August 18, 2025 • 22 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) Ukrainian President Volodymyr Zelenskiy and his European allies arrive in Washington on Monday anxious to find out what Donald Trump committed to at his summit with Vladimir Putin and apprehensive that he’ll force Kyiv into making unpalatable concessions.
(2) UK Prime Minister Keir Starmer declared at a Jaguar Land Rover factory in May that his world-leading trade deal with President Donald Trump included a cut in US tariffs on British steel to zero.
(3) Israel’s economy slumped in the second quarter as the country’s 12-day war with Iran imposed a total shutdown on many businesses.
(4) Annual pay for bosses of FTSE 100 companies hit a record high for the third consecutive year.
(5) In 1981, the year Airbus SE announced it would build a new single-aisle jetliner to take on Boeing the 737 ruled the roost.
(6) Advanced Credit Solutions is a tiny finance firm based in Luxembourg that was founded by a Belgian and works with insurers. Despite its outwardly bland appearance, the business it does is anything but.
Podcast Conversation: Chinese Robotic Stocks May Rise After Unitree Wins Gold in Games
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
They say is the Bloomberg Daybreak Ero podcast. Good morning,
It's Monday, the eighteenth of August. I'm Stephen Carroll in London.
Coming up today. Ukraine's President Vladimir Zelenski arrives in Washington
for crunch talks with President Trump, joined by the UK's
Keir Starmer and other European leaders. The median pay for
for one hundred CEOs reaches four point six million pounds,
(00:31):
but that's still pales in comparison to what their American
counterparts earn, plus credit where it's due. We take a
closer look at Apollo's fiendishly complicated fund that's finding creative
ways to put insurance capital to work. Let's start with
a roundup of our top stories. Ukraine's President Vladimir Elenski
has arrived in Washington ahead of meetings with President Trump
(00:54):
and European leaders. The summit's being attended by top officials
including the UK's Ker starmerman Is Fredrick Martz, and Francis
Emmanuel Macron. Here's what he's hoping to achieve at the meeting,
to strategize.
Speaker 1 (01:06):
How to keep the pressure agenda alive in case present
Putin doesn't come to the final meeting, of the quality
of meeting, and how we strategize on the next.
Speaker 2 (01:19):
Steps as fre as President Emmanuel Macron. President Trump is
expected to outline terms for a potential peace deal discussed
with Vladimir Putin, with Washington likely to focus on territorial
concessions demanded by Russia. The meeting follows a weekend phone
call among allies during which Donald Trump is said to
have told leaders he's open to US involvement in providing
(01:41):
security guarantees for Ukraine. Here's what Trump's Special ENVOYE Steve
Whitcoff told CNN's State of the Union program on Sunday.
Speaker 3 (01:50):
We got to win agreement that the United States and
other European nations could effectively of offer Oral five like
language to cover a security guarantee work off.
Speaker 2 (02:07):
They're referring to NATO's Article five, the Alliance's mutual defense clause,
requiring member states to respond if any one of them
is attacked. More than three months after the US and
the UK agreed the first of a string of deals
to reduce tariffs, so many trading partners are still waiting
for the rhetoric to become reality. Britain, Japan, South Korea
(02:28):
and the EU. I'll say the White House has promised
them exemptions and trade talks, but hasn't yet signed them
into law.
Speaker 4 (02:34):
Bloomberg Exchange. Wilcock has more.
Speaker 5 (02:37):
For the Brits. It's steel. Take a listen to Prime
Minister Kistama three months ago.
Speaker 6 (02:43):
Just a few moments ago, I spoke to President Trump,
the President of the United States, and I'm really pleased
to announce that we've agreed the basis of a historic
economic prosperity deal. It will remove tariffs or British steer
and aluminium, reducing them to zero.
Speaker 5 (03:04):
The UK Prime Minister was very clear and no one
in the US corrected him. But the steel exemption has
never been finalized. So the current tariff on UK steel
exported to America is twenty five percent. The Japan, South
Korea and the European Union, it's the exact same problem,
but with cars. Fears are growing the scale of the
(03:25):
US's global trade talks on making delays inevitable and likely
causing more economic damage in London. James Wilcock, Bloomberg Radio.
Speaker 2 (03:35):
Israel's economy slumped in the second quarter, as the country's
twelve day war with Iran forced a shut down of
many businesses, GDP fell by three point five percent in annualized,
seasonally adjusted terms. The worse than expected data came as
hundreds of thousands of Israelis took to the streets to
protest Prime Minister Benjaminettaniahu's plan to expand operations in the
(03:57):
Gaza Strip. Organizers said as many as half million people
attended the rally in Tel Aviv. Netania, who, however, insists
that calls to end the conflict will only embolden her
mass We assume when we.
Speaker 7 (04:10):
Come up, those who are calling for an end to
the war today without defeating her mass are not only
hardening her Massa's stance and delaying the release of our hostages.
They are also ensuring that the horrors of October the
seventh will recur again and again.
Speaker 2 (04:23):
That was Israeli Prime Minister Bennamin natanie who's speaking through
a translator. And you will pay for bosses of forty
one hundred companies have has had a record high for
the third year in a row with Mario.
Speaker 4 (04:34):
Here's Bloomberg's Crispett.
Speaker 8 (04:36):
Medium pay for CEOs that the one hundred biggest companies
traded on the London Stock Exchange reached four point six
million pounds in the last financial year. That's equivalent to
around six point two million dollars. According to the research
from the left leaning think tank the High Pay Center,
average salaries for top bosses rose by seven percent across
(04:58):
the year. Still, the figures four far short of CEO compensation.
In the United States. Dates of a median pay a
selected sm P five hundred companies shows compensation there has
reached sixteen point eight million dollars, and some argue that
this pay gap is one reason British companies have been
(05:19):
moving their listings to New York. In London, Chris Pitt
Bloomberg Radio.
Speaker 2 (05:25):
Airbus's A three to twenty series is about to overtake
the Boeing seven three seven as the most delivered commercial
airplane in history. Aviation consultancy firm Syrium says the jet
is just twenty sales short of the record. The four
decade race between the two firms charts both airbusses rise
and also the lack of new plane designs in aviation,
(05:48):
and those are our top stories this morning. I check
on the markets for you. The MCI ASA Pacific Index
up by half of one percent. The Nike in Tokyo
is a one percent hire this morning, the MCI China
Index one point three percent high. Eurostox fifty futures are
up by two tenths of one percent. Watching oil prices
holding steady Brent cruise at sixty five dollars eighty seven
ahead of that crucial Zelenski Trump meeting coming up a
(06:10):
little bit later. The ten year treasury yield DNA basis
point in trading today after the big news we saw
on Friday, four point three percent is where that's starting
the week. We're looking at the Bloomberg Dollar Spot Index
a tenth of one percent week, or the euros at
one seventeen against the dollar. In a moment, we'll bring
you more on what to expect from Ukrainian President's White
House meeting, plus how private capital giant APOLLOW and finance
(06:33):
firm ACS have devised a fiendishly complicated fund that's found
in creative ways to put insurance capital to work. But first,
another story that I've been reading this morning about from
what may have been the major sporting event of the weekend,
depending on your point of view the World Humanoid Robot Games.
So the event in Beijing c's robots taking part in
(06:54):
things like races, football matches, boxing matches, and well, it's
very impressive see the progress being made in this area.
Quite funny to see these robots falling over each other,
essentially playing football with no skill whatsoever, something I can
identify with, and in some cases losing robotic limbs while
taking part in these events as well. Now, Vidius Jensenwong
has talked about robotics having the potential to grow into
(07:14):
a multi trillion dollar industry elon Musk's The's test as
optimists having the potential to generate ten trillion dollars in revenue,
But it does look like we might be some distance
from those massive gains as well. In fact, one of
the leading companies at these games in China, Unitrey, the CEO,
said earlier this month, and in terms of development, it
feels like a point of two to three years before
(07:35):
chat ept to put it on a comparison to large
language models, But for now, it's funny to watch and
to marvel at a key sector as the technology develops.
You can read our reporting from the World Humanoid robot
games on Bloomberg dot Com and the Terminal will put
a link to the story in our podcast show notes
as well. Let's bring you more now on the Ukrainian
(07:56):
president's meeting with Donald Trump later and the Alaska After
the Alaska so much with Russia's Vladimir Putin. Our chief
Asier correspondent Raza Mathson is with me now from more Ras.
Good morning now. Presidentce Lanski's last over office meeting with
Donald Trump was bruising. What is Vladimir's Lansky hoping to
achieve today?
Speaker 9 (08:14):
Well, at the outset, I imagine he's trying to avoid
a repeat of that February meeting, of course, and the
risk is not insignificant. They're given that Donald Trump is
really pushing heavily to get not just to cease far
it seems, but a full peace deal and to do
so quickly, and as part of that suggesting Ukraine really
needs to be prepared to seed territory. So it's to
(08:37):
manage that meeting is probably the most overarching objective, and
to keep Donald Trump very focused on what this also
means for Ukraine and to keep Ukraine's interests in mind.
I mean, he'll want to understand even more what exactly
was said between the leaders of US and Russia in
that meeting. He want to understand what Donald Trump is
(08:57):
thinking about land and territory. He'll really want to understand
what Donald Trump is thinking when there's these references that
we're now hearing to potential security guarantees for Ukraine. What
does that actually mean in practice and what would that
look like? And so the questions are over what exactly
that would entail, and to understand Donald Trump's timeline and
(09:20):
to remind him that racing to get a piece steal
would probably not be necessarily in Ukraine's interests when it
comes to things again like land. But Donald Trump seems
very intent on getting the leaders of Russian and Ukraine
in the room sooner rather than later, and perhaps Volomia
Zelinsky wants to encourage Donald Trump to tap the brakes
very slightly on that to get a clearer sense of
(09:42):
the road in a way before they all sit down.
Speaker 2 (09:45):
Vlos Mitsinski is not coming alone to this meeting, as
well as being accompanied by a whole range of European
leaders including ursul Vandeline and Kris Dharmer. I mean, what's
the effect that those leaders are hoping to have on
the president by coming along.
Speaker 9 (09:59):
Well, in a way they'll all be we found out,
perhaps a bit like a shield for Vladimi Zelinsky again
to avoid that conversation going off the rails that we
saw earlier in the year, but also very much to
send the message that they're standing with Ukraine on this,
and they're standing with the Ukrainian leader in his interests
in these conversations, and to endorse the view again that
(10:22):
you can't rush into something where you see Ukraine being
pressed to seed territory Russia making fairly minimal concessions potentially
on land, and a lack of clarity about these security guarantees.
And also to again so the role of Europe needs
to be heard in all of this, and perhaps there
is a role for Europe in post war security for Ukraine.
(10:43):
And so it's about helping manage that conversation and again
steer it in the direction that they want, which is
above all to support Ukraine.
Speaker 2 (10:54):
So many of our conversations around these series of meetings
about who's not in the room. Vladimir Putin is not
this version of this composition of a meeting. What has
changed since the Trump Putin summit. We only have a
limited idea of what was discussed at that meeting.
Speaker 9 (11:12):
Well, that's right, and we've seem to have leap frog
from the idea of a cease far into let's get
a full peace steal and do it very quickly. I mean,
Donald Trump said he was going into that meeting with
Vladimir Putin to come out with the ceasefire, and now
he says, actually, we don't need that anyway. Let's just
get a full peace steal, and we've got the parameters
of it already. So that seems to have shifted the
(11:32):
territory very much in the conversation and put Ukraine under
a lot of pressure very quickly. And so that's certainly
the backdrop again to which these conversations are happening today.
And the challenge in all of this is not just
for Zelensky but also for the European leaders to stay
united him. It's a pretty big gaggle of them going.
(11:54):
Some of them have very good relationships with the US president,
particularly the NATO Secretary General and the FINISHED President, but
they don't always all agree on the path forward for Ukraine.
And so you know, understanding exactly where Donald Trump's mind
is is probably the number one priority here.
Speaker 2 (12:14):
In terms of what could emerge from this and how
European leaders might be hoping for a win in this.
What does a win look like for those who've traveled
to Washington today.
Speaker 9 (12:25):
Well, a win is probably just a feeling that Donald
Trump's heard what they've come to say and is taking
that on board when he thinks about the next steps
in all of this. I mean, it's clear he now
wants to move towards a full peace steal and you
know his words even to Voladimir Zelensky overnight, where you
can have you can make this happen pretty quick if
you want so, seems to be putting the pressure back
(12:48):
on Ukraine. So a win for Europe is to have
Donald Trump really aware of what this means for Ukraine constitution,
are able to give up territory, freezing a war in place?
What does that mean? What's the future of Ukraine in
all of this? So that's probably the number one priority,
is to slightly reset the table a bit with Donald
Trump and have him really factor in the Ukrainian part
(13:10):
of it.
Speaker 4 (13:10):
After his meeting with Putin a.
Speaker 10 (13:13):
Few days ago.
Speaker 2 (13:14):
Okay Razla Matheson Archievaser correspondent, thank you very much for
joining us to look ahead to that meeting taking place
in Washington.
Speaker 4 (13:21):
Later stay with us.
Speaker 2 (13:23):
More from Bloomberg Daybreak Europe coming up after this. Now,
in recent years, Apollo and other peers with private equity
routes have been buying up swathes of the life assurance
and annuity industry, getting their hands on a mountain of savings.
But there's a snag. Using this cash for riskier, more
lucrative bets on private credit and similar assets often inflicts heavy,
(13:44):
hefty capital charges on insurers. So Apollo has created a
complex investment vehicle to solve that dilemma, and our senior
private credit reporter Silas Brown joins me now to explain. Silas,
good morning. What is the goal behind Fox Hedge.
Speaker 10 (14:00):
Well, it's an intriguing name, isn't it? But I think
the goal in essence is insurance companies have a series
of needs when they're deploying capital. One of them is
to try to match assets with liability. So they haven't
you know, long term liabilities with their with their insurance contracts,
(14:23):
and it's very very hard to find debt with with
equivalent maturities, and so Foxhead, which has a final maturity
of forty years, solves solves that problem. I mean, it's
quite a rarity actually to find corporate debt with such
lengthy maturities. But also given its rated double A and
(14:46):
houses a series of different asset classes, including direct lending,
a clos a whole sort of smallas board of different
assets that Apollo is active in with a heart with A.
It's highest rating at double A minus. That also means
that they can get exposure to a series of asset
classes without inflicting hefty capital charges as you say, to
(15:14):
access to them. So they can kind of benefit from
the boom of private credit without having without sort of
suffering the capital charges that come alongside with investing in
these sort of more lower rated asset classes.
Speaker 2 (15:27):
Okay, so it's sort of a workaround for these insurers.
But talk us a little bit, to us a little
bit about the mechanics of this.
Speaker 4 (15:34):
How does it work?
Speaker 10 (15:37):
This is a real this is very challenging. But basically
what Apollo has done along with this, this this small
business called Advanced Credit Solutions, which actually came up with
the idea. So they've set up an SPV in Bermuda,
and the SPV is backed by Apollo originated assets from
(15:59):
anything from c those direct loans to real estate to
investment grades investment grade assets, and the SPV then sells
corporate debt, and the corporate debt is has I think
in them sort of average waste maturity of about thirty years,
but the final maturity is forty years, and they and
(16:22):
they sell the debt and the debt is then sold
to the insurance company that owns as well as a
number of other insurers. I mean, there's much there's more
kind of complicated within that mechanism. There's more complicated processes,
but I mean, that's that's the essence of it.
Speaker 2 (16:42):
Okay, I'm furiously drawing a spider diagram as I'm talking
to your status to try and understand this, But I
think I've got the outline of a special purpose vehicle.
But essentially the complexity is sort of what's unique about
this particular move. But is it a risky move for
these insurers? What's the sort of risk involved? Yeah, so
I think I think I think the Fox edge is
(17:04):
an interesting illustration of a phenomena that's been occurring for
a few years, which is that private capital firms are
buying up insurance companies and using that using that that
insurer capital to invest in different alternative markets. Fox Edge
(17:25):
is is, I, you know, we think quite a unique fund,
but will.
Speaker 10 (17:31):
I assume be copied and I think there will be
similar similar funds from from a number of different private
capital firms and another players on Wall Street. I think
that's one of the risks. I think one of the
risks is that I mean that we've heard from quite
a few people, is it's not that Apollos Apollo is
(17:55):
a clever you know, full of clever people that that
kind of understand the dynamics of when dealing with a
liquid investment. It's more that other people may copy and
if something's done in a more slap dash way, you
can find you can find real dangers when you're investing
(18:16):
kind of long term investments in liquid and very complicated
asset classes and structures. And so I think that's that
seems to me our chief our chief risk that these
this is very new ground and you know, billions of
dollars of being put to work by private capital firms
(18:37):
on behalf of insurance companies and it only takes one
you know, poorly structured investment. I think to for regulators
to clamp down on kind of burgeoning industries such as these.
Speaker 4 (18:51):
And have we heard anything from regulators about this.
Speaker 10 (18:56):
That they have not spoken about Fox Edge directly as
a as far as we know, I mean they, I
think they. You know, a number of regulators, both in
the US and Europe are engaged with the broader concept
that I outlined outlined earlier, because I mean, I think
it is I mean, you know, from a private credit perspective,
(19:19):
I think it is you know, the idea of private
capital managing increasingly managing more and more insurance money, I
think is one of two big phenomenas that occurring in
private credit, the other being an increasing push into retail.
And both of those concepts I think regulators are very
very interested in. I think the idea from a regulatory
(19:42):
perspective on insurer insurer money is to do with capital
charges as well. You know, they have rules that if
you can't if you invest in sort of some investment
grades assets sort of risk riskier loans, then you have
to pay capital charge. You have to pay higher charges
against it than what you would if you invested in
(20:05):
investment grade assets and these kind of structures. So you know,
because they're structured in a way that does create a
degree of safety for the investors, they can achieve investment grades,
ratings through constituent parts, some of which are sub investment grade.
(20:26):
Forgive me if this is complicated, but I think that's
kind of I think this arbitraging the capital charges, I
think is something that regulators are very engaged with.
Speaker 2 (20:37):
Okay, siders, we appreciate you taking us on this journey
through a very complex but really interesting development in the
financial plumbing. I suppose in private credits a Sidus brand,
our senior private credit reporter. Thank you very much. Well,
the time is six twenty two here in London. Let's
bring up to speed on what's moving on markets this morning.
So we've got Asian shares rising four tens of one
(20:57):
percent now in the MSCI Asia Pacific Index, led by
gaines in China and Japan. So the Nickken Tokyo's up
by nine tens of one percent, the Hang Seng indexes
up by half a percent, of the MSCI China Index
one percent higher. Seth Korea actually lagging this morning, down
by one point three percent in trading in fact, the
gage of Shang High list at stocks is set for
its highest close in a decade. Ahead of that meeting
(21:20):
between Donald Trump and Vladmir Zelenski. Later, we have got
oil prices holding pretty steady. Brown Cruise up just a
tenth of one percent, sixty five dollars and eighty nine cents.
We'll be watching what's going on with European yields later on,
because we have that big jump in yields, particularly at
the long end of the curve on Friday, ten basis
points higher for the ten and thirty year French yields.
Speaker 3 (21:40):
Eight.
Speaker 2 (21:43):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 11 (21:49):
Look for us on your podcast feed every morning, on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 2 (21:55):
You can also listen live each morning on London Dab
Radio the Bloomberg Business app.
Speaker 11 (22:00):
Bloomberg dot Com, our flagship New York station, is also
available on your Amazon Alexa devices. Just say Alexa play
Bloomberg eleven thirty. I'm Caroline Hepka.
Speaker 4 (22:10):
And I'm Stephen. Carol.
Speaker 2 (22:11):
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 (00:10):
They say is the Bloomberg Daybreak Ero podcast. Good morning,
It's Monday, the eighteenth of August. I'm Stephen Carroll in London.
Coming up today. Ukraine's President Vladimir Zelenski arrives in Washington
for crunch talks with President Trump, joined by the UK's
Keir Starmer and other European leaders. The median pay for
for one hundred CEOs reaches four point six million pounds,
(00:31):
but that's still pales in comparison to what their American
counterparts earn, plus credit where it's due. We take a
closer look at Apollo's fiendishly complicated fund that's finding creative
ways to put insurance capital to work. Let's start with
a roundup of our top stories. Ukraine's President Vladimir Elenski
has arrived in Washington ahead of meetings with President Trump
(00:54):
and European leaders. The summit's being attended by top officials
including the UK's Ker starmerman Is Fredrick Martz, and Francis
Emmanuel Macron. Here's what he's hoping to achieve at the meeting,
to strategize.
Speaker 1 (01:06):
How to keep the pressure agenda alive in case present
Putin doesn't come to the final meeting, of the quality
of meeting, and how we strategize on the next.
Speaker 2 (01:19):
Steps as fre as President Emmanuel Macron. President Trump is
expected to outline terms for a potential peace deal discussed
with Vladimir Putin, with Washington likely to focus on territorial
concessions demanded by Russia. The meeting follows a weekend phone
call among allies during which Donald Trump is said to
have told leaders he's open to US involvement in providing
(01:41):
security guarantees for Ukraine. Here's what Trump's Special ENVOYE Steve
Whitcoff told CNN's State of the Union program on Sunday.
Speaker 3 (01:50):
We got to win agreement that the United States and
other European nations could effectively of offer Oral five like
language to cover a security guarantee work off.
Speaker 2 (02:07):
They're referring to NATO's Article five, the Alliance's mutual defense clause,
requiring member states to respond if any one of them
is attacked. More than three months after the US and
the UK agreed the first of a string of deals
to reduce tariffs, so many trading partners are still waiting
for the rhetoric to become reality. Britain, Japan, South Korea
(02:28):
and the EU. I'll say the White House has promised
them exemptions and trade talks, but hasn't yet signed them
into law.
Speaker 4 (02:34):
Bloomberg Exchange. Wilcock has more.
Speaker 5 (02:37):
For the Brits. It's steel. Take a listen to Prime
Minister Kistama three months ago.
Speaker 6 (02:43):
Just a few moments ago, I spoke to President Trump,
the President of the United States, and I'm really pleased
to announce that we've agreed the basis of a historic
economic prosperity deal. It will remove tariffs or British steer
and aluminium, reducing them to zero.
Speaker 5 (03:04):
The UK Prime Minister was very clear and no one
in the US corrected him. But the steel exemption has
never been finalized. So the current tariff on UK steel
exported to America is twenty five percent. The Japan, South
Korea and the European Union, it's the exact same problem,
but with cars. Fears are growing the scale of the
(03:25):
US's global trade talks on making delays inevitable and likely
causing more economic damage in London. James Wilcock, Bloomberg Radio.
Speaker 2 (03:35):
Israel's economy slumped in the second quarter, as the country's
twelve day war with Iran forced a shut down of
many businesses, GDP fell by three point five percent in annualized,
seasonally adjusted terms. The worse than expected data came as
hundreds of thousands of Israelis took to the streets to
protest Prime Minister Benjaminettaniahu's plan to expand operations in the
(03:57):
Gaza Strip. Organizers said as many as half million people
attended the rally in Tel Aviv. Netania, who, however, insists
that calls to end the conflict will only embolden her
mass We assume when we.
Speaker 7 (04:10):
Come up, those who are calling for an end to
the war today without defeating her mass are not only
hardening her Massa's stance and delaying the release of our hostages.
They are also ensuring that the horrors of October the
seventh will recur again and again.
Speaker 2 (04:23):
That was Israeli Prime Minister Bennamin natanie who's speaking through
a translator. And you will pay for bosses of forty
one hundred companies have has had a record high for
the third year in a row with Mario.
Speaker 4 (04:34):
Here's Bloomberg's Crispett.
Speaker 8 (04:36):
Medium pay for CEOs that the one hundred biggest companies
traded on the London Stock Exchange reached four point six
million pounds in the last financial year. That's equivalent to
around six point two million dollars. According to the research
from the left leaning think tank the High Pay Center,
average salaries for top bosses rose by seven percent across
(04:58):
the year. Still, the figures four far short of CEO compensation.
In the United States. Dates of a median pay a
selected sm P five hundred companies shows compensation there has
reached sixteen point eight million dollars, and some argue that
this pay gap is one reason British companies have been
(05:19):
moving their listings to New York. In London, Chris Pitt
Bloomberg Radio.
Speaker 2 (05:25):
Airbus's A three to twenty series is about to overtake
the Boeing seven three seven as the most delivered commercial
airplane in history. Aviation consultancy firm Syrium says the jet
is just twenty sales short of the record. The four
decade race between the two firms charts both airbusses rise
and also the lack of new plane designs in aviation,
(05:48):
and those are our top stories this morning. I check
on the markets for you. The MCI ASA Pacific Index
up by half of one percent. The Nike in Tokyo
is a one percent hire this morning, the MCI China
Index one point three percent high. Eurostox fifty futures are
up by two tenths of one percent. Watching oil prices
holding steady Brent cruise at sixty five dollars eighty seven
ahead of that crucial Zelenski Trump meeting coming up a
(06:10):
little bit later. The ten year treasury yield DNA basis
point in trading today after the big news we saw
on Friday, four point three percent is where that's starting
the week. We're looking at the Bloomberg Dollar Spot Index
a tenth of one percent week, or the euros at
one seventeen against the dollar. In a moment, we'll bring
you more on what to expect from Ukrainian President's White
House meeting, plus how private capital giant APOLLOW and finance
(06:33):
firm ACS have devised a fiendishly complicated fund that's found
in creative ways to put insurance capital to work. But first,
another story that I've been reading this morning about from
what may have been the major sporting event of the weekend,
depending on your point of view the World Humanoid Robot Games.
So the event in Beijing c's robots taking part in
(06:54):
things like races, football matches, boxing matches, and well, it's
very impressive see the progress being made in this area.
Quite funny to see these robots falling over each other,
essentially playing football with no skill whatsoever, something I can
identify with, and in some cases losing robotic limbs while
taking part in these events as well. Now, Vidius Jensenwong
has talked about robotics having the potential to grow into
(07:14):
a multi trillion dollar industry elon Musk's The's test as
optimists having the potential to generate ten trillion dollars in revenue,
But it does look like we might be some distance
from those massive gains as well. In fact, one of
the leading companies at these games in China, Unitrey, the CEO,
said earlier this month, and in terms of development, it
feels like a point of two to three years before
(07:35):
chat ept to put it on a comparison to large
language models, But for now, it's funny to watch and
to marvel at a key sector as the technology develops.
You can read our reporting from the World Humanoid robot
games on Bloomberg dot Com and the Terminal will put
a link to the story in our podcast show notes
as well. Let's bring you more now on the Ukrainian
(07:56):
president's meeting with Donald Trump later and the Alaska After
the Alaska so much with Russia's Vladimir Putin. Our chief
Asier correspondent Raza Mathson is with me now from more Ras.
Good morning now. Presidentce Lanski's last over office meeting with
Donald Trump was bruising. What is Vladimir's Lansky hoping to
achieve today?
Speaker 9 (08:14):
Well, at the outset, I imagine he's trying to avoid
a repeat of that February meeting, of course, and the
risk is not insignificant. They're given that Donald Trump is
really pushing heavily to get not just to cease far
it seems, but a full peace deal and to do
so quickly, and as part of that suggesting Ukraine really
needs to be prepared to seed territory. So it's to
(08:37):
manage that meeting is probably the most overarching objective, and
to keep Donald Trump very focused on what this also
means for Ukraine and to keep Ukraine's interests in mind.
I mean, he'll want to understand even more what exactly
was said between the leaders of US and Russia in
that meeting. He want to understand what Donald Trump is
(08:57):
thinking about land and territory. He'll really want to understand
what Donald Trump is thinking when there's these references that
we're now hearing to potential security guarantees for Ukraine. What
does that actually mean in practice and what would that
look like? And so the questions are over what exactly
that would entail, and to understand Donald Trump's timeline and
(09:20):
to remind him that racing to get a piece steal
would probably not be necessarily in Ukraine's interests when it
comes to things again like land. But Donald Trump seems
very intent on getting the leaders of Russian and Ukraine
in the room sooner rather than later, and perhaps Volomia
Zelinsky wants to encourage Donald Trump to tap the brakes
very slightly on that to get a clearer sense of
(09:42):
the road in a way before they all sit down.
Speaker 2 (09:45):
Vlos Mitsinski is not coming alone to this meeting, as
well as being accompanied by a whole range of European
leaders including ursul Vandeline and Kris Dharmer. I mean, what's
the effect that those leaders are hoping to have on
the president by coming along.
Speaker 9 (09:59):
Well, in a way they'll all be we found out,
perhaps a bit like a shield for Vladimi Zelinsky again
to avoid that conversation going off the rails that we
saw earlier in the year, but also very much to
send the message that they're standing with Ukraine on this,
and they're standing with the Ukrainian leader in his interests
in these conversations, and to endorse the view again that
(10:22):
you can't rush into something where you see Ukraine being
pressed to seed territory Russia making fairly minimal concessions potentially
on land, and a lack of clarity about these security guarantees.
And also to again so the role of Europe needs
to be heard in all of this, and perhaps there
is a role for Europe in post war security for Ukraine.
(10:43):
And so it's about helping manage that conversation and again
steer it in the direction that they want, which is
above all to support Ukraine.
Speaker 2 (10:54):
So many of our conversations around these series of meetings
about who's not in the room. Vladimir Putin is not
this version of this composition of a meeting. What has
changed since the Trump Putin summit. We only have a
limited idea of what was discussed at that meeting.
Speaker 9 (11:12):
Well, that's right, and we've seem to have leap frog
from the idea of a cease far into let's get
a full peace steal and do it very quickly. I mean,
Donald Trump said he was going into that meeting with
Vladimir Putin to come out with the ceasefire, and now
he says, actually, we don't need that anyway. Let's just
get a full peace steal, and we've got the parameters
of it already. So that seems to have shifted the
(11:32):
territory very much in the conversation and put Ukraine under
a lot of pressure very quickly. And so that's certainly
the backdrop again to which these conversations are happening today.
And the challenge in all of this is not just
for Zelensky but also for the European leaders to stay
united him. It's a pretty big gaggle of them going.
(11:54):
Some of them have very good relationships with the US president,
particularly the NATO Secretary General and the FINISHED President, but
they don't always all agree on the path forward for Ukraine.
And so you know, understanding exactly where Donald Trump's mind
is is probably the number one priority here.
Speaker 2 (12:14):
In terms of what could emerge from this and how
European leaders might be hoping for a win in this.
What does a win look like for those who've traveled
to Washington today.
Speaker 9 (12:25):
Well, a win is probably just a feeling that Donald
Trump's heard what they've come to say and is taking
that on board when he thinks about the next steps
in all of this. I mean, it's clear he now
wants to move towards a full peace steal and you
know his words even to Voladimir Zelensky overnight, where you
can have you can make this happen pretty quick if
you want so, seems to be putting the pressure back
(12:48):
on Ukraine. So a win for Europe is to have
Donald Trump really aware of what this means for Ukraine constitution,
are able to give up territory, freezing a war in place?
What does that mean? What's the future of Ukraine in
all of this? So that's probably the number one priority,
is to slightly reset the table a bit with Donald
Trump and have him really factor in the Ukrainian part
(13:10):
of it.
Speaker 4 (13:10):
After his meeting with Putin a.
Speaker 10 (13:13):
Few days ago.
Speaker 2 (13:14):
Okay Razla Matheson Archievaser correspondent, thank you very much for
joining us to look ahead to that meeting taking place
in Washington.
Speaker 4 (13:21):
Later stay with us.
Speaker 2 (13:23):
More from Bloomberg Daybreak Europe coming up after this. Now,
in recent years, Apollo and other peers with private equity
routes have been buying up swathes of the life assurance
and annuity industry, getting their hands on a mountain of savings.
But there's a snag. Using this cash for riskier, more
lucrative bets on private credit and similar assets often inflicts heavy,
(13:44):
hefty capital charges on insurers. So Apollo has created a
complex investment vehicle to solve that dilemma, and our senior
private credit reporter Silas Brown joins me now to explain. Silas,
good morning. What is the goal behind Fox Hedge.
Speaker 10 (14:00):
Well, it's an intriguing name, isn't it? But I think
the goal in essence is insurance companies have a series
of needs when they're deploying capital. One of them is
to try to match assets with liability. So they haven't
you know, long term liabilities with their with their insurance contracts,
(14:23):
and it's very very hard to find debt with with
equivalent maturities, and so Foxhead, which has a final maturity
of forty years, solves solves that problem. I mean, it's
quite a rarity actually to find corporate debt with such
lengthy maturities. But also given its rated double A and
(14:46):
houses a series of different asset classes, including direct lending,
a clos a whole sort of smallas board of different
assets that Apollo is active in with a heart with A.
It's highest rating at double A minus. That also means
that they can get exposure to a series of asset
classes without inflicting hefty capital charges as you say, to
(15:14):
access to them. So they can kind of benefit from
the boom of private credit without having without sort of
suffering the capital charges that come alongside with investing in
these sort of more lower rated asset classes.
Speaker 2 (15:27):
Okay, so it's sort of a workaround for these insurers.
But talk us a little bit, to us a little
bit about the mechanics of this.
Speaker 4 (15:34):
How does it work?
Speaker 10 (15:37):
This is a real this is very challenging. But basically
what Apollo has done along with this, this this small
business called Advanced Credit Solutions, which actually came up with
the idea. So they've set up an SPV in Bermuda,
and the SPV is backed by Apollo originated assets from
(15:59):
anything from c those direct loans to real estate to
investment grades investment grade assets, and the SPV then sells
corporate debt, and the corporate debt is has I think
in them sort of average waste maturity of about thirty years,
but the final maturity is forty years, and they and
(16:22):
they sell the debt and the debt is then sold
to the insurance company that owns as well as a
number of other insurers. I mean, there's much there's more
kind of complicated within that mechanism. There's more complicated processes,
but I mean, that's that's the essence of it.
Speaker 2 (16:42):
Okay, I'm furiously drawing a spider diagram as I'm talking
to your status to try and understand this, But I
think I've got the outline of a special purpose vehicle.
But essentially the complexity is sort of what's unique about
this particular move. But is it a risky move for
these insurers? What's the sort of risk involved? Yeah, so
I think I think I think the Fox edge is
(17:04):
an interesting illustration of a phenomena that's been occurring for
a few years, which is that private capital firms are
buying up insurance companies and using that using that that
insurer capital to invest in different alternative markets. Fox Edge
(17:25):
is is, I, you know, we think quite a unique fund,
but will.
Speaker 10 (17:31):
I assume be copied and I think there will be
similar similar funds from from a number of different private
capital firms and another players on Wall Street. I think
that's one of the risks. I think one of the
risks is that I mean that we've heard from quite
a few people, is it's not that Apollos Apollo is
(17:55):
a clever you know, full of clever people that that
kind of understand the dynamics of when dealing with a
liquid investment. It's more that other people may copy and
if something's done in a more slap dash way, you
can find you can find real dangers when you're investing
(18:16):
kind of long term investments in liquid and very complicated
asset classes and structures. And so I think that's that
seems to me our chief our chief risk that these
this is very new ground and you know, billions of
dollars of being put to work by private capital firms
(18:37):
on behalf of insurance companies and it only takes one
you know, poorly structured investment. I think to for regulators
to clamp down on kind of burgeoning industries such as these.
Speaker 4 (18:51):
And have we heard anything from regulators about this.
Speaker 10 (18:56):
That they have not spoken about Fox Edge directly as
a as far as we know, I mean they, I
think they. You know, a number of regulators, both in
the US and Europe are engaged with the broader concept
that I outlined outlined earlier, because I mean, I think
it is I mean, you know, from a private credit perspective,
(19:19):
I think it is you know, the idea of private
capital managing increasingly managing more and more insurance money, I
think is one of two big phenomenas that occurring in
private credit, the other being an increasing push into retail.
And both of those concepts I think regulators are very
very interested in. I think the idea from a regulatory
(19:42):
perspective on insurer insurer money is to do with capital
charges as well. You know, they have rules that if
you can't if you invest in sort of some investment
grades assets sort of risk riskier loans, then you have
to pay capital charge. You have to pay higher charges
against it than what you would if you invested in
(20:05):
investment grade assets and these kind of structures. So you know,
because they're structured in a way that does create a
degree of safety for the investors, they can achieve investment grades,
ratings through constituent parts, some of which are sub investment grade.
(20:26):
Forgive me if this is complicated, but I think that's
kind of I think this arbitraging the capital charges, I
think is something that regulators are very engaged with.
Speaker 2 (20:37):
Okay, siders, we appreciate you taking us on this journey
through a very complex but really interesting development in the
financial plumbing. I suppose in private credits a Sidus brand,
our senior private credit reporter. Thank you very much. Well,
the time is six twenty two here in London. Let's
bring up to speed on what's moving on markets this morning.
So we've got Asian shares rising four tens of one
(20:57):
percent now in the MSCI Asia Pacific Index, led by
gaines in China and Japan. So the Nickken Tokyo's up
by nine tens of one percent, the Hang Seng indexes
up by half a percent, of the MSCI China Index
one percent higher. Seth Korea actually lagging this morning, down
by one point three percent in trading in fact, the
gage of Shang High list at stocks is set for
its highest close in a decade. Ahead of that meeting
(21:20):
between Donald Trump and Vladmir Zelenski. Later, we have got
oil prices holding pretty steady. Brown Cruise up just a
tenth of one percent, sixty five dollars and eighty nine cents.
We'll be watching what's going on with European yields later on,
because we have that big jump in yields, particularly at
the long end of the curve on Friday, ten basis
points higher for the ten and thirty year French yields.
Speaker 3 (21:40):
Eight.
Speaker 2 (21:43):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 11 (21:49):
Look for us on your podcast feed every morning, on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 2 (21:55):
You can also listen live each morning on London Dab
Radio the Bloomberg Business app.
Speaker 11 (22:00):
Bloomberg dot Com, our flagship New York station, is also
available on your Amazon Alexa devices. Just say Alexa play
Bloomberg eleven thirty. I'm Caroline Hepka.
Speaker 4 (22:10):
And I'm Stephen. Carol.
Speaker 2 (22:11):
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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