January 29, 2025 • 23 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) Rachel Reeves will pledge to go “further and faster” to boost the UK economy by unblocking new infrastructure projects, as she seeks to lure investors and win back business support after a rocky start to her tenure as Chancellor of the Exchequer.
(2) Microsoft and OpenAI are investigating whether data output from OpenAI’s technology was obtained in an unauthorized manner by a group linked to Chinese artificial intelligence startup DeepSeek, according to people familiar with the matter.
(3) Apple has been secretly working with SpaceX and T-Mobile US Inc. to add support for the Starlink network in its latest iPhone software, providing an alternative to the company’s in-house satellite-communication service.The companies have been testing iPhones with the Starlink.
(4) President Trump's surprise announcement to halt trillions of dollars in federal spending sparked panic in Washington and among local officials across the country.
(5) Bernard Arnault said a wind of optimism is blowing through the US after Donald Trump’s inauguration as president, in contrast to his native France, where the government is seeking to raise corporate taxes and unemployment is increasing.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
This is the Bloomberg Daybacate podcast, available every morning on Apple,
Spotify or wherever you listen. It's Wednesday, the twenty ninth
of January in London. I'm Caroline Hipkin.
Speaker 1 (00:17):
And I'm Stephen Carroll. Coming up today, the UK's Chancellor,
Rachel Reeves wants to go further and faster to boost
growth by unblocking new infrastructure projects.
Speaker 2 (00:27):
Microsoft is investigating whether a deep Seak linked group obtained
open AI data without authorization.
Speaker 1 (00:34):
Plus collaborating in secret. Bloomberg learns Apple and SpaceX are
working to add the Starlink network to iPhones.
Speaker 3 (00:42):
Let's start with a round up of our top stories.
Speaker 1 (00:44):
The UK's Chancellor, Rachel Reeves will pledge today to boost
the economy by unblocking new infrastructure projects and deregulation. In
a speech intended to reframe the narrative around her tenures
so far, Reeves will say growth won't come without a fight.
It's a message Kirstarmer has also sought to deliver in
the last twenty four hours.
Speaker 4 (01:03):
The number one priority of this labor government is gross
gross growth growth and by that I mean wealsh creation,
We have to get our economy working. I think we're
beginning to see how that's turning around. We'll build on
that as we go forward.
Speaker 1 (01:19):
Chris Charmer speaking there as he joined the Chancellor in
Bloomberg's London headquarters yesterday to pitch the government's plan to business.
Reader's speech is expected to include a green light for
new homes and transport links between Oxford and Cambridge, as
well as possible backing for a third runway at Heathrow.
We'll have live coverage on Bloomberg Radio of the speech
for our UK audience starting at ten am London time.
Speaker 3 (01:42):
Microsoft and open Ai.
Speaker 2 (01:44):
I'm investigating whether data from open AI's technology was obtained
in an unauthorized way by a group linked to China's
deep Seek. Deep Seek and the hedge fund High Flyer
where deep Seat was started, did not immediately respond to
requests for common and it comes as President Donald Trump's
ais are David Sachs told Fox News that there is
(02:06):
substantial evidence that the Chinese AARA startup did distill knowledge
from open Ai models.
Speaker 5 (02:14):
There's a technique in Ai called distillation, which you're going
to hear a lot about, and it's when a one
model learns from another model. Effectively, what happens is that
the student model asked the parent model a lot of questions,
just like a human would learn. But ais can do
this asking millions of questions, and they can essentially mimic
the reasoning process that they learned from the parent model,
(02:35):
and they can kind of suck the knowledge out of
the parent model. And there's substantial evidence that what Deepseak
did here is they distilled the knowledge out of open
AI's models, and I don't think open ai is very
happy about this.
Speaker 2 (02:51):
In a statement, open Ai didn't directly address those comments
by David Sachs, but did say that they know companies
based in the People's with public of China and others
are quote constantly trying to distill the models of leading
USAI companies. Markets are continuing to grapple with the impact
of Deepsek's AI model, known as R one, which was
(03:13):
produced at a fraction of the cost of its US competitors,
leading to a one trillion dollar route in tech stocs.
Speaker 1 (03:20):
Apple has been secretly working with SpaceX and T Mobile
US to include the Starlink network in its latest iPhone software.
Wimberg has learned that the smartphone's latest software update, release
this week, supports the technology. The tie up comes as
a surprise. Apple already provides its own offering, and neither
company had signaled the change was coming.
Speaker 2 (03:43):
A judge has temporarily halted President chump surprise order to
freeze fed or grant funding. The order was issued after
a lawsuit filed by a coalition of non profit organizations.
New York Senator Chuck Schumer was highly critical of the measures.
Speaker 6 (03:59):
In an instant with no precedent, no justification, no legal grounds,
Donald Trump has shut off billions, perhaps trillions, of dollars
that help American families every single.
Speaker 2 (04:13):
Day, New York Senator Chuck Schumer speaking there. The original
White House memo sparked widespread confusion and panic about its
broad scope, which included anti poverty initiatives and medical research,
as well as other forms of aid. Some Republicans have
supported the president's announcement on spending, whilst Democrats have described
(04:37):
the plans as unconstitutional.
Speaker 1 (04:40):
ALVMH has reported subdued demand as wealthy shoppers remained cautious.
The luxury Giant posted a one percent decline in sales
of fashion and leather goods during the last three months
of twenty twenty four, while revenue grew by just one percent,
despite both figures being ahead of analyst estimates. Revenue disappointed
as the firm's recurring income fell by fourteen percent. Of
(05:03):
Your Major CEO Belnar Alnau is optimistic about the prospects
in the United States, telling reporters that Donald Trump has
brought a wind of optimism. The billionaire also referred to
his return to France after the US presidential inauguration as
a cold shower.
Speaker 2 (05:19):
Now supersonic air travel might be returning to passenger flights.
A new aircraft from Boom Technology broke the sound barrier
for the first time in tests yesterday bloomb egx James
Wilcock Casmore.
Speaker 7 (05:33):
It's been twenty years since Concour's final flight. Now Boom
Technology want to revive the dream of taking you from
London to Miami in less than five hours. This is
the sound of their first major step taking.
Speaker 3 (05:45):
Off actual level.
Speaker 7 (05:55):
Their XB one craft is now the first civil supersonic
jet made in America, but the company plans to go bigger.
They intend to carry passengers on a supersonic commercial airliner
three times larger by twenty twenty nine. It's a tough challenge.
Boom is one of the few players left in the
space due to the financial and technical difficulties in London.
(06:17):
James Wilcock, Bloomberg Radio.
Speaker 1 (06:19):
Those are your top stories on the markets. We saw
a rebound and tech shows yesterday, the Nasdak finishing up
one point six percent, European stock features pointing higher three
quarters of one percent on the eurostocks fifty Today. We
have the Federal Reserve decision later on tenure treasury o
Ahead of that, databasis point to four point five two percent.
The Bloomberg Dollar Spot Index is a tenth weeker. We've
got the Japanese and three tenths stronger at one fifty
(06:41):
five fourteen against the dollar.
Speaker 2 (06:44):
Now, in a moment, we'll bring you more on what
to expect from the UK Chancellor's speech on growth later
today and Apple's latest innovation with Starlink. But first a
word on another story that we've been reading this morning
from our opinion Coldness about food, the highs and lows.
This is Howard cha Yan, who is a dedicated foodie.
Speaker 3 (07:04):
He's always got a great piece out, Yeah he does.
Speaker 1 (07:06):
He's a great Instagram account as well, I follow has
various culinary adventures, but he's been writing about the dominance
of French cooking in contemporary cuisine. Referring to the latest
Bookhuse Dog Competition, which is named after the legendary Leon Hfus,
he says that, you know, this is something that's kind
of been true without history, is that even now the
hottest new restaurants are French restaurants. It's sort of a
(07:28):
lot of people's entryway into the business. It's seen as
being sort of the you know, the hegemony of cooking
if you want. But and this is the part that
I really love about this piece. He also talks about
that it's not about everything being fancy and wonderful, and
even the most incredible creations can fall flat, whereas sometimes
you really just want the slice of pizza from the
place that you like in Greenwich, or that you want
to have your favorite noodle dish from your local Cantonese restaurant,
(07:50):
or you know, they're talking about the love of the
kind of simple, not low cuisine, he points out, just
good food.
Speaker 2 (07:56):
Okay, yeah, I don't wonder whether any any French person
would agree with that, don't know. Yeah, definitely favorite French
for you lived in France for years.
Speaker 3 (08:04):
I've lived in France for years. Favorite French food.
Speaker 1 (08:07):
Oh I mean it can't be a paramanti.
Speaker 3 (08:09):
AhR Ratitui full editor.
Speaker 2 (08:12):
As a child, I love it as an adult. There
you go, great peace on the terminal to think about
this morning.
Speaker 1 (08:16):
Let's bring you more in now on the Chancellor Rachel
Reeves plans to go further and faster to boost the
UK economy through new infrastructure projects. Our UK correspond at
Lizzie Pardon is with us now for more. Lizzie, what
are we expecting from the Chancellor today?
Speaker 8 (08:28):
So we're expecting it to give the green light to
a load of infrastructure projects, possibly signaling backing for a
third runway Heathrow. This is something we've been reporting on
all week. We're also expecting announcements focused on building up
this region around Oxford and Cambridge to make what they're
calling the potential to be Europe's Silicon Valley. So we'll
(08:49):
get announcements on more funding to improve transport in the area,
housing as well, and we're expecting the appointment of Science
Minister Patrick Vallance as the Oxford Cambridge Growth Corridor Champion.
So putting flesh on the bones of that growth, Growth,
Growth ambition that you heard from Kirs Starmer a moment ago.
Speaker 2 (09:06):
Yeah, Okay, criticism though of course that it centers a
lot on the south and the southeast of England rather
than the rest of the country. Already, Rachel Reeves and
Kis Darmer were here in Bloomberg's You're Up headquarters in
London yesterday to make this pitch to business leaders. If
you've read any of this on the Blueberg website, you'll
see a nice picture of them also sitting there. What
(09:27):
have they been hearing in terms of what the business
leaders think about this pitch from government.
Speaker 8 (09:33):
Well, it was interesting, Steven and I spoke to Kathy
Ward yesterday, the CEO and co founder of ARC Invest,
and she was quite clear that it's good. Rachel Reeves
and Kirstarmer are going for it when it comes to
this messaging on growth, and actually she's making lots of
investments here in the UK. But then we spoke to
the former TESCO CEO, Dave Lewis, and he says, you
(09:54):
can't just talk the UK to growth. You need joined
up thinking across government.
Speaker 3 (09:58):
You need action. And I mentioned the.
Speaker 8 (10:01):
Announcement that we're expecting on a third runway at Heathrow
despite the opposition on climate grounds within the cabinet. And
actually we've also on Bloomberg TV been speaking to the
Ryanair CFO about this and they're different.
Speaker 3 (10:14):
There's a different opposition here.
Speaker 8 (10:15):
He says, yes, we'd be keen to see more growth,
Yes we'd be keen to see more capacity. But in
his words, if you really want the airlines to grow
in the UK, you need to bring down the taxes
on passengers arriving and leaving the country. So it's not
just as easy as building a third runway. And of
course businesses got absolutely whacked with the tax hikes in
the October budget and.
Speaker 1 (10:35):
That's contributed to this narrative that we've had around the
Labor government in recent months, adding to a run of
bad economic data as well. Is this going to be
enough to turn around the sort of doom narrative that
there is around the government.
Speaker 8 (10:47):
Well, if you look at all the data recently, it's
gloomy and that economic messaging has weighed on the economy.
You've got private sector activity stagnating, public sector borrowing over
shooting forecast, jobs cut at the fastest pace since the
financial crisis, consume a confidence at its lowest in more
than a year, not to mention the two bouts of
(11:08):
market turmoil and the fact that the change in the
non dom rules mean that there's been an exodus of
millionaires out of the UK. So ultimately, yes, growth is
the holy grail, but it's going to take time to
materialize in the data. Reeves knows this, and she's going
to say today growth will not come without a fight.
(11:30):
There'll be a fight on the climate when it comes
to Heathrow. But labor's on the ropes. Starmer's got this
big majority. Now it's time to take on his opponents.
Speaker 2 (11:38):
Yeah, I mean I think the swift retort to that
is why why does it take a fight on growth?
I think business leaders might have been kind of scratching
their heads on that. Also thought it was fascinating though
the Chancellor talking, sorry, the Prime Minister talking about AR
artificial intelligence.
Speaker 3 (11:55):
You know, when he was.
Speaker 2 (11:56):
Speaking to business leaders he said that the UK would
strip away flation, strip away the inhibition of planning, and
use AI to take us forward. This had a very
interesting sort of pivotal time in development of AI. Lizzie
and I wonder also how that is actually going to
be delivered.
Speaker 8 (12:15):
Yeah, I think an interesting question is whether you can
get the top AI talent to stay in the UK,
stay around Oxford and Cambridge when you've got the tax
system as it is in the UK compared to the US,
when you have salaries as they are, and whether you
can get these companies to list here we already lost
arm for example, and whether we have the energy policy
(12:38):
to support it. That's Dave Lewis's new project. And yes,
the Labor government has made lots of noises about green
energy the transition. But when you've got Donald Trump across
the pond talking about drill baby drill and harnessing fossil
fuels to boost growth using the AI boom, can the
UK keep up?
Speaker 3 (12:58):
Look?
Speaker 1 (12:58):
I think those are really interesting here too, around how
much deregulation can deliver and how the UK positions itself
between the United States and that approach, as you mentioned, Lizzie,
from Donald Trump of wanting to drive towards deregulation, and
then the signals that are also coming out of the
European Union. You know, the European Comission President our Silvangelid
is presenting her Competitiveness Compass today, which is supposed to
(13:20):
also include talk of cutting red tape for businesses. When
we spoke to Kathy Wood yesterday, she was quite favorable
about how the approach the UK is taking as being
sort of the middle way between the more regulation in
Europe and the less in the United States. And she
wasn't that concerned. Although she is too in favor of
deregulation and has praised Donald Trump's efforts, she didn't seem
that concerned that that, you know, rules were going to
(13:42):
be stifling the innovation opportunity in the UK.
Speaker 8 (13:45):
No, indeed, But as you say, Kathy would very much
somebody who is a risk taker, and she is behind
Donald Trump's deregulation. There are others on the other side
of the coin who'll say, look, Rachel Reeves is talking
of deregulation. She's axed the Competition Markets Authority chair delayed
the introduction of stricter bank capital rules. But that will
(14:07):
come at a cost and a cost to consumers. You've
got regulation for a reason, and so they have to
make this bold statement, and at the moment it is
growth at pretty much any cost.
Speaker 2 (14:19):
Well, except that they have not included of course, the
two main drivers of economic growth as economists would see it,
closer ties to the European Union and migration. On those
points the labor government doesn't seem to be changing. And
on workers' rights again more regulation coming in, there doesn't
seem to be a change in turn on that front either.
Speaker 8 (14:40):
Yeah, well that's exactly the point. John Micklethwaite had his
sit down with the Business Secretary and the Chancellor at
Davos and they were saying that they would be growth
over climate when it came to Heathrow or the hinting
at that. So then the question becomes, why aren't you
prioritizing growth when it comes to EU relationship. Look, there's
(15:00):
likely to be a compromise here. Reeves has signaled in
interviews over the weekend that the UK's open to membership
of the Pan Euro Mediterranean Convention as that looks to
ease trade frictions with the EU. And of course there
is the huge political headache of reversing Brexit. So you
can see labor trying to inch towards those closer trade
(15:22):
ties with the EU.
Speaker 1 (15:24):
Okay, more details to come from Rachel Reeves later on today.
We will bring that speech to you live for our
UK listeners here on Bloomberg Radio as well for no
Elsie Berd and our UK correspondent, thank you very much
for joining us.
Speaker 7 (15:36):
Now.
Speaker 2 (15:37):
Bloomberg has learned that Apple has been secretly working with
SpaceX and T Mobile in the US to add support
for the Starlink network to iPhones. Our chief technology correspondent
Mark German joins us now for more on his reporting. Mark,
good morning, thanks for being with us. So first, ye,
what's the goal of this tie up and what does
(15:58):
it actually mean for an iPhone? You're going to have
to take me through this very slowly, Mark.
Speaker 9 (16:04):
Okay, so good morning, thank you so much for having me.
So really, today, phones connect to the network in two ways.
There is the home way, which is you go on
your home Wi Fi network. This is typically when you're
at the office, when your house, you when you download movies,
you want to download a TV show, you want to
play games. But when you're out and about, you're connecting
(16:25):
to the cellular data network, right, and so you're using
your carrier plan in order to use the web browser
to do text messaging, to do other things you normally
do in your phone that require an Internet connection, but
slowly emerging is a third way of downloading data to
the phone, and that's satellite networks and Elon Musk's SpaceX.
(16:45):
Other companies, including Apple itself with a partner known as
Global Star, have been working on satellite networks for iPhones
in order to do text messaging and emergency services in
places like a long hike or a back road that
not have cellular connection. The idea u satellites far away
one hundreds of miles away in the sky in order
(17:06):
to always stay connected. And Apple has its own service
that it rolled out a few years ago with Global
Star for emergency services. Late last year they enabled text
messaging over that network. But there's alternatives in SpaceX through
a new one called Starlink, is its own new satellite
network that Apple is now also going to support on
the iPhone in the US. This is starting with T Mobile,
(17:30):
but SpaceX is Starlink their negotiations with other carriers around
the world to tie to their networks as well, so
this could be offered outside the US eventually as well.
Speaker 1 (17:40):
So what if Apple were developing their own system for this,
why were why go to Starlink? Why do you deal
with them?
Speaker 9 (17:47):
So? Yes, indeed, Apple has its own service. This is
through Global Star. It's called Emergency soos over Satellite or
I Message over Satellite. This is available in many countries
around the world, but there they want to have their
own satellite providers as well. Right, the carriers don't want
to get jettisoned by this service from Apple the service
(18:08):
from other companies. So they're partnering, right, and so T
mobiles partner is SpaceX, Starlink, Verizon, an AT, and T
the other major carriers in the US, other carriers around
the world. They're negotiating their own partnerships, and in order
to keep those carrier relationships healthy, Apple has to work
with these third party solutions as well. I've also believed
(18:28):
they're doing this to avoid antitrust scrutiny. It would be
a big antitrust violation if Apple were to promote its
satellite service and then block these third party services as
well that are, by the way, already tied to the
networks that its iPhone customers are paying for.
Speaker 2 (18:46):
So what was the plan then to roll out these
services going forwards?
Speaker 9 (18:51):
So I can speak to Starlink and the T mobile service.
As of now, it's in a very early beta. There's
probably fewer than a customers with access to this at
this point. I would say maybe only a handful of
people have actually been able to be in an off
the grid situation where they're actually using this technology at
(19:12):
this point. But over time, I expect the satellite networks
to get much better. Right now, you're able to do
very low bandwidth text messages with friends with emergency services.
But over the arc of time, maybe five ten years,
I expect these to evolve to be able to send images, video,
power applications, maybe one day even make brief phone calls.
(19:34):
But I still think we're ways away from that happening.
Speaker 1 (19:38):
Mark. This is coming in a week where we're going
to get earnings from Apple. The indications aren't great. Worries
about risks of tariff's weakness in China. What will you
be watching out for when we got that earning support tomorrow.
Speaker 9 (19:51):
Yeah, Obviously there's a lot of peripheral stuff around the
edges facing Apple right now. Obviously there's the presumptive tariffs
situation that's going to impact them given the second Trump administration.
Obviously there's concerns about iPhone sales in China. According to
Counterpoint Research, Huawei in terms of flagship phone sales, it's
(20:13):
now talk to the iPhone there, with the iPhone sales
falling somewhere north of eighteen percent in China. You have
the situation with its artificial intelligence service being very basic
at this point, but none of that really matters, right
to investors. If Apple crushes the Wall Street forecasts and
last I checked, the forecasts are you know, between three
(20:34):
and six percent growth year every year, and if they
beat that, I think investors will be happy. All things considered,
it's very likely going to be a record quarter for
Apple all time throughout the history of the company, the
most revenue they ever generated in a quarter. There's a possibility,
I would say it's a coin possibility that you're even
(20:54):
going to see a record on both iPhone and service
to sales as well. So if they go three for
three on that right, all time revenue record, all time
ifel revenue record, all time services record, despite all the
very real noise of surrounding them, I think they'll have
a positive story to tell.
Speaker 1 (21:12):
Oh, Mark, I can sents you have your binger kardiat
already for when you get that report, But I did
want to ask you one more thing about this. It's
been a week of course, with the AI stories dominated markets,
the cold question around Deep Seek and what it might
mean for AI and for big tech companies. Where is
Apple and the AI journey? Where should we be thinking
about it to cite it in that story, where we
(21:32):
could be looking at it, perhaps a new revelution in
the AI space.
Speaker 9 (21:37):
Well, I would say of all the things that Apple
is prioritizing and working right on right now, I would
say their AI effort is probably the least impressive of
the bunch. I mean up there with the vision pro
the vision pro ser is even less impressive than the
AI work. But at the same time they're very much
(21:57):
behind there. There are serious questions about the work. There
are serious questions about why they're still behind open ai
and other competitors. But this deep seek situation, you know,
you noticed Apple stock went up when all the other
companies went down because of deep Seek, And I think
Deep Seek what it did is it did affirm a
couple of strategies that Apple's doing here with AI. One
(22:19):
strategy is to be sort of the Switzerland of AI
and be the platform of AI and have all these
companies run on top of their operating system. So I
think that deep Seek, you know, if that continues to
see momentum, there is some potential beneficiary to Apple here
from subscriptions and the like, So we'll see what happens there.
(22:39):
For one, I think it's going to get banned, but
that's just my speculation. The other thing is that deep
Seek is very light AI models, a lot of stuff
running on device, and Apple's really pushing the on device
idea for processing these generative AI models versus pushing everything
to the cloud like Open AI and Google.
Speaker 1 (22:58):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 2 (23:04):
Look for us on your podcast feed every morning on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 1 (23:11):
You can also listen live each morning on London DAB Radio,
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Speaker 2 (23:16):
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Speaker 3 (23:24):
I'm Caroline Hepka and.
Speaker 1 (23:25):
I'm Stephen Carroll. Join us again tomorrow morning for all
the news you need to start your day right here
on Bloomberg Daybreak Europe,
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
This is the Bloomberg Daybacate podcast, available every morning on Apple,
Spotify or wherever you listen. It's Wednesday, the twenty ninth
of January in London. I'm Caroline Hipkin.
Speaker 1 (00:17):
And I'm Stephen Carroll. Coming up today, the UK's Chancellor,
Rachel Reeves wants to go further and faster to boost
growth by unblocking new infrastructure projects.
Speaker 2 (00:27):
Microsoft is investigating whether a deep Seak linked group obtained
open AI data without authorization.
Speaker 1 (00:34):
Plus collaborating in secret. Bloomberg learns Apple and SpaceX are
working to add the Starlink network to iPhones.
Speaker 3 (00:42):
Let's start with a round up of our top stories.
Speaker 1 (00:44):
The UK's Chancellor, Rachel Reeves will pledge today to boost
the economy by unblocking new infrastructure projects and deregulation. In
a speech intended to reframe the narrative around her tenures
so far, Reeves will say growth won't come without a fight.
It's a message Kirstarmer has also sought to deliver in
the last twenty four hours.
Speaker 4 (01:03):
The number one priority of this labor government is gross
gross growth growth and by that I mean wealsh creation,
We have to get our economy working. I think we're
beginning to see how that's turning around. We'll build on
that as we go forward.
Speaker 1 (01:19):
Chris Charmer speaking there as he joined the Chancellor in
Bloomberg's London headquarters yesterday to pitch the government's plan to business.
Reader's speech is expected to include a green light for
new homes and transport links between Oxford and Cambridge, as
well as possible backing for a third runway at Heathrow.
We'll have live coverage on Bloomberg Radio of the speech
for our UK audience starting at ten am London time.
Speaker 3 (01:42):
Microsoft and open Ai.
Speaker 2 (01:44):
I'm investigating whether data from open AI's technology was obtained
in an unauthorized way by a group linked to China's
deep Seek. Deep Seek and the hedge fund High Flyer
where deep Seat was started, did not immediately respond to
requests for common and it comes as President Donald Trump's
ais are David Sachs told Fox News that there is
(02:06):
substantial evidence that the Chinese AARA startup did distill knowledge
from open Ai models.
Speaker 5 (02:14):
There's a technique in Ai called distillation, which you're going
to hear a lot about, and it's when a one
model learns from another model. Effectively, what happens is that
the student model asked the parent model a lot of questions,
just like a human would learn. But ais can do
this asking millions of questions, and they can essentially mimic
the reasoning process that they learned from the parent model,
(02:35):
and they can kind of suck the knowledge out of
the parent model. And there's substantial evidence that what Deepseak
did here is they distilled the knowledge out of open
AI's models, and I don't think open ai is very
happy about this.
Speaker 2 (02:51):
In a statement, open Ai didn't directly address those comments
by David Sachs, but did say that they know companies
based in the People's with public of China and others
are quote constantly trying to distill the models of leading
USAI companies. Markets are continuing to grapple with the impact
of Deepsek's AI model, known as R one, which was
(03:13):
produced at a fraction of the cost of its US competitors,
leading to a one trillion dollar route in tech stocs.
Speaker 1 (03:20):
Apple has been secretly working with SpaceX and T Mobile
US to include the Starlink network in its latest iPhone software.
Wimberg has learned that the smartphone's latest software update, release
this week, supports the technology. The tie up comes as
a surprise. Apple already provides its own offering, and neither
company had signaled the change was coming.
Speaker 2 (03:43):
A judge has temporarily halted President chump surprise order to
freeze fed or grant funding. The order was issued after
a lawsuit filed by a coalition of non profit organizations.
New York Senator Chuck Schumer was highly critical of the measures.
Speaker 6 (03:59):
In an instant with no precedent, no justification, no legal grounds,
Donald Trump has shut off billions, perhaps trillions, of dollars
that help American families every single.
Speaker 2 (04:13):
Day, New York Senator Chuck Schumer speaking there. The original
White House memo sparked widespread confusion and panic about its
broad scope, which included anti poverty initiatives and medical research,
as well as other forms of aid. Some Republicans have
supported the president's announcement on spending, whilst Democrats have described
(04:37):
the plans as unconstitutional.
Speaker 1 (04:40):
ALVMH has reported subdued demand as wealthy shoppers remained cautious.
The luxury Giant posted a one percent decline in sales
of fashion and leather goods during the last three months
of twenty twenty four, while revenue grew by just one percent,
despite both figures being ahead of analyst estimates. Revenue disappointed
as the firm's recurring income fell by fourteen percent. Of
(05:03):
Your Major CEO Belnar Alnau is optimistic about the prospects
in the United States, telling reporters that Donald Trump has
brought a wind of optimism. The billionaire also referred to
his return to France after the US presidential inauguration as
a cold shower.
Speaker 2 (05:19):
Now supersonic air travel might be returning to passenger flights.
A new aircraft from Boom Technology broke the sound barrier
for the first time in tests yesterday bloomb egx James
Wilcock Casmore.
Speaker 7 (05:33):
It's been twenty years since Concour's final flight. Now Boom
Technology want to revive the dream of taking you from
London to Miami in less than five hours. This is
the sound of their first major step taking.
Speaker 3 (05:45):
Off actual level.
Speaker 7 (05:55):
Their XB one craft is now the first civil supersonic
jet made in America, but the company plans to go bigger.
They intend to carry passengers on a supersonic commercial airliner
three times larger by twenty twenty nine. It's a tough challenge.
Boom is one of the few players left in the
space due to the financial and technical difficulties in London.
(06:17):
James Wilcock, Bloomberg Radio.
Speaker 1 (06:19):
Those are your top stories on the markets. We saw
a rebound and tech shows yesterday, the Nasdak finishing up
one point six percent, European stock features pointing higher three
quarters of one percent on the eurostocks fifty Today. We
have the Federal Reserve decision later on tenure treasury o
Ahead of that, databasis point to four point five two percent.
The Bloomberg Dollar Spot Index is a tenth weeker. We've
got the Japanese and three tenths stronger at one fifty
(06:41):
five fourteen against the dollar.
Speaker 2 (06:44):
Now, in a moment, we'll bring you more on what
to expect from the UK Chancellor's speech on growth later
today and Apple's latest innovation with Starlink. But first a
word on another story that we've been reading this morning
from our opinion Coldness about food, the highs and lows.
This is Howard cha Yan, who is a dedicated foodie.
Speaker 3 (07:04):
He's always got a great piece out, Yeah he does.
Speaker 1 (07:06):
He's a great Instagram account as well, I follow has
various culinary adventures, but he's been writing about the dominance
of French cooking in contemporary cuisine. Referring to the latest
Bookhuse Dog Competition, which is named after the legendary Leon Hfus,
he says that, you know, this is something that's kind
of been true without history, is that even now the
hottest new restaurants are French restaurants. It's sort of a
(07:28):
lot of people's entryway into the business. It's seen as
being sort of the you know, the hegemony of cooking
if you want. But and this is the part that
I really love about this piece. He also talks about
that it's not about everything being fancy and wonderful, and
even the most incredible creations can fall flat, whereas sometimes
you really just want the slice of pizza from the
place that you like in Greenwich, or that you want
to have your favorite noodle dish from your local Cantonese restaurant,
(07:50):
or you know, they're talking about the love of the
kind of simple, not low cuisine, he points out, just
good food.
Speaker 2 (07:56):
Okay, yeah, I don't wonder whether any any French person
would agree with that, don't know. Yeah, definitely favorite French
for you lived in France for years.
Speaker 3 (08:04):
I've lived in France for years. Favorite French food.
Speaker 1 (08:07):
Oh I mean it can't be a paramanti.
Speaker 3 (08:09):
AhR Ratitui full editor.
Speaker 2 (08:12):
As a child, I love it as an adult. There
you go, great peace on the terminal to think about
this morning.
Speaker 1 (08:16):
Let's bring you more in now on the Chancellor Rachel
Reeves plans to go further and faster to boost the
UK economy through new infrastructure projects. Our UK correspond at
Lizzie Pardon is with us now for more. Lizzie, what
are we expecting from the Chancellor today?
Speaker 8 (08:28):
So we're expecting it to give the green light to
a load of infrastructure projects, possibly signaling backing for a
third runway Heathrow. This is something we've been reporting on
all week. We're also expecting announcements focused on building up
this region around Oxford and Cambridge to make what they're
calling the potential to be Europe's Silicon Valley. So we'll
(08:49):
get announcements on more funding to improve transport in the area,
housing as well, and we're expecting the appointment of Science
Minister Patrick Vallance as the Oxford Cambridge Growth Corridor Champion.
So putting flesh on the bones of that growth, Growth,
Growth ambition that you heard from Kirs Starmer a moment ago.
Speaker 2 (09:06):
Yeah, Okay, criticism though of course that it centers a
lot on the south and the southeast of England rather
than the rest of the country. Already, Rachel Reeves and
Kis Darmer were here in Bloomberg's You're Up headquarters in
London yesterday to make this pitch to business leaders. If
you've read any of this on the Blueberg website, you'll
see a nice picture of them also sitting there. What
(09:27):
have they been hearing in terms of what the business
leaders think about this pitch from government.
Speaker 8 (09:33):
Well, it was interesting, Steven and I spoke to Kathy
Ward yesterday, the CEO and co founder of ARC Invest,
and she was quite clear that it's good. Rachel Reeves
and Kirstarmer are going for it when it comes to
this messaging on growth, and actually she's making lots of
investments here in the UK. But then we spoke to
the former TESCO CEO, Dave Lewis, and he says, you
(09:54):
can't just talk the UK to growth. You need joined
up thinking across government.
Speaker 3 (09:58):
You need action. And I mentioned the.
Speaker 8 (10:01):
Announcement that we're expecting on a third runway at Heathrow
despite the opposition on climate grounds within the cabinet. And
actually we've also on Bloomberg TV been speaking to the
Ryanair CFO about this and they're different.
Speaker 3 (10:14):
There's a different opposition here.
Speaker 8 (10:15):
He says, yes, we'd be keen to see more growth,
Yes we'd be keen to see more capacity. But in
his words, if you really want the airlines to grow
in the UK, you need to bring down the taxes
on passengers arriving and leaving the country. So it's not
just as easy as building a third runway. And of
course businesses got absolutely whacked with the tax hikes in
the October budget and.
Speaker 1 (10:35):
That's contributed to this narrative that we've had around the
Labor government in recent months, adding to a run of
bad economic data as well. Is this going to be
enough to turn around the sort of doom narrative that
there is around the government.
Speaker 8 (10:47):
Well, if you look at all the data recently, it's
gloomy and that economic messaging has weighed on the economy.
You've got private sector activity stagnating, public sector borrowing over
shooting forecast, jobs cut at the fastest pace since the
financial crisis, consume a confidence at its lowest in more
than a year, not to mention the two bouts of
(11:08):
market turmoil and the fact that the change in the
non dom rules mean that there's been an exodus of
millionaires out of the UK. So ultimately, yes, growth is
the holy grail, but it's going to take time to
materialize in the data. Reeves knows this, and she's going
to say today growth will not come without a fight.
(11:30):
There'll be a fight on the climate when it comes
to Heathrow. But labor's on the ropes. Starmer's got this
big majority. Now it's time to take on his opponents.
Speaker 2 (11:38):
Yeah, I mean I think the swift retort to that
is why why does it take a fight on growth?
I think business leaders might have been kind of scratching
their heads on that. Also thought it was fascinating though
the Chancellor talking, sorry, the Prime Minister talking about AR
artificial intelligence.
Speaker 3 (11:55):
You know, when he was.
Speaker 2 (11:56):
Speaking to business leaders he said that the UK would
strip away flation, strip away the inhibition of planning, and
use AI to take us forward. This had a very
interesting sort of pivotal time in development of AI. Lizzie
and I wonder also how that is actually going to
be delivered.
Speaker 8 (12:15):
Yeah, I think an interesting question is whether you can
get the top AI talent to stay in the UK,
stay around Oxford and Cambridge when you've got the tax
system as it is in the UK compared to the US,
when you have salaries as they are, and whether you
can get these companies to list here we already lost
arm for example, and whether we have the energy policy
(12:38):
to support it. That's Dave Lewis's new project. And yes,
the Labor government has made lots of noises about green
energy the transition. But when you've got Donald Trump across
the pond talking about drill baby drill and harnessing fossil
fuels to boost growth using the AI boom, can the
UK keep up?
Speaker 3 (12:58):
Look?
Speaker 1 (12:58):
I think those are really interesting here too, around how
much deregulation can deliver and how the UK positions itself
between the United States and that approach, as you mentioned, Lizzie,
from Donald Trump of wanting to drive towards deregulation, and
then the signals that are also coming out of the
European Union. You know, the European Comission President our Silvangelid
is presenting her Competitiveness Compass today, which is supposed to
(13:20):
also include talk of cutting red tape for businesses. When
we spoke to Kathy Wood yesterday, she was quite favorable
about how the approach the UK is taking as being
sort of the middle way between the more regulation in
Europe and the less in the United States. And she
wasn't that concerned. Although she is too in favor of
deregulation and has praised Donald Trump's efforts, she didn't seem
that concerned that that, you know, rules were going to
(13:42):
be stifling the innovation opportunity in the UK.
Speaker 8 (13:45):
No, indeed, But as you say, Kathy would very much
somebody who is a risk taker, and she is behind
Donald Trump's deregulation. There are others on the other side
of the coin who'll say, look, Rachel Reeves is talking
of deregulation. She's axed the Competition Markets Authority chair delayed
the introduction of stricter bank capital rules. But that will
(14:07):
come at a cost and a cost to consumers. You've
got regulation for a reason, and so they have to
make this bold statement, and at the moment it is
growth at pretty much any cost.
Speaker 2 (14:19):
Well, except that they have not included of course, the
two main drivers of economic growth as economists would see it,
closer ties to the European Union and migration. On those
points the labor government doesn't seem to be changing. And
on workers' rights again more regulation coming in, there doesn't
seem to be a change in turn on that front either.
Speaker 8 (14:40):
Yeah, well that's exactly the point. John Micklethwaite had his
sit down with the Business Secretary and the Chancellor at
Davos and they were saying that they would be growth
over climate when it came to Heathrow or the hinting
at that. So then the question becomes, why aren't you
prioritizing growth when it comes to EU relationship. Look, there's
(15:00):
likely to be a compromise here. Reeves has signaled in
interviews over the weekend that the UK's open to membership
of the Pan Euro Mediterranean Convention as that looks to
ease trade frictions with the EU. And of course there
is the huge political headache of reversing Brexit. So you
can see labor trying to inch towards those closer trade
(15:22):
ties with the EU.
Speaker 1 (15:24):
Okay, more details to come from Rachel Reeves later on today.
We will bring that speech to you live for our
UK listeners here on Bloomberg Radio as well for no
Elsie Berd and our UK correspondent, thank you very much
for joining us.
Speaker 7 (15:36):
Now.
Speaker 2 (15:37):
Bloomberg has learned that Apple has been secretly working with
SpaceX and T Mobile in the US to add support
for the Starlink network to iPhones. Our chief technology correspondent
Mark German joins us now for more on his reporting. Mark,
good morning, thanks for being with us. So first, ye,
what's the goal of this tie up and what does
(15:58):
it actually mean for an iPhone? You're going to have
to take me through this very slowly, Mark.
Speaker 9 (16:04):
Okay, so good morning, thank you so much for having me.
So really, today, phones connect to the network in two ways.
There is the home way, which is you go on
your home Wi Fi network. This is typically when you're
at the office, when your house, you when you download movies,
you want to download a TV show, you want to
play games. But when you're out and about, you're connecting
(16:25):
to the cellular data network, right, and so you're using
your carrier plan in order to use the web browser
to do text messaging, to do other things you normally
do in your phone that require an Internet connection, but
slowly emerging is a third way of downloading data to
the phone, and that's satellite networks and Elon Musk's SpaceX.
(16:45):
Other companies, including Apple itself with a partner known as
Global Star, have been working on satellite networks for iPhones
in order to do text messaging and emergency services in
places like a long hike or a back road that
not have cellular connection. The idea u satellites far away
one hundreds of miles away in the sky in order
(17:06):
to always stay connected. And Apple has its own service
that it rolled out a few years ago with Global
Star for emergency services. Late last year they enabled text
messaging over that network. But there's alternatives in SpaceX through
a new one called Starlink, is its own new satellite
network that Apple is now also going to support on
the iPhone in the US. This is starting with T Mobile,
(17:30):
but SpaceX is Starlink their negotiations with other carriers around
the world to tie to their networks as well, so
this could be offered outside the US eventually as well.
Speaker 1 (17:40):
So what if Apple were developing their own system for this,
why were why go to Starlink? Why do you deal
with them?
Speaker 9 (17:47):
So? Yes, indeed, Apple has its own service. This is
through Global Star. It's called Emergency soos over Satellite or
I Message over Satellite. This is available in many countries
around the world, but there they want to have their
own satellite providers as well. Right, the carriers don't want
to get jettisoned by this service from Apple the service
(18:08):
from other companies. So they're partnering, right, and so T
mobiles partner is SpaceX, Starlink, Verizon, an AT, and T
the other major carriers in the US, other carriers around
the world. They're negotiating their own partnerships, and in order
to keep those carrier relationships healthy, Apple has to work
with these third party solutions as well. I've also believed
(18:28):
they're doing this to avoid antitrust scrutiny. It would be
a big antitrust violation if Apple were to promote its
satellite service and then block these third party services as
well that are, by the way, already tied to the
networks that its iPhone customers are paying for.
Speaker 2 (18:46):
So what was the plan then to roll out these
services going forwards?
Speaker 9 (18:51):
So I can speak to Starlink and the T mobile service.
As of now, it's in a very early beta. There's
probably fewer than a customers with access to this at
this point. I would say maybe only a handful of
people have actually been able to be in an off
the grid situation where they're actually using this technology at
(19:12):
this point. But over time, I expect the satellite networks
to get much better. Right now, you're able to do
very low bandwidth text messages with friends with emergency services.
But over the arc of time, maybe five ten years,
I expect these to evolve to be able to send images, video,
power applications, maybe one day even make brief phone calls.
(19:34):
But I still think we're ways away from that happening.
Speaker 1 (19:38):
Mark. This is coming in a week where we're going
to get earnings from Apple. The indications aren't great. Worries
about risks of tariff's weakness in China. What will you
be watching out for when we got that earning support tomorrow.
Speaker 9 (19:51):
Yeah, Obviously there's a lot of peripheral stuff around the
edges facing Apple right now. Obviously there's the presumptive tariffs
situation that's going to impact them given the second Trump administration.
Obviously there's concerns about iPhone sales in China. According to
Counterpoint Research, Huawei in terms of flagship phone sales, it's
(20:13):
now talk to the iPhone there, with the iPhone sales
falling somewhere north of eighteen percent in China. You have
the situation with its artificial intelligence service being very basic
at this point, but none of that really matters, right
to investors. If Apple crushes the Wall Street forecasts and
last I checked, the forecasts are you know, between three
(20:34):
and six percent growth year every year, and if they
beat that, I think investors will be happy. All things considered,
it's very likely going to be a record quarter for
Apple all time throughout the history of the company, the
most revenue they ever generated in a quarter. There's a possibility,
I would say it's a coin possibility that you're even
(20:54):
going to see a record on both iPhone and service
to sales as well. So if they go three for
three on that right, all time revenue record, all time
ifel revenue record, all time services record, despite all the
very real noise of surrounding them, I think they'll have
a positive story to tell.
Speaker 1 (21:12):
Oh, Mark, I can sents you have your binger kardiat
already for when you get that report, But I did
want to ask you one more thing about this. It's
been a week of course, with the AI stories dominated markets,
the cold question around Deep Seek and what it might
mean for AI and for big tech companies. Where is
Apple and the AI journey? Where should we be thinking
about it to cite it in that story, where we
(21:32):
could be looking at it, perhaps a new revelution in
the AI space.
Speaker 9 (21:37):
Well, I would say of all the things that Apple
is prioritizing and working right on right now, I would
say their AI effort is probably the least impressive of
the bunch. I mean up there with the vision pro
the vision pro ser is even less impressive than the
AI work. But at the same time they're very much
(21:57):
behind there. There are serious questions about the work. There
are serious questions about why they're still behind open ai
and other competitors. But this deep seek situation, you know,
you noticed Apple stock went up when all the other
companies went down because of deep Seek, And I think
Deep Seek what it did is it did affirm a
couple of strategies that Apple's doing here with AI. One
(22:19):
strategy is to be sort of the Switzerland of AI
and be the platform of AI and have all these
companies run on top of their operating system. So I
think that deep Seek, you know, if that continues to
see momentum, there is some potential beneficiary to Apple here
from subscriptions and the like, So we'll see what happens there.
(22:39):
For one, I think it's going to get banned, but
that's just my speculation. The other thing is that deep
Seek is very light AI models, a lot of stuff
running on device, and Apple's really pushing the on device
idea for processing these generative AI models versus pushing everything
to the cloud like Open AI and Google.
Speaker 1 (22:58):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 2 (23:04):
Look for us on your podcast feed every morning on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 1 (23:11):
You can also listen live each morning on London DAB Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 2 (23:16):
Our flagship New York station is also available on your
Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.
Speaker 3 (23:24):
I'm Caroline Hepka and.
Speaker 1 (23:25):
I'm Stephen Carroll. Join us again tomorrow morning for all
the news you need to start your day right here
on Bloomberg Daybreak Europe,
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