October 16, 2025 • 19 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) Chinese state actors systemically and successfully compromised classified UK government computer systems for more than a decade, according to two former senior security officials and other government officials familiar with the matter.
(2) US Treasury Secretary Scott Bessent dangled the possibility of extending a pause of import duties on Chinese goods for longer than three months if China halts its plan for strict new export controls on rare-earth elements.
(3) Chancellor of the Exchequer Rachel Reeves needs to raise her fiscal buffer fivefold to have a better-than-even chance of avoiding more tax rises and spending cuts in the coming years, according to the Institute for Fiscal Studies.
(4) French premier Sebastien Lecornu appears set to survive two no-confidence motions on Thursday after announcing plans to suspend a contentious pension law in order to win support in the National Assembly.
(5) President Donald Trump said he had authorized the Central Intelligence Agency to take covert action in Venezuela, arguing that he had to stem the flow of drugs and illegal migrants into the US.
Podcast Conversation: Smart Glasses Shouldn’t Replace Smartphones
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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):
This is the Bloomberg Day BAQT podcast. Good morning, It's Thursday,
the sixteenth of October. I'm Caroline hepkat in London and.
Speaker 1 (00:16):
I'm Stephen Caroline Brussels. Coming up today, British officials revealed
that China has been accessing classified UK systems for at
least ten years.
Speaker 2 (00:25):
A leading economic think tank says the Chancellor Rachel Reeves
needs a fifty billion pound buffer if she wants to
balance the UK's books in the years ahead.
Speaker 3 (00:35):
Plus not such smart money.
Speaker 1 (00:37):
Billionaire investor Ken Griffin says Generative AI isn't helping hedge
funds beat the market.
Speaker 2 (00:43):
Let's start with a roundup of our top stories.
Speaker 1 (00:46):
Chinese state actors have systematically compromised the UK government's classified
computer systems for more than a decade. Bloomberg has learned
China routinely accessed Britain's secret information, in one example by
purchasing a data center which held confidential intelligence. The news
comes as politicians in Westminster are debating if China is
a threat after a court case around alleged Chinese spies collapsed.
Speaker 3 (01:10):
Leader of the Opposition Kenny.
Speaker 1 (01:11):
Badenock says, the Prime Minister has questions to answer.
Speaker 4 (01:15):
He cannot explain why he could not see this case through.
Speaker 5 (01:19):
He should have seen this case through.
Speaker 4 (01:21):
And let me be clear, mister speaker, about what has happened.
A serious case involving national security has collapsed because this government.
Speaker 5 (01:29):
Is too weak to stand up to China now.
Speaker 1 (01:32):
In response to the government says that the previous conservative
Conservative administration did to not desiccate designate China as a threat.
Several government officials who spoke to Bloomberg anonymously say the
scale of cybersecurity breaches show Beijing poses a significant threat
to national security. A recent breach of a major US
based cybersecurity provider has also been blamed on state backed
(01:54):
hackers from China. Chinese officials have not responded to Bloomberg's
requests for comment.
Speaker 2 (02:00):
US Treasury Secretary Scott Bessent is suggesting a new pause
on tariffs for Chinese goods if the country stops its
plans for rare earth market dominance. The two countries have
both significantly ramped up their threats and sanctions over the
past week. The US Treasury Secretary also took aim at
one of China's top negotiators, calling him quote unhinged.
Speaker 6 (02:26):
Perhaps the Vice Minister who showed up here with variancendiari
language on August twenty eighth has gone rogue instead quote,
China will cause global chaos if.
Speaker 3 (02:44):
If the port shipping fees go through.
Speaker 2 (02:48):
Bessend added that he wants to coordinate an international response
from democracies to undermine China's plans to control the rare
earth metals market. He added that market moves wouldn't influence him,
saying that the US won't negotiate with China quote because
the stock market is going down.
Speaker 1 (03:07):
The UK's Chancellor Rachel Reeves needs to raise her fiscal
boffer five fold to have a better than even chance
of avoiding more tax rises and spending cuts. That's according
to the Institute for Fiscal Studies, which warns that restoring
the current nine point nine billion pound margin won't be
enough to balance the book's long term with more. Here's
Bimberg's Crispitz fifty billion.
Speaker 7 (03:28):
That's the figure the IFS says is needed to avoid
what it calls a fiscal groundhog day, where the government
repeatedly faces pressure to tighten policy from one forecast to
the next by comparison, the leading economics think tank says
that restoring the government's current raiser thin headroom would still
(03:48):
only give Reeves a one in three chance of meeting
her pledge to balance spending long term. The analysis highlights
the scale of the challenge facing the Chancellor ahead of
what's expected to be a difficult budget later this month
in London. Chris Pitt Bloomberg Radio.
Speaker 2 (04:07):
France's Prime Minister Sebacia Lecornu may be able to survive
to no confidence motions. Today he won the backing of
the Socialist Party after announcing the suspension of contentious pension changes.
Lecorn Who's probable survival brings some respite from the recent
political turmoil that has driven up France's boring costs. The
(04:28):
government still faces major fiscal challenges, though Charlotte de Montpellier's
senior economists at IG has told Bloomberg the current situation
isn't much of a relief for markets.
Speaker 5 (04:39):
Given the political landscape currently. I think we can expect.
Speaker 2 (04:43):
That if it goes through, the budget will be.
Speaker 5 (04:45):
More expansionary than this one, so it.
Speaker 2 (04:47):
Means that the deficit to GDP ratio will be worse
than the one that is.
Speaker 5 (04:51):
Currently the imph next year.
Speaker 2 (04:53):
Charlotte de Montpellier's senior economists at ing speaking then, these
socialists have already warned that their decision not to Censulo
Corny today doesn't give the premier a blank check.
Speaker 1 (05:06):
US President Donald Trump says he's authorized the CIA to
take covert action in Venezuela in order to stem a
flow of drugs and illegal migrants to the United States.
It confirms an earlier report in The New York Times,
which said the agency would be enabled to carry out
lethal operations in Venezuela and wider action in the Caribbean.
Speaking at the White House, Trump rebuff to reporters' question
(05:28):
on whether the CIA has the authority to take out
Venezuelan President Nicholas Maduro.
Speaker 8 (05:34):
I think Venezuela is feeling heat, but I think a
lot of other countries are feeling heat too. We're not
going to let this country, our country, be ruined because
other people want to drop. As you say, their worst,
they have given us their worst, I.
Speaker 1 (05:49):
Was President Trump, speaking as the US has already hit
half a dozen voats in the Southern Caribbean since the
start of September, saying the vessels were transporting drugs to America.
Speaker 2 (06:00):
Now, Bloomberg understands that EU countries will begin debating next
week just how much preferential treatment to give European firms
bidding for public contracts.
Speaker 5 (06:11):
Bloomberg's Mihil Kubala has more.
Speaker 9 (06:13):
The EU is looking for ways to boost homegrown companies
and strengthen its industrial base, sources have told Bloomberg France
is leading the drive to prioritize European companies in public
contracts worth about two and a half trillion euros. That's
a market equivalent to about fifteen percent of the bloc's GDP.
The push is a way to counterbalance protection as US
(06:36):
trade policies or Chinnel's weaponization of certain raw materials. Still,
officials war that implementing the buy European approach could be
complex in some sectors. Defense, for example, the block is
still heavily reliant on American suppliers in Brussels.
Speaker 1 (06:53):
Michael Kubala Bloomberg Radio, and those are your top stories
on the market. It's the MSCIS Specific Index seven tents
higher this morning. The NICK and Tokyo's up by one
point three percent. Eurostocks fifty futures down four tenths this morning,
as we're looking at the Bloomberg Dollar Spot Index, a
tenth of one percent weeker, the euros at one sixteen
fifty six, the tenure treasury yield holding steady at four
(07:14):
point zero two percent.
Speaker 2 (07:16):
Well, in a moment, we'll bring you more on the
UK cybersecurity breach and also why Citadel's Ken Griffin isn't
impressed by.
Speaker 5 (07:24):
AI, at least not yet.
Speaker 2 (07:26):
There's also another story though here that's got our attention today.
Perhaps I should say caught our eye haha. Could smart
glasses replace our smartphones?
Speaker 1 (07:36):
I'm really glad that someone else has joined ludd Eyede's
corner with you and me, Caroline, who's essentially somewhat suspicious
of new technology.
Speaker 3 (07:44):
This has been Burke.
Speaker 1 (07:45):
Opinion column as Katherine Thorbeck has been writing about the
massive amounts of money that big tech companies are pouring
into developing smart glasses, doing things like making them look
better of course making them more functional. AIS helping with
that as well. She points to a recent survey of
eight con trees, which includes China, India and the US
stow and that forty eight percent of people were interested
in purchasing a pair of smart glasses in.
Speaker 3 (08:07):
The next year.
Speaker 1 (08:08):
The trust of Catherine's argument, though, was essentially they might
have the technopanies might have to go a bit further
to try and convince us that we need this technology.
Speaker 2 (08:17):
Look, I think fifty to fifty is actually pretty good.
To my mind, is a bit kind of Ready Player
one or even Stephen They Live, which is a really
old movie reference. Basically, are we in this kind of
post privacy sort of world where you're going to wear
those smart glasses. I always thought that headphones might not
(08:37):
take off. They are absolutely ubiquitous. I'm surprised that people
wear them at all times of the day and night.
So maybe it's not so far fetched that people will
also wear tech on their faces on their glasses.
Speaker 1 (08:48):
We need to draw two lists after this conversation. One
is pieces of technology we thought wouldn't take off but did.
Another is films that Stephen has not seen to get
reference in our conversations. You can read Captain's piece at
Bloomberg dot com Forward slash Opinion.
Speaker 2 (09:04):
Okay, let's get to our top story here in the UK,
Chinese state actors have compromised classified UK government systems for
more than a decade. We now learn joining US is
our chief Asia correspondent Roslyn matheson Good Morning, Roz. Look
what do we know that about this security breach? What
information was accessed and also how.
Speaker 10 (09:28):
This was our exclusive reporting which shows that they were
routinely and successfully accessing low and medium level classified information
for at least a decade. And this is things like
private communications, some diplomatic cables, discussion around government policy, so
it wasn't top secret information, but it was still classified
(09:50):
information and doing so it seems routinely, and one person
told us endlessly for about ten years without detection, and
some of it was potentially through a particular data center
that was sold to an entity that had a link
to China some time ago.
Speaker 5 (10:07):
That's now been tightened up.
Speaker 10 (10:10):
But the fact is that it seems like these Chinese
state actors were just coming in constantly and getting fairly
low level information, but information that's still class is classified
and information that could be used potentially against the UK
given it's about things like again that the formulation of
government policy ross.
Speaker 1 (10:30):
This exclusive reporting is coming after the collapse of a
trial of two men accused of spying for China because,
according to prosecutors, successive British governments had declined to formally
designate China as a threat to national security.
Speaker 3 (10:43):
Could that designation change now?
Speaker 10 (10:46):
Well, there's obviously a bit of pressure again around there.
So this is something that's come up for many years,
and not just under this administration. Is you have China
hawks in various governments saying that the UK needs to
move forward and do this. And obviously the fact that
this case was seen to have collapsed in part because
of the UK not using this designation has brought it
(11:10):
back into the conversation. But you can see from some
of the witness statements that we're given from bureaucrats at
least is that they couch this as a complex relationship
with China, between the China and UK, and that they
say that the UK is ready to confront China, it's
ready to compete with China, but also it does want
(11:30):
an economic relationship with China, and just points again to
that type rope that many UK governments seem to walk,
and that the Starma government certainly is very much walking,
is that it wants that door open to China, it
needs that economic relationship and so you've got to make
political calculations out of that.
Speaker 2 (11:48):
And yet this is in a complex, you know, global situation.
It also comes as US authorities have issued these warnings
about significant cyber threat because of a breach of a
major US based cybersecurity provider F five. They call it
a catastrophic breach. And again this is something that is
(12:10):
blamed on state backed hackers from China. So there's also
a broader concern and it's about you know, the US
China relation and the UK US China relationship.
Speaker 10 (12:22):
Well, that's right, and in fact the UK has been
caught up in this because there's been warnings issued here
because of customers potentially have been breached in the UK,
not just in the US. And some of these are
really big companies and they use some of these systems,
and you know, the reporting shows that these hackers possibly
stole parts of source code which are used in application services,
(12:45):
again by very big companies, and so you've had warnings
to companies across the US but also in the UK
that they need to go and check their systems and
they're going to be seeing if there's been any infiltration.
And so certainly that has also come across here doubt
will be part of the conversation about how countries not
to see UK, but the US and well, frankly everywhere
(13:08):
are handling this proliferation of cyber attacks that come from
China actors, but also from actors all around the world,
and how do you bulletproof your systems and also how
do you respond to the fact that often it's state
barked rols.
Speaker 3 (13:23):
Have we heard any thing from China about all of this, It's.
Speaker 5 (13:26):
Interesting they've been pretty quiet.
Speaker 10 (13:28):
I mean they did when the case was dropped against
these two people in the UK, they did say it
showed the case was without merit. And they've also there's
been a few editorials in China state media in recent
days saying that this shows that there's just an unnecessary
level of paranoia, as they call it in the UK
about China, and there are people who are tempting to
(13:50):
use all of this to try and cause problems in
the relationship. But you haven't had a lot of very
public comments made from China specifically about this by case
with the two being dropped, and perhaps they just want
to let that be because again, China has its own
incentive to have the relationship stay on and improved footing
(14:10):
with the UK again mostly around train and investment.
Speaker 2 (14:13):
Okay, Rolls, thank you so much for being with us.
That is our chief Asia correspondent rose In Mathison, thank
you stay with us. More from Bloomberg daybaqube coming up
after this.
Speaker 1 (14:25):
What's Citadel's Cam Griffin is the I just big name
and finance to weigh in on the subject of artificial
intelligence as companies have been investing massive amounts of money
in the technology, but the debate over what returns it
can provide is continuing. Cam Griffin saying that AI isn't
meaningfully affecting hedgephones so far. Our reporter to out bios
(14:46):
here with more details.
Speaker 3 (14:48):
TIA. What is Cam Griffin's view on this? Then?
Speaker 5 (14:50):
Yeah, it's interesting.
Speaker 11 (14:51):
So he was speaking at an investors conference in New
York and he made his views on this issue pretty clear. Essentially,
he says there are ways that AI can help enhance productivity,
but when it comes to actually helping hedge funds beat
the market and generate alpha, he thinks it falls short.
And when talking about his own shop Citadel, Griffin said
(15:12):
that AI hasn't replaced meaningful research. This isn't the first time,
he's made sort of skeptical comments about AI. He's previously
called it a limited tool when it comes to investment analysis,
and has typically downplayed fears that the tech could replace
human jobs in the past. So fundamentally he thinks that
(15:34):
it's unlikely to create widespread change, So it will have impact,
but not perhaps in the profound way that others in
the industry have come to expect.
Speaker 3 (15:45):
Well, that's the thing.
Speaker 2 (15:46):
It's a lively debate in the industry, and one you know,
with a lot of money potentially resting on it.
Speaker 5 (15:50):
What are the other views?
Speaker 11 (15:52):
So this view definitely does set Griffin apart from his peers.
I mean, just take the example of JP Morgan CEO
Jamie Diamond. He recently said that the Bank spends two
billion dollars a year developing AI technology, but also crucially
that they save the same amount because of the tech.
(16:13):
He was speaking to Bloomberg last week and he was
very clear about just how impactful he thinks that AI
is and how impactful it could be in the future.
He said the Bank already has hundreds of use cases
for it and only expects that to grow, and in
terms of its impact in the world, he compared it
to something like the printing press, so hugely significant in
(16:36):
terms of history and its impact.
Speaker 5 (16:39):
On the future.
Speaker 11 (16:40):
But we have also heard from multiple others in the
world of financial services. They've praised AI, and that includes
a former Treasury Secretary Larry Summers. He called the emergence
of AI a moment of stunning technological possibility. In the UK,
there's also been Charlie Nunn, the CEO of Lloyd's Bank,
he said the AI is core to the firm's operations,
(17:03):
and just recently Golden Sachs CEO David Solomon released a
vision statement about how the company is going to reorganize
itself to fully benefit from AI. So in terms of
the financial services sector at least, Griffin seems to be
certainly in the minority here.
Speaker 3 (17:22):
Outside of the financial industry though too.
Speaker 1 (17:24):
But I mean, what do we know about the broader
effects that AI is already having on the economy.
Speaker 11 (17:29):
Well, there are mixed opinions about this, so you know,
on the one hand, there are some that argue that
the productivity gains from AI will result in faster and
certainly more sustainable economic growth. For example, recently, Federal Reserve
Governor Christopher Waller said that AI will be a huge
boost to the economy.
Speaker 12 (17:50):
Aside from questions about how AI's gained will be distributed,
there's a more fundamental matter of how they will be measured.
Speaker 3 (17:57):
Even at a macro level.
Speaker 12 (17:59):
Are using AI to increase productivity, that's the payoff for
a profit maximizing firm. This gain in producing more output
with the same inputs is counted in gross domestic product
and as a result you're getting more output the same
number of inputs. Productivity per unit of input goes up,
and that raises GDP and productivity growth.
Speaker 11 (18:20):
So the Fed's Christopher Waller, they're talking about the payoff
from AI, but not everyone agrees with this entirely. There
are specific concerns about the impact of AI on the
labor market, particularly entry level jobs that could be vulnerable.
Bloomberg reporting actually from this summer concluded that even if
(18:42):
the technology only eliminates one fifth of new graduate jobs
over the next five years, that would still have major
ramifications for a generation of young workers and also for
the economy. So there is both anxiety and optimism about
a potential impact.
Speaker 1 (19:03):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 2 (19:09):
Look for us on your podcast feed every morning, on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 1 (19:15):
You can also listen live each morning on London Dab Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 2 (19:21):
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 3 (19:30):
I'm Stephen Carroll.
Speaker 1 (19:31):
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):
This is the Bloomberg Day BAQT podcast. Good morning, It's Thursday,
the sixteenth of October. I'm Caroline hepkat in London and.
Speaker 1 (00:16):
I'm Stephen Caroline Brussels. Coming up today, British officials revealed
that China has been accessing classified UK systems for at
least ten years.
Speaker 2 (00:25):
A leading economic think tank says the Chancellor Rachel Reeves
needs a fifty billion pound buffer if she wants to
balance the UK's books in the years ahead.
Speaker 3 (00:35):
Plus not such smart money.
Speaker 1 (00:37):
Billionaire investor Ken Griffin says Generative AI isn't helping hedge
funds beat the market.
Speaker 2 (00:43):
Let's start with a roundup of our top stories.
Speaker 1 (00:46):
Chinese state actors have systematically compromised the UK government's classified
computer systems for more than a decade. Bloomberg has learned
China routinely accessed Britain's secret information, in one example by
purchasing a data center which held confidential intelligence. The news
comes as politicians in Westminster are debating if China is
a threat after a court case around alleged Chinese spies collapsed.
Speaker 3 (01:10):
Leader of the Opposition Kenny.
Speaker 1 (01:11):
Badenock says, the Prime Minister has questions to answer.
Speaker 4 (01:15):
He cannot explain why he could not see this case through.
Speaker 5 (01:19):
He should have seen this case through.
Speaker 4 (01:21):
And let me be clear, mister speaker, about what has happened.
A serious case involving national security has collapsed because this government.
Speaker 5 (01:29):
Is too weak to stand up to China now.
Speaker 1 (01:32):
In response to the government says that the previous conservative
Conservative administration did to not desiccate designate China as a threat.
Several government officials who spoke to Bloomberg anonymously say the
scale of cybersecurity breaches show Beijing poses a significant threat
to national security. A recent breach of a major US
based cybersecurity provider has also been blamed on state backed
(01:54):
hackers from China. Chinese officials have not responded to Bloomberg's
requests for comment.
Speaker 2 (02:00):
US Treasury Secretary Scott Bessent is suggesting a new pause
on tariffs for Chinese goods if the country stops its
plans for rare earth market dominance. The two countries have
both significantly ramped up their threats and sanctions over the
past week. The US Treasury Secretary also took aim at
one of China's top negotiators, calling him quote unhinged.
Speaker 6 (02:26):
Perhaps the Vice Minister who showed up here with variancendiari
language on August twenty eighth has gone rogue instead quote,
China will cause global chaos if.
Speaker 3 (02:44):
If the port shipping fees go through.
Speaker 2 (02:48):
Bessend added that he wants to coordinate an international response
from democracies to undermine China's plans to control the rare
earth metals market. He added that market moves wouldn't influence him,
saying that the US won't negotiate with China quote because
the stock market is going down.
Speaker 1 (03:07):
The UK's Chancellor Rachel Reeves needs to raise her fiscal
boffer five fold to have a better than even chance
of avoiding more tax rises and spending cuts. That's according
to the Institute for Fiscal Studies, which warns that restoring
the current nine point nine billion pound margin won't be
enough to balance the book's long term with more. Here's
Bimberg's Crispitz fifty billion.
Speaker 7 (03:28):
That's the figure the IFS says is needed to avoid
what it calls a fiscal groundhog day, where the government
repeatedly faces pressure to tighten policy from one forecast to
the next by comparison, the leading economics think tank says
that restoring the government's current raiser thin headroom would still
(03:48):
only give Reeves a one in three chance of meeting
her pledge to balance spending long term. The analysis highlights
the scale of the challenge facing the Chancellor ahead of
what's expected to be a difficult budget later this month
in London. Chris Pitt Bloomberg Radio.
Speaker 2 (04:07):
France's Prime Minister Sebacia Lecornu may be able to survive
to no confidence motions. Today he won the backing of
the Socialist Party after announcing the suspension of contentious pension changes.
Lecorn Who's probable survival brings some respite from the recent
political turmoil that has driven up France's boring costs. The
(04:28):
government still faces major fiscal challenges, though Charlotte de Montpellier's
senior economists at IG has told Bloomberg the current situation
isn't much of a relief for markets.
Speaker 5 (04:39):
Given the political landscape currently. I think we can expect.
Speaker 2 (04:43):
That if it goes through, the budget will be.
Speaker 5 (04:45):
More expansionary than this one, so it.
Speaker 2 (04:47):
Means that the deficit to GDP ratio will be worse
than the one that is.
Speaker 5 (04:51):
Currently the imph next year.
Speaker 2 (04:53):
Charlotte de Montpellier's senior economists at ing speaking then, these
socialists have already warned that their decision not to Censulo
Corny today doesn't give the premier a blank check.
Speaker 1 (05:06):
US President Donald Trump says he's authorized the CIA to
take covert action in Venezuela in order to stem a
flow of drugs and illegal migrants to the United States.
It confirms an earlier report in The New York Times,
which said the agency would be enabled to carry out
lethal operations in Venezuela and wider action in the Caribbean.
Speaking at the White House, Trump rebuff to reporters' question
(05:28):
on whether the CIA has the authority to take out
Venezuelan President Nicholas Maduro.
Speaker 8 (05:34):
I think Venezuela is feeling heat, but I think a
lot of other countries are feeling heat too. We're not
going to let this country, our country, be ruined because
other people want to drop. As you say, their worst,
they have given us their worst, I.
Speaker 1 (05:49):
Was President Trump, speaking as the US has already hit
half a dozen voats in the Southern Caribbean since the
start of September, saying the vessels were transporting drugs to America.
Speaker 2 (06:00):
Now, Bloomberg understands that EU countries will begin debating next
week just how much preferential treatment to give European firms
bidding for public contracts.
Speaker 5 (06:11):
Bloomberg's Mihil Kubala has more.
Speaker 9 (06:13):
The EU is looking for ways to boost homegrown companies
and strengthen its industrial base, sources have told Bloomberg France
is leading the drive to prioritize European companies in public
contracts worth about two and a half trillion euros. That's
a market equivalent to about fifteen percent of the bloc's GDP.
The push is a way to counterbalance protection as US
(06:36):
trade policies or Chinnel's weaponization of certain raw materials. Still,
officials war that implementing the buy European approach could be
complex in some sectors. Defense, for example, the block is
still heavily reliant on American suppliers in Brussels.
Speaker 1 (06:53):
Michael Kubala Bloomberg Radio, and those are your top stories
on the market. It's the MSCIS Specific Index seven tents
higher this morning. The NICK and Tokyo's up by one
point three percent. Eurostocks fifty futures down four tenths this morning,
as we're looking at the Bloomberg Dollar Spot Index, a
tenth of one percent weeker, the euros at one sixteen
fifty six, the tenure treasury yield holding steady at four
(07:14):
point zero two percent.
Speaker 2 (07:16):
Well, in a moment, we'll bring you more on the
UK cybersecurity breach and also why Citadel's Ken Griffin isn't
impressed by.
Speaker 5 (07:24):
AI, at least not yet.
Speaker 2 (07:26):
There's also another story though here that's got our attention today.
Perhaps I should say caught our eye haha. Could smart
glasses replace our smartphones?
Speaker 1 (07:36):
I'm really glad that someone else has joined ludd Eyede's
corner with you and me, Caroline, who's essentially somewhat suspicious
of new technology.
Speaker 3 (07:44):
This has been Burke.
Speaker 1 (07:45):
Opinion column as Katherine Thorbeck has been writing about the
massive amounts of money that big tech companies are pouring
into developing smart glasses, doing things like making them look
better of course making them more functional. AIS helping with
that as well. She points to a recent survey of
eight con trees, which includes China, India and the US
stow and that forty eight percent of people were interested
in purchasing a pair of smart glasses in.
Speaker 3 (08:07):
The next year.
Speaker 1 (08:08):
The trust of Catherine's argument, though, was essentially they might
have the technopanies might have to go a bit further
to try and convince us that we need this technology.
Speaker 2 (08:17):
Look, I think fifty to fifty is actually pretty good.
To my mind, is a bit kind of Ready Player
one or even Stephen They Live, which is a really
old movie reference. Basically, are we in this kind of
post privacy sort of world where you're going to wear
those smart glasses. I always thought that headphones might not
(08:37):
take off. They are absolutely ubiquitous. I'm surprised that people
wear them at all times of the day and night.
So maybe it's not so far fetched that people will
also wear tech on their faces on their glasses.
Speaker 1 (08:48):
We need to draw two lists after this conversation. One
is pieces of technology we thought wouldn't take off but did.
Another is films that Stephen has not seen to get
reference in our conversations. You can read Captain's piece at
Bloomberg dot com Forward slash Opinion.
Speaker 2 (09:04):
Okay, let's get to our top story here in the UK,
Chinese state actors have compromised classified UK government systems for
more than a decade. We now learn joining US is
our chief Asia correspondent Roslyn matheson Good Morning, Roz. Look
what do we know that about this security breach? What
information was accessed and also how.
Speaker 10 (09:28):
This was our exclusive reporting which shows that they were
routinely and successfully accessing low and medium level classified information
for at least a decade. And this is things like
private communications, some diplomatic cables, discussion around government policy, so
it wasn't top secret information, but it was still classified
(09:50):
information and doing so it seems routinely, and one person
told us endlessly for about ten years without detection, and
some of it was potentially through a particular data center
that was sold to an entity that had a link
to China some time ago.
Speaker 5 (10:07):
That's now been tightened up.
Speaker 10 (10:10):
But the fact is that it seems like these Chinese
state actors were just coming in constantly and getting fairly
low level information, but information that's still class is classified
and information that could be used potentially against the UK
given it's about things like again that the formulation of
government policy ross.
Speaker 1 (10:30):
This exclusive reporting is coming after the collapse of a
trial of two men accused of spying for China because,
according to prosecutors, successive British governments had declined to formally
designate China as a threat to national security.
Speaker 3 (10:43):
Could that designation change now?
Speaker 10 (10:46):
Well, there's obviously a bit of pressure again around there.
So this is something that's come up for many years,
and not just under this administration. Is you have China
hawks in various governments saying that the UK needs to
move forward and do this. And obviously the fact that
this case was seen to have collapsed in part because
of the UK not using this designation has brought it
(11:10):
back into the conversation. But you can see from some
of the witness statements that we're given from bureaucrats at
least is that they couch this as a complex relationship
with China, between the China and UK, and that they
say that the UK is ready to confront China, it's
ready to compete with China, but also it does want
(11:30):
an economic relationship with China, and just points again to
that type rope that many UK governments seem to walk,
and that the Starma government certainly is very much walking,
is that it wants that door open to China, it
needs that economic relationship and so you've got to make
political calculations out of that.
Speaker 2 (11:48):
And yet this is in a complex, you know, global situation.
It also comes as US authorities have issued these warnings
about significant cyber threat because of a breach of a
major US based cybersecurity provider F five. They call it
a catastrophic breach. And again this is something that is
(12:10):
blamed on state backed hackers from China. So there's also
a broader concern and it's about you know, the US
China relation and the UK US China relationship.
Speaker 10 (12:22):
Well, that's right, and in fact the UK has been
caught up in this because there's been warnings issued here
because of customers potentially have been breached in the UK,
not just in the US. And some of these are
really big companies and they use some of these systems,
and you know, the reporting shows that these hackers possibly
stole parts of source code which are used in application services,
(12:45):
again by very big companies, and so you've had warnings
to companies across the US but also in the UK
that they need to go and check their systems and
they're going to be seeing if there's been any infiltration.
And so certainly that has also come across here doubt
will be part of the conversation about how countries not
to see UK, but the US and well, frankly everywhere
(13:08):
are handling this proliferation of cyber attacks that come from
China actors, but also from actors all around the world,
and how do you bulletproof your systems and also how
do you respond to the fact that often it's state
barked rols.
Speaker 3 (13:23):
Have we heard any thing from China about all of this, It's.
Speaker 5 (13:26):
Interesting they've been pretty quiet.
Speaker 10 (13:28):
I mean they did when the case was dropped against
these two people in the UK, they did say it
showed the case was without merit. And they've also there's
been a few editorials in China state media in recent
days saying that this shows that there's just an unnecessary
level of paranoia, as they call it in the UK
about China, and there are people who are tempting to
(13:50):
use all of this to try and cause problems in
the relationship. But you haven't had a lot of very
public comments made from China specifically about this by case
with the two being dropped, and perhaps they just want
to let that be because again, China has its own
incentive to have the relationship stay on and improved footing
(14:10):
with the UK again mostly around train and investment.
Speaker 2 (14:13):
Okay, Rolls, thank you so much for being with us.
That is our chief Asia correspondent rose In Mathison, thank
you stay with us. More from Bloomberg daybaqube coming up
after this.
Speaker 1 (14:25):
What's Citadel's Cam Griffin is the I just big name
and finance to weigh in on the subject of artificial
intelligence as companies have been investing massive amounts of money
in the technology, but the debate over what returns it
can provide is continuing. Cam Griffin saying that AI isn't
meaningfully affecting hedgephones so far. Our reporter to out bios
(14:46):
here with more details.
Speaker 3 (14:48):
TIA. What is Cam Griffin's view on this? Then?
Speaker 5 (14:50):
Yeah, it's interesting.
Speaker 11 (14:51):
So he was speaking at an investors conference in New
York and he made his views on this issue pretty clear. Essentially,
he says there are ways that AI can help enhance productivity,
but when it comes to actually helping hedge funds beat
the market and generate alpha, he thinks it falls short.
And when talking about his own shop Citadel, Griffin said
(15:12):
that AI hasn't replaced meaningful research. This isn't the first time,
he's made sort of skeptical comments about AI. He's previously
called it a limited tool when it comes to investment analysis,
and has typically downplayed fears that the tech could replace
human jobs in the past. So fundamentally he thinks that
(15:34):
it's unlikely to create widespread change, So it will have impact,
but not perhaps in the profound way that others in
the industry have come to expect.
Speaker 3 (15:45):
Well, that's the thing.
Speaker 2 (15:46):
It's a lively debate in the industry, and one you know,
with a lot of money potentially resting on it.
Speaker 5 (15:50):
What are the other views?
Speaker 11 (15:52):
So this view definitely does set Griffin apart from his peers.
I mean, just take the example of JP Morgan CEO
Jamie Diamond. He recently said that the Bank spends two
billion dollars a year developing AI technology, but also crucially
that they save the same amount because of the tech.
(16:13):
He was speaking to Bloomberg last week and he was
very clear about just how impactful he thinks that AI
is and how impactful it could be in the future.
He said the Bank already has hundreds of use cases
for it and only expects that to grow, and in
terms of its impact in the world, he compared it
to something like the printing press, so hugely significant in
(16:36):
terms of history and its impact.
Speaker 5 (16:39):
On the future.
Speaker 11 (16:40):
But we have also heard from multiple others in the
world of financial services. They've praised AI, and that includes
a former Treasury Secretary Larry Summers. He called the emergence
of AI a moment of stunning technological possibility. In the UK,
there's also been Charlie Nunn, the CEO of Lloyd's Bank,
he said the AI is core to the firm's operations,
(17:03):
and just recently Golden Sachs CEO David Solomon released a
vision statement about how the company is going to reorganize
itself to fully benefit from AI. So in terms of
the financial services sector at least, Griffin seems to be
certainly in the minority here.
Speaker 3 (17:22):
Outside of the financial industry though too.
Speaker 1 (17:24):
But I mean, what do we know about the broader
effects that AI is already having on the economy.
Speaker 11 (17:29):
Well, there are mixed opinions about this, so you know,
on the one hand, there are some that argue that
the productivity gains from AI will result in faster and
certainly more sustainable economic growth. For example, recently, Federal Reserve
Governor Christopher Waller said that AI will be a huge
boost to the economy.
Speaker 12 (17:50):
Aside from questions about how AI's gained will be distributed,
there's a more fundamental matter of how they will be measured.
Speaker 3 (17:57):
Even at a macro level.
Speaker 12 (17:59):
Are using AI to increase productivity, that's the payoff for
a profit maximizing firm. This gain in producing more output
with the same inputs is counted in gross domestic product
and as a result you're getting more output the same
number of inputs. Productivity per unit of input goes up,
and that raises GDP and productivity growth.
Speaker 11 (18:20):
So the Fed's Christopher Waller, they're talking about the payoff
from AI, but not everyone agrees with this entirely. There
are specific concerns about the impact of AI on the
labor market, particularly entry level jobs that could be vulnerable.
Bloomberg reporting actually from this summer concluded that even if
(18:42):
the technology only eliminates one fifth of new graduate jobs
over the next five years, that would still have major
ramifications for a generation of young workers and also for
the economy. So there is both anxiety and optimism about
a potential impact.
Speaker 1 (19:03):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 2 (19:09):
Look for us on your podcast feed every morning, on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 1 (19:15):
You can also listen live each morning on London Dab Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 2 (19:21):
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 3 (19:30):
I'm Stephen Carroll.
Speaker 1 (19:31):
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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