Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) BHP Group proposed a takeover of Anglo American that values the smaller miner at £31.1 billion ($38.8 billion), in a deal that would catapult the combined company’s copper production far beyond its rivals while sparking the biggest shakeup in the industry in over a decade.
(2) Deutsche Bank's trading revenue rose 7% in the first quarter, more than analysts had expected and better than most of the biggest US investment banks
(3) Barclays posted first-quarter revenue that topped analyst estimates after its stock traders collected a surprise windfall from tumultuous global markets.
(4) BNP Paribas fixed-income traders trailed all of the large Wall Street banks in the first quarter, taking the shine off a strong performance in other parts of the investment bank.
(5) President Joe Biden signed a $95 billion national security package into law and said assistance to Ukraine would begin to move within "hours," capping off a bruising fight with Republicans over long-delayed assistance for Kyiv and other besieged US allies.
(6) Shares in Meta have dropped by as much as 19% in after-hours trading, after the social media giant said it plans to spend billions of dollars more than expected this year.
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Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
This is the Bloomberg Debac podcast, available every morning on Apple,
Spotify or wherever you listen. It's Thursday, the twenty fifth
of April here in London. I'm Caroline Hepka and I'm
Tom m Kenzie.
Speaker 3 (00:19):
Coming up today. Mining giant BHP confirms that it's made
a thirty one billion pound takeover offer for Anglo American
in what could be the biggest deal this year.
Speaker 2 (00:30):
Fixed income trading helps to boost Deutsche Bank's earnings but
disappoints at BNP, Pariber and Barclay's Plus.
Speaker 3 (00:36):
Defending TikTok on TikTok, the social media firm says it
will win its fight against a possible US band.
Speaker 2 (00:44):
Let's start with a roundup of our top stories.
Speaker 3 (00:46):
The world's largest mining company has made a takeover bid
for its UK rival Anglo American, BHP confirming it has
made an all share proposal to Anglo, valuing the smaller
mining company at thirty one point one million pounds. Bloomberg's
James Walcock has more it could.
Speaker 4 (01:03):
Be the biggest shakeup in mining for a decade, and
copper is at the heart of it. Anglo American has
long been seen as an M and A target. The
thirty four billion dollar company owns big South American copper operations,
which are a key metal for electrification and renewable energy.
It's possible the BHP's bid for Anglo could prompt other
(01:24):
giants to make a move. Regardless if it happens, it
may be the largest M and A deal of the
year in London.
Speaker 5 (01:32):
James Wilcock Bloomberg Radio.
Speaker 2 (01:34):
Barclays has reported its latest set of results on a
big day for European earnings. Investment bank revenue and net
interest income met estimates at the British lender pre tax
profit beat forecast, coming in at two point two eight
billion pounds for the quarter.
Speaker 6 (01:50):
Now.
Speaker 2 (01:50):
Speaking exclusively to Bloomberg CEO CS Venkata Krishnan said that
the results are entirely in line with expectations. Venkat Krishnan
also shared his thoughts on the London IPO markets.
Speaker 7 (02:02):
I think the equity market in the UK and equity
risk culture needs a shot in the arm to be frank.
I think that it's important for companies to list in
the UK, especially for life sciences technology companies, and it
needs many things which are slowly coming together. There's a
part of it which is regulation. There's a part of
(02:23):
it which is equity investment and people buying more stocks,
pension funds buying more stocks. And we think that some
of the initiatives, for instance, the public flotation of the
government's share of Netwest, should be important aspects of that.
Speaker 2 (02:38):
Ben kat Krishnan was more upbeat though on the UK
political situation, saying that a great strength of the UK
is relatively little different in economic policy between Labor and
the Conservatives. Getting back though to the company story, Berkley
share price jumping as much as three percent this morning,
currently up by two point six.
Speaker 5 (02:58):
Percent, okay.
Speaker 3 (02:59):
Staying in the banking space, Deutsche Bank over in Germany
seeing a seven percent jump in earnings from fixed income
trading in.
Speaker 5 (03:06):
The first quarter.
Speaker 3 (03:08):
That is more than analysts had expected and better than
most of the bank's biggest US rivals. Income from an
advising on deals and stock and bond sales jump fifty
four percent. Is the investment bank made up for a
boost from interest rates fading. CFO James von Moltke hail's
strong momentum in the investment bank.
Speaker 8 (03:26):
We're very pleased with the results. There thirteen percent up
year on year are fake business and also within that
the financing business doing very well, so we see very
strong momentum and client engagement there. We're also seeing resilience
and growth across the other three businesses, so it's nice
to have a shining star, but seeing resilience on the
more balance sheet sensitive businesses of our corporate bank and
(03:49):
private bank is encouraging.
Speaker 3 (03:52):
For Malka added, hecs optimism and growth coming back to Europe.
Shares in Deutsche Bank of rally by almost fifty percent
over the past year so far on the session, they're
down just one point three percent so far.
Speaker 2 (04:04):
BNP parabus share price set up this morning two point
one percent right now. Income from fixed income, currencies and
commodity trading at BNP parabars slump by twenty percent year
on year. That's worse than had been expected, the disappointment
taking the shine off the stronger performance in other parts
of the French lenders Investment bank. Overall, BNP parwabus or
(04:25):
net income and revenue come in ahead of estmates in
the first.
Speaker 3 (04:29):
Quarter, shares in Meta dropping by sixteen percent, around sixteen
percent in after hours trading after the social media Chant
said it plans to spend billions of dollars more than
expected this year. The parent company of Facebook and Instagram
says investments in artificial intelligence will increase and meaningfully, with
capital expenditure of up to forty billion dollars this year.
(04:49):
CEO Mark Zuckerberg is warning investors that it could take
time for the AI bets to pay off, as.
Speaker 9 (04:55):
We're scaling capex and energy expenses for AI. We all
continue for focusing on operating the rest of our company efficiently,
but realistically, even with shifting many of our existing resources
to focus on AI, will still grow our investment envelope
meaningfully before we make much revenue from some of the
new product.
Speaker 3 (05:15):
Mark Zuckerberg's comments on spending, along with a warning that
sales growth would be slower then expected in the second quarter,
overshadowed the first quarter numbers. Revenue increased by twenty seven
percent to thirty six billion US dollars, while profits more
than double to twelve point four billion US dollars.
Speaker 2 (05:32):
Okay, so lots of earnings news, but there are some
other stories to think about. The US has been secretly
sending Ukraine its long range Army tactical missile systems or
known as attackers, for sure. They've been doing that since February.
President Joe Biden signed a new aid bill to provide
Ukraine with sixty one billion dollars in military aid last night,
(05:55):
which was expected to include this ordinance. However, the State
Department and spokesman Verdant Patel said that the US leader
had privately already given the green light for the ballistic
missiles to be sent.
Speaker 10 (06:09):
The United States provided Ukraine with long range attackers at
the President's direction. He quietly directed his National security team
to send attackers to Ukraine for use inside Ukrainian sovereign
territory in February. They started moving as part of the
military aid package we announced on March twelfth, and those
(06:31):
missiles arrived in Ukraine this month.
Speaker 2 (06:35):
The US had avoided sending the missiles that Patel spoke
of until now because the Biden administration considered that it
would be seen as escalatory by the Kremlin. The missiles
can hit targets over a range of three hundred kilometers.
The New York Times reports that they used for the
first They were used for the first time in recent
days to strike an airfield in Crimea.
Speaker 3 (06:57):
And Russia has vetoed a UN Security Council resolution on
not deploying nuclear weapons in space. China abstained. The proposal
would have reconfirmed a global commitment that dates back to
nineteen sixty seven, which bans nuclear weapons in orbits. The
vote comes just months after the US told allies that
Russia could deploy a real or mock warhead into space
(07:21):
as early as this year. The gremlins alleged ambition underscores
what security experts in Washington say is growing competition between
the US, Russia, and China to develop anti satellite weapons.
Speaker 2 (07:34):
In a moment, we're going to be bringing you more
on the mining story, this mega deal potentially we've got
more details of it this morning. But before we get
to that, there's a piece I bet you're going to
be interested in this, Tom. Look, I always try to
bring you something a bit lighter, something a bit more fun,
which is all about how you choose your football team.
(07:55):
And this comes because the bluey big opinion on is
Howard juy Ewan, who's been in UK for six years.
This long piece about what is it one of the
questions that you ask, how do you pick your football team?
If you haven't grown up with one. Do you follow
the same men's and women's side, or do you does
that matter loyty to one club or not. He's asked
(08:16):
like a million questions. He's also asked listeners and viewers
to run readers to write in to tell him, well,
how did you choose your side?
Speaker 3 (08:23):
It's very easy, I mean, this is one choice, isn't
there Arsenal obviously the women's team, which are currently top
of the league and outperform all of their rivals, and
of course the men's team also, by the way, talk
of the league. So it's an obvious choice. I don't
see what the dilemma is.
Speaker 5 (08:40):
They get word.
Speaker 2 (08:41):
Yeah, you have to tell them exactly.
Speaker 10 (08:43):
No.
Speaker 2 (08:44):
It's a really lovely piece about cultural.
Speaker 3 (08:47):
Phenomen It's a social lubricant, being able to talk. I'm
frankly a bit of a fair weather sports, but it
does help in certain social situations to be able to
dig into the back pocket for a bit of a
chat about football. Yes, and if you don't have that
sometimes you can be kind of left out in the
social cold.
Speaker 5 (09:03):
Yeah, I get that.
Speaker 2 (09:04):
It was mentioning. Yeah, okay, so a fun read then
for you on the Bloomberg Terminal this morning, and let's
also get to let's get to our top story then,
as I mentioned, the mining story, are we in for
a big shake up in the industry? The price of
copper has been sawing this year. BHP has confirmed that
(09:25):
it made an all shared proposal to Anglo American, valuing
the smallest slightly smaller mining company at thirty one point
one billion pounds. Joining us now is Bloomberg's Commodities reporter Martin.
Richie Martin, thanks for getting back on the radio with
us this morning. Now that we have that figure, what
do we know then about the deal?
Speaker 11 (09:45):
The top line is this is all about copper. BHP
is going to become if this deal goes ahead successfully,
it's going to become the world's biggest copper manor passing
other companies like codel Co and Chile and Freeport. And
that's because the miners are expecting a big wave of
(10:09):
demand for copper. And we've seen over the past few
years a number of quite big transactions and a lot
of talk about how they want to gain exposure to copper.
But this is the first really big deal in the sector.
Angle has some other bits and pieces. It has metallurgical
coal business. It produces diamonds, it produces some potash that's
(10:33):
made in fertilizer, and it's got iron ore. But at
the core of it is the copper. And this is
not just the biggest deal in mining this year, but
probably one of the biggest M and D transactions we'll
see all year.
Speaker 3 (10:49):
Martin, what's your assessment of the likelihood of this of
this deal going through and what it means more broadly
for the sector?
Speaker 11 (10:54):
Then, So, obviously with any major deal, you look at
who the rivals might be, where there be any other
companies that could could put in competitive bids. Now, those
likely candidates in the mining space are are Glencore, Rio
(11:17):
Tinto and Valley. So people are saying, you know, they
could make bids, but I would just point to a
couple of things that those those companies all of our
own reasons not to make a bid. Rio Tinto has
invested a lot in building its own copper minds, for
example huge mine in Mongolia. It's it has said it
(11:38):
prefers that approach to making big deals. Glencore is trying
to take over Canadian company tech Resources to get it's
it's copper and zinc assets, and then Valley is actually
trying to demerge its metals business, so they're all tied
up in their own kind of strategy towards metals, which
(12:00):
has kind of left the door open for behp I
guests to try and swallow up Angler at this smaller arrival.
Speaker 6 (12:06):
Yeah.
Speaker 2 (12:07):
Absolutely, it's a really interesting story and one that will
follow closely. Thank you so much for the update, Martin
Richie Bloomberg's Commodities Reporter. Then the BHP proposal for Anglo
American Anglo Americans share price currently up more than twelve percent.
We've also got to dig into the bank earnings from
the European lenders. Deutsche Banks first quarter fixed income commodity
(12:31):
revenue rising seven percent BNP Paribar are worse than expected
twenty percent slump in Fick trading, Barkley's investment banking revenue
meeting expectations. Join us now, man who knows far March
far more about this than me. Bloomberg's EMEA head of
Finance and Investing, Tom Metcalf, really massively busy morning for you, Tom,
So thanks for sparing us some time. What of those
(12:54):
three interests you most I suppose.
Speaker 5 (12:57):
Yeah, You've had three big, big European banks come through.
Look we're in London. I think Barkleys is maybe the most.
Speaker 6 (13:03):
Interesting story here at in a particular share price where
you know, often the first thing I look at for
bark is how do those fixed rate traders do?
Speaker 5 (13:11):
And in the past that's really underpinned the results.
Speaker 6 (13:13):
This time around they sort of disappointed, but they were
sort of you know, helped by the actuaries trade and
doing very well and perhaps more importantly at the moment,
the UK Bank this outlook on NIM, you know, being
a real support here and effectively what Barkleys has done
had they had a strategy update in February and they've
absolutely hit right on the nail what they said they'd do,
which I think for shareholders is a real kind of boon.
(13:36):
You know, they want to see just that steady delivery.
You know, me beeing a journist, I love the volatility
and the excitement not offered by trading. But actually I
think what today shows is Barkley maybe becoming a bit
more boring, but for shareholders that is what they really
want going forward.
Speaker 3 (13:48):
Is Deutsche Bank becoming more boring or is that in
terms of the trading part of that business. They've got
ad exposure to fixed income. How did that come together
for Deutsche Bank OP in Germany.
Speaker 6 (13:57):
Yes, very similar structure to Barkley's big investment bank and
fixing was a huge part of that. And I think
it's fascinating because their fixed traders did really well. They
were up seven percent, which is basically in line with
some of the best Wall Street banks. So before the
shares started trading, I was like, probably dotcha bank shares
are going to be up. They actually fell and I
think are maybe flat, which again goes maybe back to
this point of this. You know, very volatile earnings. The
(14:19):
investment bank is just not valued as highly as say
that more stable recurring revenue. But yeah, those two I
always think of as a pair, Deutsche Bank and Barcleay's.
They kind of both European banks, a big investment bank
or big trading presences, and sometimes they moving lockstep. But
today it looks like Barkleay's maybe has a slight edge.
Speaker 2 (14:36):
Okay. Other interesting stories, I mean loane loss provisions or
bonuses or buy backs, I mean those are always interesting
stories too.
Speaker 6 (14:46):
Yeah, and you had I think it was a CFO
saying they're a little bit worried over in Frankfurt when
they look at the UK and there's this bonus cap
which has been removed, allowing you know, some banks to
take advantage of that. So right now in the UK
there was a rule, it was a EU rule you
could only have effectively twice the bonus of your salary.
Where you compare that to New York where bonuses can
be many multiples, so you might get a smaller fixed bit,
(15:07):
but your bonus can really jump and effecting in the
UK that's now been rolled back post Brexit. It's a
very very difficult thing to sort of implement in terms
of a change. So if you can imagine everyone's on contracts,
how many people are going to want to sort of
move away from a very high fixed pay into bonuses.
But as time goes on, I'm expecting that to sort
of effectively rolled out, and that is potentially a bit
(15:29):
of a competitive advantage.
Speaker 5 (15:30):
I say, bit of.
Speaker 6 (15:31):
But it's interesting that Deutsche Bank chose to sort of
raise this and you know it's one of those classic
messaging you know, by an executive and hey, regulators take
notice of this, Well, you think it's a bit of
a problem. Is there anything you can do to kind
of help us out to.
Speaker 3 (15:42):
Tech now and a disappointing Honey's report from Meta has
tech investors on edge the Facebook owner's outlook for a
week of sales, and it was the outlook rather than
the quarterly results themselves. It was the outlook plus the
higher costs forecast, underlining the questions about the impact of AI.
Shot horror to investors. You actually have to spend to
make that aime to the fore and it's expensive. Let's
bring in Bloomberg's tech editor here in London, Olivia Solan.
(16:05):
Olivia kind of talked to us about the investor reaction
to this. Why are they so surprised it costs forty
thousand dollars for a GPU from video? We know they're
buying thousands of these.
Speaker 1 (16:14):
I think everyone just got so excited about AI. There's
been so much hype over the last year, ever since
Chatchibt was unleashed on the world, and so I think
perhaps people have been expecting more immediate returns on that investment.
But yes, as you say, it's very expensive to hire
the engineers to build these models, to kind of get
(16:34):
all the infrastructure the data centers the chips to do
the training and so and then figure out how to
put this into their business.
Speaker 6 (16:41):
You know.
Speaker 1 (16:41):
So I guess we're specifically talking about generative AI rather
than AIRE more broadly, because Meta and others have been
using that very effectively for years.
Speaker 2 (16:51):
Yeah, we also get earnings out today, Microsoft at Alphabet
and Intel out of the USCC this evening. Thinking about
that nine pm London time, how do you think that
that is going to play out, because actually the kind
of disappointment around Meta had such a widespread impact on
shares yesterday.
Speaker 5 (17:06):
Yeah.
Speaker 1 (17:07):
Well, I think Microsoft probably has the biggest head start
in terms of rolling out a generative AI tools across
it's paid for products. Alphabet is kind of playing catch up.
We know it's been a leader in AI in AI
breakthroughs for like other types of machine learning, but for
generative AI, it's sort of been kind of trying to
(17:28):
play catch up. And so it has announced a bunch
of ways that it's rolling these kind of generative AI
tools throughout its products. But I don't think we're going
to see the kind of gains from that quite yet.
Speaker 3 (17:39):
Yeah, and then there was the controversy around its Gemini
model as well, and the fallout from that you've been
writing about about how some executives at least are.
Speaker 5 (17:47):
Not ready for AI.
Speaker 3 (17:48):
Really really interesting piece we're checking out on the terminal
and on Bloomberg dot com. What's behind that?
Speaker 6 (17:54):
Right?
Speaker 1 (17:54):
This was a survey of chief information officers, so it
people within I think seven hundred companies, and the general
sense was, as you know, as we're kind of seem
to be learning that most companies haven't really figured out
how to make money from AI, and they need at
least a couple more years to really integrate AI tools
into their products and services. Some of the main kind
(18:16):
of concerns are how long it takes to implement, security concerns,
potential biases and AI systems, and of course intellectual property issues.
Speaker 12 (18:27):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 2 (18:34):
Look for us on your podcast feed every morning, on Apple,
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Speaker 12 (18:40):
You can also listen live each morning on London Dab Radio,
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Speaker 2 (18:45):
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I'm Caroline Hipka and.
Speaker 5 (18:54):
I'm Stephen Carroll.
Speaker 12 (18:55):
Join us again tomorrow morning for all the news you
need to start your day, right here on Bloomberg day
Break Europe.
Speaker 6 (19:04):
Mm hmm
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
This is the Bloomberg Debac podcast, available every morning on Apple,
Spotify or wherever you listen. It's Thursday, the twenty fifth
of April here in London. I'm Caroline Hepka and I'm
Tom m Kenzie.
Speaker 3 (00:19):
Coming up today. Mining giant BHP confirms that it's made
a thirty one billion pound takeover offer for Anglo American
in what could be the biggest deal this year.
Speaker 2 (00:30):
Fixed income trading helps to boost Deutsche Bank's earnings but
disappoints at BNP, Pariber and Barclay's Plus.
Speaker 3 (00:36):
Defending TikTok on TikTok, the social media firm says it
will win its fight against a possible US band.
Speaker 2 (00:44):
Let's start with a roundup of our top stories.
Speaker 3 (00:46):
The world's largest mining company has made a takeover bid
for its UK rival Anglo American, BHP confirming it has
made an all share proposal to Anglo, valuing the smaller
mining company at thirty one point one million pounds. Bloomberg's
James Walcock has more it could.
Speaker 4 (01:03):
Be the biggest shakeup in mining for a decade, and
copper is at the heart of it. Anglo American has
long been seen as an M and A target. The
thirty four billion dollar company owns big South American copper operations,
which are a key metal for electrification and renewable energy.
It's possible the BHP's bid for Anglo could prompt other
(01:24):
giants to make a move. Regardless if it happens, it
may be the largest M and A deal of the
year in London.
Speaker 5 (01:32):
James Wilcock Bloomberg Radio.
Speaker 2 (01:34):
Barclays has reported its latest set of results on a
big day for European earnings. Investment bank revenue and net
interest income met estimates at the British lender pre tax
profit beat forecast, coming in at two point two eight
billion pounds for the quarter.
Speaker 6 (01:50):
Now.
Speaker 2 (01:50):
Speaking exclusively to Bloomberg CEO CS Venkata Krishnan said that
the results are entirely in line with expectations. Venkat Krishnan
also shared his thoughts on the London IPO markets.
Speaker 7 (02:02):
I think the equity market in the UK and equity
risk culture needs a shot in the arm to be frank.
I think that it's important for companies to list in
the UK, especially for life sciences technology companies, and it
needs many things which are slowly coming together. There's a
part of it which is regulation. There's a part of
(02:23):
it which is equity investment and people buying more stocks,
pension funds buying more stocks. And we think that some
of the initiatives, for instance, the public flotation of the
government's share of Netwest, should be important aspects of that.
Speaker 2 (02:38):
Ben kat Krishnan was more upbeat though on the UK
political situation, saying that a great strength of the UK
is relatively little different in economic policy between Labor and
the Conservatives. Getting back though to the company story, Berkley
share price jumping as much as three percent this morning,
currently up by two point six.
Speaker 5 (02:58):
Percent, okay.
Speaker 3 (02:59):
Staying in the banking space, Deutsche Bank over in Germany
seeing a seven percent jump in earnings from fixed income
trading in.
Speaker 5 (03:06):
The first quarter.
Speaker 3 (03:08):
That is more than analysts had expected and better than
most of the bank's biggest US rivals. Income from an
advising on deals and stock and bond sales jump fifty
four percent. Is the investment bank made up for a
boost from interest rates fading. CFO James von Moltke hail's
strong momentum in the investment bank.
Speaker 8 (03:26):
We're very pleased with the results. There thirteen percent up
year on year are fake business and also within that
the financing business doing very well, so we see very
strong momentum and client engagement there. We're also seeing resilience
and growth across the other three businesses, so it's nice
to have a shining star, but seeing resilience on the
more balance sheet sensitive businesses of our corporate bank and
(03:49):
private bank is encouraging.
Speaker 3 (03:52):
For Malka added, hecs optimism and growth coming back to Europe.
Shares in Deutsche Bank of rally by almost fifty percent
over the past year so far on the session, they're
down just one point three percent so far.
Speaker 2 (04:04):
BNP parabus share price set up this morning two point
one percent right now. Income from fixed income, currencies and
commodity trading at BNP parabars slump by twenty percent year
on year. That's worse than had been expected, the disappointment
taking the shine off the stronger performance in other parts
of the French lenders Investment bank. Overall, BNP parwabus or
(04:25):
net income and revenue come in ahead of estmates in
the first.
Speaker 3 (04:29):
Quarter, shares in Meta dropping by sixteen percent, around sixteen
percent in after hours trading after the social media Chant
said it plans to spend billions of dollars more than
expected this year. The parent company of Facebook and Instagram
says investments in artificial intelligence will increase and meaningfully, with
capital expenditure of up to forty billion dollars this year.
(04:49):
CEO Mark Zuckerberg is warning investors that it could take
time for the AI bets to pay off, as.
Speaker 9 (04:55):
We're scaling capex and energy expenses for AI. We all
continue for focusing on operating the rest of our company efficiently,
but realistically, even with shifting many of our existing resources
to focus on AI, will still grow our investment envelope
meaningfully before we make much revenue from some of the
new product.
Speaker 3 (05:15):
Mark Zuckerberg's comments on spending, along with a warning that
sales growth would be slower then expected in the second quarter,
overshadowed the first quarter numbers. Revenue increased by twenty seven
percent to thirty six billion US dollars, while profits more
than double to twelve point four billion US dollars.
Speaker 2 (05:32):
Okay, so lots of earnings news, but there are some
other stories to think about. The US has been secretly
sending Ukraine its long range Army tactical missile systems or
known as attackers, for sure. They've been doing that since February.
President Joe Biden signed a new aid bill to provide
Ukraine with sixty one billion dollars in military aid last night,
(05:55):
which was expected to include this ordinance. However, the State
Department and spokesman Verdant Patel said that the US leader
had privately already given the green light for the ballistic
missiles to be sent.
Speaker 10 (06:09):
The United States provided Ukraine with long range attackers at
the President's direction. He quietly directed his National security team
to send attackers to Ukraine for use inside Ukrainian sovereign
territory in February. They started moving as part of the
military aid package we announced on March twelfth, and those
(06:31):
missiles arrived in Ukraine this month.
Speaker 2 (06:35):
The US had avoided sending the missiles that Patel spoke
of until now because the Biden administration considered that it
would be seen as escalatory by the Kremlin. The missiles
can hit targets over a range of three hundred kilometers.
The New York Times reports that they used for the
first They were used for the first time in recent
days to strike an airfield in Crimea.
Speaker 3 (06:57):
And Russia has vetoed a UN Security Council resolution on
not deploying nuclear weapons in space. China abstained. The proposal
would have reconfirmed a global commitment that dates back to
nineteen sixty seven, which bans nuclear weapons in orbits. The
vote comes just months after the US told allies that
Russia could deploy a real or mock warhead into space
(07:21):
as early as this year. The gremlins alleged ambition underscores
what security experts in Washington say is growing competition between
the US, Russia, and China to develop anti satellite weapons.
Speaker 2 (07:34):
In a moment, we're going to be bringing you more
on the mining story, this mega deal potentially we've got
more details of it this morning. But before we get
to that, there's a piece I bet you're going to
be interested in this, Tom. Look, I always try to
bring you something a bit lighter, something a bit more fun,
which is all about how you choose your football team.
(07:55):
And this comes because the bluey big opinion on is
Howard juy Ewan, who's been in UK for six years.
This long piece about what is it one of the
questions that you ask, how do you pick your football team?
If you haven't grown up with one. Do you follow
the same men's and women's side, or do you does
that matter loyty to one club or not. He's asked
(08:16):
like a million questions. He's also asked listeners and viewers
to run readers to write in to tell him, well,
how did you choose your side?
Speaker 3 (08:23):
It's very easy, I mean, this is one choice, isn't
there Arsenal obviously the women's team, which are currently top
of the league and outperform all of their rivals, and
of course the men's team also, by the way, talk
of the league. So it's an obvious choice. I don't
see what the dilemma is.
Speaker 5 (08:40):
They get word.
Speaker 2 (08:41):
Yeah, you have to tell them exactly.
Speaker 10 (08:43):
No.
Speaker 2 (08:44):
It's a really lovely piece about cultural.
Speaker 3 (08:47):
Phenomen It's a social lubricant, being able to talk. I'm
frankly a bit of a fair weather sports, but it
does help in certain social situations to be able to
dig into the back pocket for a bit of a
chat about football. Yes, and if you don't have that
sometimes you can be kind of left out in the
social cold.
Speaker 5 (09:03):
Yeah, I get that.
Speaker 2 (09:04):
It was mentioning. Yeah, okay, so a fun read then
for you on the Bloomberg Terminal this morning, and let's
also get to let's get to our top story then,
as I mentioned, the mining story, are we in for
a big shake up in the industry? The price of
copper has been sawing this year. BHP has confirmed that
(09:25):
it made an all shared proposal to Anglo American, valuing
the smallest slightly smaller mining company at thirty one point
one billion pounds. Joining us now is Bloomberg's Commodities reporter Martin.
Richie Martin, thanks for getting back on the radio with
us this morning. Now that we have that figure, what
do we know then about the deal?
Speaker 11 (09:45):
The top line is this is all about copper. BHP
is going to become if this deal goes ahead successfully,
it's going to become the world's biggest copper manor passing
other companies like codel Co and Chile and Freeport. And
that's because the miners are expecting a big wave of
(10:09):
demand for copper. And we've seen over the past few
years a number of quite big transactions and a lot
of talk about how they want to gain exposure to copper.
But this is the first really big deal in the sector.
Angle has some other bits and pieces. It has metallurgical
coal business. It produces diamonds, it produces some potash that's
(10:33):
made in fertilizer, and it's got iron ore. But at
the core of it is the copper. And this is
not just the biggest deal in mining this year, but
probably one of the biggest M and D transactions we'll
see all year.
Speaker 3 (10:49):
Martin, what's your assessment of the likelihood of this of
this deal going through and what it means more broadly
for the sector?
Speaker 11 (10:54):
Then, So, obviously with any major deal, you look at
who the rivals might be, where there be any other
companies that could could put in competitive bids. Now, those
likely candidates in the mining space are are Glencore, Rio
(11:17):
Tinto and Valley. So people are saying, you know, they
could make bids, but I would just point to a
couple of things that those those companies all of our
own reasons not to make a bid. Rio Tinto has
invested a lot in building its own copper minds, for
example huge mine in Mongolia. It's it has said it
(11:38):
prefers that approach to making big deals. Glencore is trying
to take over Canadian company tech Resources to get it's
it's copper and zinc assets, and then Valley is actually
trying to demerge its metals business, so they're all tied
up in their own kind of strategy towards metals, which
(12:00):
has kind of left the door open for behp I
guests to try and swallow up Angler at this smaller arrival.
Speaker 6 (12:06):
Yeah.
Speaker 2 (12:07):
Absolutely, it's a really interesting story and one that will
follow closely. Thank you so much for the update, Martin
Richie Bloomberg's Commodities Reporter. Then the BHP proposal for Anglo
American Anglo Americans share price currently up more than twelve percent.
We've also got to dig into the bank earnings from
the European lenders. Deutsche Banks first quarter fixed income commodity
(12:31):
revenue rising seven percent BNP Paribar are worse than expected
twenty percent slump in Fick trading, Barkley's investment banking revenue
meeting expectations. Join us now, man who knows far March
far more about this than me. Bloomberg's EMEA head of
Finance and Investing, Tom Metcalf, really massively busy morning for you, Tom,
So thanks for sparing us some time. What of those
(12:54):
three interests you most I suppose.
Speaker 5 (12:57):
Yeah, You've had three big, big European banks come through.
Look we're in London. I think Barkleys is maybe the most.
Speaker 6 (13:03):
Interesting story here at in a particular share price where
you know, often the first thing I look at for
bark is how do those fixed rate traders do?
Speaker 5 (13:11):
And in the past that's really underpinned the results.
Speaker 6 (13:13):
This time around they sort of disappointed, but they were
sort of you know, helped by the actuaries trade and
doing very well and perhaps more importantly at the moment,
the UK Bank this outlook on NIM, you know, being
a real support here and effectively what Barkleys has done
had they had a strategy update in February and they've
absolutely hit right on the nail what they said they'd do,
which I think for shareholders is a real kind of boon.
(13:36):
You know, they want to see just that steady delivery.
You know, me beeing a journist, I love the volatility
and the excitement not offered by trading. But actually I
think what today shows is Barkley maybe becoming a bit
more boring, but for shareholders that is what they really
want going forward.
Speaker 3 (13:48):
Is Deutsche Bank becoming more boring or is that in
terms of the trading part of that business. They've got
ad exposure to fixed income. How did that come together
for Deutsche Bank OP in Germany.
Speaker 6 (13:57):
Yes, very similar structure to Barkley's big investment bank and
fixing was a huge part of that. And I think
it's fascinating because their fixed traders did really well. They
were up seven percent, which is basically in line with
some of the best Wall Street banks. So before the
shares started trading, I was like, probably dotcha bank shares
are going to be up. They actually fell and I
think are maybe flat, which again goes maybe back to
this point of this. You know, very volatile earnings. The
(14:19):
investment bank is just not valued as highly as say
that more stable recurring revenue. But yeah, those two I
always think of as a pair, Deutsche Bank and Barcleay's.
They kind of both European banks, a big investment bank
or big trading presences, and sometimes they moving lockstep. But
today it looks like Barkleay's maybe has a slight edge.
Speaker 2 (14:36):
Okay. Other interesting stories, I mean loane loss provisions or
bonuses or buy backs, I mean those are always interesting
stories too.
Speaker 6 (14:46):
Yeah, and you had I think it was a CFO
saying they're a little bit worried over in Frankfurt when
they look at the UK and there's this bonus cap
which has been removed, allowing you know, some banks to
take advantage of that. So right now in the UK
there was a rule, it was a EU rule you
could only have effectively twice the bonus of your salary.
Where you compare that to New York where bonuses can
be many multiples, so you might get a smaller fixed bit,
(15:07):
but your bonus can really jump and effecting in the
UK that's now been rolled back post Brexit. It's a
very very difficult thing to sort of implement in terms
of a change. So if you can imagine everyone's on contracts,
how many people are going to want to sort of
move away from a very high fixed pay into bonuses.
But as time goes on, I'm expecting that to sort
of effectively rolled out, and that is potentially a bit
(15:29):
of a competitive advantage.
Speaker 5 (15:30):
I say, bit of.
Speaker 6 (15:31):
But it's interesting that Deutsche Bank chose to sort of
raise this and you know it's one of those classic
messaging you know, by an executive and hey, regulators take
notice of this, Well, you think it's a bit of
a problem. Is there anything you can do to kind
of help us out to.
Speaker 3 (15:42):
Tech now and a disappointing Honey's report from Meta has
tech investors on edge the Facebook owner's outlook for a
week of sales, and it was the outlook rather than
the quarterly results themselves. It was the outlook plus the
higher costs forecast, underlining the questions about the impact of AI.
Shot horror to investors. You actually have to spend to
make that aime to the fore and it's expensive. Let's
bring in Bloomberg's tech editor here in London, Olivia Solan.
(16:05):
Olivia kind of talked to us about the investor reaction
to this. Why are they so surprised it costs forty
thousand dollars for a GPU from video? We know they're
buying thousands of these.
Speaker 1 (16:14):
I think everyone just got so excited about AI. There's
been so much hype over the last year, ever since
Chatchibt was unleashed on the world, and so I think
perhaps people have been expecting more immediate returns on that investment.
But yes, as you say, it's very expensive to hire
the engineers to build these models, to kind of get
(16:34):
all the infrastructure the data centers the chips to do
the training and so and then figure out how to
put this into their business.
Speaker 6 (16:41):
You know.
Speaker 1 (16:41):
So I guess we're specifically talking about generative AI rather
than AIRE more broadly, because Meta and others have been
using that very effectively for years.
Speaker 2 (16:51):
Yeah, we also get earnings out today, Microsoft at Alphabet
and Intel out of the USCC this evening. Thinking about
that nine pm London time, how do you think that
that is going to play out, because actually the kind
of disappointment around Meta had such a widespread impact on
shares yesterday.
Speaker 5 (17:06):
Yeah.
Speaker 1 (17:07):
Well, I think Microsoft probably has the biggest head start
in terms of rolling out a generative AI tools across
it's paid for products. Alphabet is kind of playing catch up.
We know it's been a leader in AI in AI
breakthroughs for like other types of machine learning, but for
generative AI, it's sort of been kind of trying to
(17:28):
play catch up. And so it has announced a bunch
of ways that it's rolling these kind of generative AI
tools throughout its products. But I don't think we're going
to see the kind of gains from that quite yet.
Speaker 3 (17:39):
Yeah, and then there was the controversy around its Gemini
model as well, and the fallout from that you've been
writing about about how some executives at least are.
Speaker 5 (17:47):
Not ready for AI.
Speaker 3 (17:48):
Really really interesting piece we're checking out on the terminal
and on Bloomberg dot com. What's behind that?
Speaker 6 (17:54):
Right?
Speaker 1 (17:54):
This was a survey of chief information officers, so it
people within I think seven hundred companies, and the general
sense was, as you know, as we're kind of seem
to be learning that most companies haven't really figured out
how to make money from AI, and they need at
least a couple more years to really integrate AI tools
into their products and services. Some of the main kind
(18:16):
of concerns are how long it takes to implement, security concerns,
potential biases and AI systems, and of course intellectual property issues.
Speaker 12 (18:27):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 2 (18:34):
Look for us on your podcast feed every morning, on Apple,
Spotify and anywhere else you get your podcasts.
Speaker 12 (18:40):
You can also listen live each morning on London Dab Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 2 (18:45):
Our flagship New York station is also available on your
Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.
I'm Caroline Hipka and.
Speaker 5 (18:54):
I'm Stephen Carroll.
Speaker 12 (18:55):
Join us again tomorrow morning for all the news you
need to start your day, right here on Bloomberg day
Break Europe.
Speaker 6 (19:04):
Mm hmm
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