline, but stagnation recession. It doesn't feel much

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Speaker 4: different to your average brit and it's a bit tomato

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Speaker 4: tomato for the Bank of England, Yes, wheak growth makes

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Speaker 4: the case to cut rates sooner, but as Andrew Bailey,

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Speaker 4: the Governor, said yesterday at the Lord's Economic Affairs Committee,

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Speaker 4: he's still concerned about wage growth and services inflation.

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Speaker 3: Burden added all three sectors of the economy strength in

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Speaker 3: the final quarter. Services contracted zero point two percent, production

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Speaker 3: by one percent, and construction one point three percent, showing

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Speaker 3: the downtown was broad base. The pounds slipped against the

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Speaker 3: dollar after the release. It traded as much as zero

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Speaker 3: point one percent week at one twenty five forty eight,

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Speaker 3: set for a third day of losses, currently training at

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Speaker 3: one twenty five forty four, down two ten percent well.

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Speaker 2: Japan also unexpectedly slipped into a recession last year, after

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Speaker 2: GDB contracted at an annualized rate of zero point four

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Speaker 2: percent in the fourth quarter. The weaker than expected result

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Speaker 2: will complicate the Bank of Japan's case for its first

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Speaker 2: rate hikes since two thousand and seven. Only one out

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Speaker 2: of thirty four economists surveyed by Bloomberg had expected a

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Speaker 2: contraction in the quarter for Japan. It also means that

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Speaker 2: Germany overtakes Japan to become the world's third largest economy.

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Speaker 3: Now Israel's Prime Minister Benjaminetna, who has broken off Gaza

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Speaker 3: ceasefire talks, calling Hamas's demands delusional. The Iran back group

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Speaker 3: wants the total withdrawal of Israeli troops from Gaza before

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Speaker 3: it releases hostages. It comes as key allies urge Israel

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Speaker 3: not to go ahead with a planned offensive in the

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Speaker 3: southern part of the strip. With more than one million

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Speaker 3: Palestinians sheltering in Rafa, Canadian Prime Minister Justin Trudeau is

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Speaker 3: one of the leaders advising restraint.

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Speaker 5: The situation right now in Gaza and the Middle East

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Speaker 5: in general is dire, and the extra pressures of the

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Speaker 5: threats to more action on Rafa has everyone deeply worry.

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Speaker 5: And we need to see stabilization in the region peace

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Speaker 5: and we need to work on the two state solution.

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Speaker 5: That is the only way to ensure a durable peace

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Speaker 5: and safety.

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Speaker 3: Despite Trudeau's words, Netanyahu had initially refused to send an

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Speaker 3: Israeli delegation to the talks at all, but eventually agreed

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Speaker 3: to so following pressure from US President Ji Biden.

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Speaker 2: Well, Vladimir Putin says that Biden would be a more experienced,

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Speaker 2: predictable leader than Donald Trump. Here is the Russian president

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Speaker 2: speaking to state television about who would be the better

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Speaker 2: US president for Russia. We've added a translator Biden.

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Speaker 6: Biden, he is the more experienced person, he is predictable,

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Speaker 6: he is a politician of the old formation. Or we

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Speaker 6: will work with any US leader. Would the American people

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Speaker 6: have confidence in?

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Speaker 2: Back in twenty sixteen putin publicly praise the other front runner,

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Speaker 2: Donald Trump. The former president, is now campaigning to turn

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Speaker 2: military aid to Ukraine into a loan and scale back

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Speaker 2: America's NATO commitments.

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Speaker 5: One of the heads of the country set up and said,

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Speaker 5: does that mean that if we don't pay the bills,

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Speaker 5: then you're not.

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Speaker 1: Going to protect us?

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Speaker 5: I said, that's exactly what it means.

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Speaker 1: Exactly, I'm not going to protect you.

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Speaker 2: Donald Trump's comments, which have rattled leaders in NATO. European

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Speaker 2: defense company shares, though, rose yesterday after the Military Alliance

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Speaker 2: said that a record eighteen out of the organization's thirty

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Speaker 2: one members would meet the goal of spending two percent

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Speaker 2: of GDP on defense Now.

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Speaker 3: Airbus says it is planning to deliver eight hundred aircraft

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Speaker 3: this year, pushing output of its A three to twenty

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Speaker 3: family of planes and widening the gap with rival Boeing

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Speaker 3: stuck in crisis mode. Of course, the European playmaker gave

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Speaker 3: the target as it reported its results for the full

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Speaker 3: year with adjusted earnings before interest and tax of five

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Speaker 3: point eight billion euros on revenue of sixty five point

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Speaker 3: four billion euros. Airbus is also planning a one europer

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Speaker 3: share special dividend on top of its regular dividend.

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Speaker 2: And finally, at least one person has been killed and

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Speaker 2: more than twenty others wounded after a shooting at a

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Speaker 2: parade in Kansas City celebrating the winners of the US

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Speaker 2: Super Bowl. Thousands of people were on the streets of

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Speaker 2: the city at the time, and the injured included children.

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Speaker 2: Three people, including two who were armed, have been detained.

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Speaker 2: Quentin Lucas, the mayor of Kansas City, paid tribute to

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Speaker 2: the emergency services.

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Speaker 7: As I was leaving the scene, I saw members of

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Speaker 7: our Kansas City Fire Department administering aid to folks who

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Speaker 7: are seriously injured, without concern for the shootings and the

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Speaker 7: challenges that were near them. This is absolutely a tragedy

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Speaker 7: the likes of which we would have never expected in

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Speaker 7: Kansas City.

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Speaker 2: That was Kansas City Mayor Quentin Lucas. President Biden has

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Speaker 2: called for a ban on assault weapons following the shooting.

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Speaker 2: And those are our top stories. Well, in a moment,

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Speaker 2: we'll dig into the UK GDP data, the UK falling

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Speaker 2: into recession, that with our UK correspondent Lizzie Burden shortly,

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Speaker 2: plus the thirteen F filings of course from the US

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Speaker 2: yes yesterday. But this story also caught our eye and

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Speaker 2: it's sort of worth a mention. Bloom Big Opinion columnist

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Speaker 2: Judy ren who is right, it's really great pieces. She's

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Speaker 2: been delving into the Kathy Woods story and she's got

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Speaker 2: a nice chart actually of the relative performance of Kathy

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Speaker 2: Wood's ETF and actually it's not very good. It's there

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Speaker 2: has been wealth destruction basically over the last decade, fourteen

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Speaker 2: billion dollars in shareholder value in the past decade. But

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Speaker 2: she points out that investors have largely stuck by Kathy Wood.

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Speaker 2: There haven't been many outflows, and she writes that that's

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Speaker 2: because Kathy Wood is a great storyteller and a kind

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Speaker 2: of great advocate for her for her ideas, and that

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Speaker 2: perhaps this is something that other money managers need to

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Speaker 2: think about, that it's sort of the selling, the idea

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Speaker 2: and the concept if you're a star investor to the investment.

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Speaker 3: I've interviewed her. She's very very compelling. Indeed, she has

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Speaker 3: that conviction Tesla would cause a key win for her.

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Speaker 3: She'd been on that company in twenty eighteen that did

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Speaker 3: very well for her. She had record in flow and

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Speaker 3: record performance during the pandemic of course, when so much

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Speaker 3: money was poured into those tech companies. But it has

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Speaker 3: been a rough ride of course forward and for her

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Speaker 3: ETF in the subsequent kind of eighteen months or so.

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Speaker 2: Yeah, and it's that whole debate around like a star

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Speaker 2: money manager, star invest a, star funds. You know, whether

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Speaker 2: you buy into that story or not. Anyway, it's a

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Speaker 2: great piece, so advice having a look at it. Shirley

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Speaker 2: Ren writing about it on the Blueberg terminal. Meanwhile, let's

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Speaker 2: go back then to the UK story, shall we.

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Speaker 3: Let's bring in Lizzie Burden then, of course, who covers

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Speaker 3: all things UK for us here on Blueberg RADI and

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Speaker 3: Blueboa TV. Lizzie, your reaction then to the data we

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Speaker 3: are now we can confirm it the UK is in recession.

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Speaker 3: Talk us through what we've been seeing on the numbers.

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Speaker 4: Well, if you break it down, you've got services, construction

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Speaker 4: and productivity activity all falling. It's a toxic headline that

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Speaker 4: there's a recession in the UK, but the difference between

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Speaker 4: stagnation and recession isn't a big one. It doesn't feel

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Speaker 4: much different for your average brit it's all much of

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Speaker 4: a muchness for the Bank of England. The governor yesterday

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Speaker 4: was just talking about how the narrative is no growth.

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Speaker 4: So yes, wheak growth makes the case to cut rates sooner.

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Speaker 4: But as Andrew Bailey said yesterday, he's still concerned about

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Speaker 4: high wage growth, services inflation, and from what he also said,

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Speaker 4: it doesn't look like more hikes are on the way

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Speaker 4: at least He's reiterated that the questions not how much

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Speaker 4: more restrictive the bank needs to be, but how long

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Speaker 4: rates need to stay restrictive for I would just point

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Speaker 4: out it's an unusual recession this because you've still got

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Speaker 4: nine hundred thousand vacancies, you've got a two year high

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Speaker 4: in consumer confidence. So while Andrew Bailey wasn't doing cartwheels

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Speaker 4: over the inflation data yesterday, he's not likely to be

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Speaker 4: crying over this.

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Speaker 2: What else did Bailey talk about YESTERDA because he spent

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Speaker 2: quite a long time with the House of Lord's Economic

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Speaker 2: Affairs committees sort of talking through all of the UK's

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Speaker 2: various issues.

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Speaker 4: Yeah, he was talking looking partly about inflation and where

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Speaker 4: it leaves the Bank of England, but also he came

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Speaker 4: on to talk about nerdier topics that you like, Carolina,

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Speaker 4: I know, like quantitative tightening. He said that changing the

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Speaker 4: quantitative tightening program to save money for the taxpayer would

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Speaker 4: effectively be a tax on the banks. Now, this has

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Speaker 4: been really controversial. How do you come out of this

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Speaker 4: tool when actually the Treasury is footing the bill. But

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Speaker 4: it's even we had Dan Hanson come in to talk

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Speaker 4: about this. It's an incredibly difficult topic to talk about

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Speaker 4: when actually the main thing the Bank of England wants

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Speaker 4: to do is prioritize interest rates as the active tool.

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Speaker 2: Yeah, the revelation that basically wants you start selling off

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Speaker 2: a Bank of England assets. You know, it's realized losses

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Speaker 2: and that's a loss for the tax pair. So I

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Speaker 2: think it's quite interesting that Baylor was sort of defending

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Speaker 2: himself against or defending the bank against those concerns about

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Speaker 2: the hit of the tax.

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Speaker 3: Pay talk us through the market reaction then to the GDB,

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Speaker 3: to the fact that we are now in a technical recession.

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Speaker 3: I'm looking at gilts for example, yields down four to

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Speaker 3: five basis points across the curve, so there is some

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Speaker 3: action there.

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Speaker 4: Yeah, that's the guilt story. The pound's taken a leg lower,

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Speaker 4: though not spectacularly. The foot seats higher, and that strength

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Speaker 4: in stocks and the weakness in the pound suggests that

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Speaker 4: traders are getting back on the rate cut bandwagon again.

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Speaker 4: And indeed, if you look at the pricing four BOE

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Speaker 4: rate cuts off the back of this print, they're fully

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Speaker 4: back to pricing three quarter point cuts in twenty twenty four.

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Speaker 2: Yeah, and it's the backward looking data, Isn't it so

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Speaker 2: very interesting? Lizzie, thank you so much for being with us.

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Speaker 2: Are UK correspondent, Lizzie Burden.

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Speaker 3: Okay, let's get to another intriguing story. It is, of

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Speaker 3: course that time of the year when we get thirteen

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Speaker 3: F filings, which in shorthand is a way for us

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Speaker 3: to look at how some of the big money managers

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Speaker 3: hedge funds notably, are lining up their bets or have

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Speaker 3: been lining up their bets. Here to discuss there's been

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Speaker 3: a focus on big tech, there's been a focus on AI.

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Speaker 3: Probably not a huge surprise there, but it does tell

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Speaker 3: us a lot about sentiments, certainly on Wall Street. Let's

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Speaker 3: bring in Charlie Wells then, who's been lifting the hood

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Speaker 3: on these thirtain F filings For us, the theme does

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Speaker 3: seem to be the smart money is also flowing into AI.

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Speaker 3: Talk us through what we've been seeing.

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Speaker 1: Yeah, so Bloomberg has analyzed eight hundred and thirty five

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Speaker 1: thirteen F filing So that's a lot for hedge funds.

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Speaker 1: That's just for hedge funds, And yes, that is correct.

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Speaker 1: It really is all about the AI trend as well

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Speaker 1: as kind of an interest again in big tech, and

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Speaker 1: the big ad here was Amazon, So twenty two billion

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Speaker 1: dollars worth of shares added by hedge funds in the

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Speaker 1: fourth quarter, as well as Intel as well as Nvidia.

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Speaker 1: But it's important to remember, of course that these are

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Speaker 1: backward looking, right, These are for the fourth quarter. They're

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Speaker 1: required to be reported to the SEC forty five days

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Speaker 1: after the end of the quarter. But still they give

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Speaker 1: us a sense that this smart money was really looking

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Speaker 1: into tech.

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Speaker 2: Yes, okay, so AI is the theme They also show though,

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Speaker 2: what positions hedge fonds left, what they exited, So what's

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Speaker 2: kind of out or what was out in the fourth quarter.

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Speaker 1: Yeah, that's good to remember, and I think it kind

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Speaker 1: of complexifies the big tech story because we saw, you know,

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Speaker 1: net six point six million dollars of shares dropped from

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Speaker 1: Meta and so that seems to be potentially some profit

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Speaker 1: taking on the tech side. Interestingly, you know, some other

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Speaker 1: drops were Nike, so we'll remember I think I'm pronouncing

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Speaker 1: that in the very American way, but you know, Nike

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Speaker 1: had a bad twenty twenty three. There was this talk

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Speaker 1: of the end of the sneaker bubble, a kind of

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Speaker 1: glut of inventory. So that seemed to fall out of

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Speaker 1: favor with hedge fund manners as well as Pfizer. Right,

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Speaker 1: the pandemic had been very much the rearview mirror at

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Speaker 1: this point. So those were two notable drops.

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Speaker 3: Anything that when I'm thinking about the economy and how

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Speaker 3: the economy is evolving, was seeing, of course the relative

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Speaker 3: resilience in the US. We're in recession here in the UK,

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Speaker 3: Japan's in recession, China has its own challenges. What can

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Speaker 3: we draw what we learn from from the way that

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Speaker 3: hedge fund managers are thinking and being placed in their bets.

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Speaker 3: What does that inform how that inform the story around

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Speaker 3: the economy.

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Speaker 1: Yeah, so they seem to be positioning themselves in a

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Speaker 1: way that was very tech oriented, as we talked about.

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Speaker 1: So you know, the largest holding in these portfolios was

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Speaker 1: tech twenty five percent, but then when you look at

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Speaker 1: the second largest category, it was consumer discretionary. And to

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Speaker 1: me that seems like a positive story at least for

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Speaker 1: the US economy, that maybe there is this sense that

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Speaker 1: the consumer will continue to spend on some of these

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Speaker 1: discretionary items, which we've seen again and again and again

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Speaker 1: over the past few years of that consumer is just

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Speaker 1: showing up I think that we'd like.

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Speaker 3: To have but don't necessarily need. Yes, that's right indication.

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Speaker 2: Okay, So then that's on the kind of economy front.

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Speaker 2: As as what else stood out to you in the

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Speaker 2: thirteen F filings, As you say, there are just so

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Speaker 2: many of them.

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Speaker 1: Well, what's fun is you can see where some of

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Speaker 1: these kind of big stock pickers, these kind of contrarian

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Speaker 1: personalities have you know, made choices. And I think Michael

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Speaker 1: Burry is a big one, famous from the big short

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Speaker 1: for betting against the US housing market. Interestingly, he took

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Speaker 1: in the fourth quarter a contrarian take on China. So

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Speaker 1: the largest holding at Sion Asset Management that his hedge

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Speaker 1: fund was Ali Baba, the second largest was JD dot Com.

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Speaker 1: We know those have not been loved by investors recently.

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Speaker 1: Ali Baba down about five percent so far this year.

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Speaker 1: JD dot Com worse, down about twenty percent, So that

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Speaker 1: certainly is a contrarian take. And then Warren Buffett, he's

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Speaker 1: always one that's interesting to look at in these filings,

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Speaker 1: trimmed a little bit of his Apple holding there so

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Speaker 1: adding some of the complexity to kind of how big

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Speaker 1: investors sort of reshaping their thinking on tech