September 25, 2025 • 21 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) HSBC Holdings said it’s achieved a world-first breakthrough in deploying quantum computing in financial markets, as a race intensifies among some of Wall Street’s biggest firms to embed the cutting-edge technology in their daily operations.
(2) Intel has approached Apple about securing an investment in the ailing chipmaker, according to people familiar with the matter, part of efforts to bolster a business that’s now partially owned by the US government.
(3) US stocks are screamingly expensive when viewed from a historical perspective. But dig into the details, and the sky-high valuations may well be warranted, say strategists at Bank of America
(4) The US lowered tariffs on auto imports from the European Union to 15% retroactive to Aug. 1, cementing terms of the framework trade agreement the two sides struck almost two months ago
(5) Splits on the Bank of England policymaking committee were on full display on Wednesday after Governor Andrew Bailey said there was further to go on interest-rate cuts just hours before external member Megan Greene proposed “skipping” a cut in November.
(6) Russia plans to run a budget deficit for a fifth year as declining revenue and increased spending continue to put pressure on the government’s finances amid the Kremlin’s war on Ukraine.
(7) Global drugmakers including Merck, Eli Lilly and AstraZeneca are pausing or canceling investments in the UK while throwing barbs at the lack of competitiveness of its business environment
Podcast Conversation: Bob Iger Just Learned a Hard Lesson: Beth Kowitt
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Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
This is the Bloomberg Daybreakerate podcast. Good Morning, It's Thursday,
the twenty fifth of September in London and Caroline Hepca
coming up today. Is this a spot Nicker moment? HSBC
says it's made a world first breakthrough in quantum computing
for financial markets.
Speaker 3 (00:27):
Not a bubble but the new normal.
Speaker 2 (00:28):
Bank of America says that sky high US stock valuations
may be warranted more than in the past. Plus a
bitter pill for the UK the government offers an olive
branch after pharmaceutical companies publicly condemned the country. Let's start
with the roundup of our top stories. HSBC says that
it has made a breakthrough in quantum computing for trading
(00:52):
using IBM's processor. The lender says it is the first
time real trades have been used at scale to show
the potential benefits of this emerging technology. Bloomberg's Chris Pitt
has the details.
Speaker 1 (01:06):
A Sputnik moment. That's how HSBC's executive in charge of
quantum computing described their successful deployment of the technology in
financial markets. The London headquartered banks said it had used
a heron quantum processor to deliver a thirty four percent
improvement in predicting how likely a bond is to trade
(01:28):
at a given price. HSBC's trial marks the first time
a bank has used real trades at scale to demonstrate
the benefits of quantum computing, which could now lead to
a flurry of activity as financial companies step up efforts
to harness the technology. In London, Chris Pitt Bloomberg Radio.
Speaker 2 (01:51):
Intel has approached Apple about an investment in a bid
to secure its future. Bloomberg understands the two firms have
had early stage talk about working more closely together. Our
US Deals reporter Ryan Gould says an agreement could be
pivotal for Intel.
Speaker 4 (02:08):
This obviously comes on the beck of both the US
government investing in Intel directly one of its largest shareholders,
and also would potentially follow a five billion dollar investment
from both in Nvidia and a two billion dollar investment
from SoftBank. I guess one way to put this all
together is you know Intel is on the.
Speaker 2 (02:29):
Comeback, Bloomberg's Ryan Gould speaking there a deal with Apple
would represent further validation of the chip maker's turnaround efforts,
although it's unlikely that Apple would switch back to Intel
processes in its devices. Shares of Intel rose by six
point four percent to thirty one dollars twenty two on
Wednesday in New York after Bloomberg reported on the discussions.
(02:54):
Strategist at Bank of America are making the case that
sky high valuations in the S and P five hundred
may be appropriate. In a note, the lenders head of
Equity and Quantitative Strategy has said that the higher quality
makeup of the index and the potential for a boom
in sales could justify the pricey levels, adding perhaps we
(03:16):
should anchor to today's multiples as the new normal. The
comments come as the US equity index has taken a
breather in the last forty eight hours, following gains of
more than thirty percent from aprils low. Amy wu Silverman
is the head of Derivatives strategy at RBC.
Speaker 5 (03:34):
Whenever I'm speaking at a relatively large meeting, so you know,
maybe thirty or more investors, everyone's going around that they're
talking about their bearish sentiment. And then if I say
show of hands, who thinks the market is going to
be higher by your in like ninety percent of folks
raise their hands so with the it's a reluctance in
the rally for sure, But then again there's this impulse
(03:55):
to be very concerned about that right tail and feel
like they still have to chase it because they know
that they cannot be left behind.
Speaker 2 (04:03):
Amy wou Silverman speaking there as the S and P
five hundreds twelve month forward price to earnings ratio hit
twenty two point nine this week. Now, that is a
level that has been topped only twice this century, the
other times the dot com bubble and the twenty twenty
pandemic rally. Now, the US has cart tariffs on EU
(04:25):
auto imports to fifteen percent. It's retroactive, so back to
the first of August. It locks in terms of trade
that were struck in a deal almost two months ago.
The move will help to ease tensions with Brussels, with
shares in European car makers arising on the announcement. New
(04:46):
car registrations across Europe also rose by four point seven
percent in August, according to the Continents also lobby the ACEA,
their latest data out today on tariffs. Most other new
rates take effect from September, while exemptions remain for aircraft, pharmaceuticals,
and certain raw materials. Talks continue on steel and aluminium,
(05:11):
where EU exports still face tarifs of up to fifty percent. Meanwhile,
the Trump administration launches investigations into imports of robotics, industrial
machinery and medical devices, setting the stage for fresh duties.
So that's all the news when it comes to the
US and the EU on tariffs. Now Here in the UK,
(05:32):
the Bank of England governor and a key policy maker
publicly disagreed about the rates path ahead, showing the split
at the top of UK monetary policy. Andrew Bailey says
that there is further to go on interest rate cuts
due to the weakening labor market, but then hours later
Megan Green proposed skipping a cut in November due to
(05:53):
fears around high inflation. The divide shows how macroeconomics is
struggling to find easy answers to the trade will or traders. Meanwhile,
see little prospect of the Bank of England moving rates
in either November or December, and they have only one
quarter point reduction fully priced in for twenty twenty six. Last,
(06:14):
the Russia plans to run a budget deficit for a
fifth year as the cost of its war with Ukraine
mounts to the Finance Ministry projects a fiscal gap equivalent
to about fifty five billion dollars in twenty twenty six.
War spending is climbing while all in gas revenue is falling,
pushing Moscow to raise value added tax rates and to
(06:34):
borrow more. This comes as President Donald Trump is pointing
to those strains, saying the Russian economy is weakening. He says,
with EU support, Ukraine is in a position to win
back all the territory at lost. Since twenty twenty two,
Ukrainian President of Losomierzelinsky has urged allies to take stronger
action against Russia.
Speaker 6 (06:55):
If it takes weapons to do it, if it takes
pressure on Russia, then it must be done, and it
must be done now. Otherwise put In will keep driving
the war forward wider and deeper.
Speaker 2 (07:10):
Ukraine's Watamus Zelenski, speaking there at the UN General Assembly.
Trump's shift on the country's chances of victory was hailed
by officials in Kiev and Europe, but the President has
offered no new US measures to support Ukraine. Privately, officials
are more concerned it puts the responsibility onto Europe to act.
(07:31):
Those are our top stories for you this morning. Let's
think about the markets then, stop Futures for Europe are
down a tenth of one percent. S and P five hundred,
and now is that EMAILI futures though are higher despite
the drops that we saw on War Street yesterday. The
S and P five hundred down one and a half percent,
the Hangkseng Tech index this morning jumping almost two percent,
CEUSI three hundred index almost one percent higher, TENNY Treasury
(07:55):
yields easier basis point to four fourteen. And you also
have the dollar this morning on the Bloomberg Dollar Spot
Index down by about a tenth of one percent. Of
those are the markets right now. In a moment, we're
going to bring you more on the news that HSBC
says it's used a quantum processor to vastly improve bond
(08:15):
trading as a trial result. But let's discuss it, and
also why there's a growing standoff between the UK government
and global farmer giants over medicine prices. Before we get
to that, though, another story caught my eye Disney Jimmy
Kimmel the issue of free speech in the United States.
So Bloomberg's Beth Cohen has an opinion column out that
(08:36):
I just thought was really interesting because it detects a
shift in the balance of risks for corporate leaders, which
I thought was very fascinating. The only other person with
more on the line, maybe than Kimmel returning to the
screens this week was Disney's CEO Bob Iiger, Beth Courh
writing that he was the one who sidelined Kimmel, then
(08:56):
he was the one who brought him back because of
a backlash. Figer had been a strong critic of President
Trump and the Trump administration during the president's first term.
Then when he returned to office, rather than sort of
standing his ground, Eiger cut back on Disney's de efforts.
But then the backlash about canceling Jimmy Kimmel has Iger
(09:18):
really under pressure again. Trump's also threatening to sue ABC.
But as Beth Carrot explains, Eiger's decision to reinstate Kimmel
is a sign that companies are realizing that perhaps they
need to find their redlines and push back against the
Trump administration. I thought this was interesting simply for the
discussion around trends and what's going on with the Trump
(09:40):
administration and how corporate America is thinking about it. I
think it also has kind of global ramifications. But I'm
going to put a link to Beth Cawrott's opinion piece
in our show notes for you can have a think
about it. Whatever your view on the subject, I think
it was an interesting discussion. Now, HSBC says that it
has achieved a break deploying quantum computing and financial markets
(10:03):
using IBM's Heron quantum processor. Joining me now to discuss this,
bilion boxed Tia ad a Bio. Good morning.
Speaker 3 (10:09):
Look.
Speaker 2 (10:10):
I to even understand this story too. I think you
have to wrap your mind around what quantum computing actually is.
Can you just give us an idea of why people
are just so excited about this?
Speaker 7 (10:21):
Yeah? Well, I mean just a quick breakdown. Quantum computing
is essentially computing that harnesses the power of quantum physics,
and that's a series of core principles that are only
true at a quantum level, so very different to the
assumptions that we see in classical physics. And just like
the differences between quantum and classical physics, quantum and SUPERCC
(10:43):
computers also operate differently, so unlike the computers that we
have now at power your laptop, your phone. Quantum computers
do their calculations in parallel, and that's key because they
don't try and find answers one step at a time.
They use quantum bits to simultate solve those problems. So
a practical example for you, if you asked a supercomputer,
(11:05):
perhaps to solve a maze, it would basically explore every
single possibility one at a time, so it would eliminate
the ones that don't work before eventually finding the solution.
And that's a process which, depending on how big the
maze is, could take weeks or even years. But with
a quantum computer, it compares and considers all of the
possibilities at once, so in theory, it gets to the
(11:26):
answer much quicker. And that's why people are so excited
about what HSBC says they've done. They've said they've figured
out how to apply this to financial services, So what.
Speaker 3 (11:36):
Have they actually achieved?
Speaker 2 (11:38):
And you know how easy would it be to reproduce this.
Speaker 7 (11:41):
While they're saying that their test show early indicators that
quantum computing can be used to improve trading performance. So
it wasn't based on live trading. It was a trial,
but in collaboration with IBM, they've shown a thirty four
percent improvement in predicting how likely a bond is to
(12:01):
trade at a given price point. But this is really
significant because it's the first time that any bank has
used real trades to demonstrate what quantum computing can do.
To date, we've seen it used mostly within the confines
of academic research or by specialist tech firms. So this
is an important development according to HSBC.
Speaker 2 (12:23):
Yeah, and so that's why you've got them talking about
a sput Nick moment.
Speaker 3 (12:27):
Why is that phrase important?
Speaker 2 (12:28):
It basically it unleashed the competition between Russia and the US,
you know, to get to space, basically created NASA. So
that's why it's kind of maybe seeing a big galvanizing
effect in terms of the financial titans. Then, who are
already putting a lot of money into this area, What
are they doing and then what could we see coming
next potentially?
Speaker 7 (12:49):
Yeah, So really, up until this point, it's been tech
firms that have been really driving the development in this space,
but we are seeing financial services providers begin to invest
as well. So the likes of JP Morgan, Goldman, Sachs
City Group, they're all exploring the area and I think
they're definitely very interested in the potential benefits, and as
I mentioned, they're really key not to let competitors get
(13:12):
ahead of them. But in terms of the payout actually
from this angles, there's some research from McKinsey that says
revenue from quantum computing could surge as much as seventy
two billion dollars in a decade from about four billion
last year, and that's going to be fueled by developments
in industries such as chemicals, life sciences, and finance. So
(13:33):
there's definitely this idea that, as we see so often
in the sector, that if one Wall Street player is
able to be successful in deploying the technology, there will
be this sort of big snowball effect and others will
really strive to keep up. And that's why some experts
are saying that when quantum computing is adopted on mass
in the financial services sector, it could be explosive. We
(13:56):
could see it come all at once, all of a sudden.
We've already seen Google saying last year that its latest
quantum process as a Winner, has solved a problem in
five minutes that the world's most powerful supercomputers couldn't do
even if they had been working on it since the
universe began to so that's quite a big difference. So
(14:18):
it seems like we could be well on our way
to change in the sector.
Speaker 2 (14:22):
Yeah, that is so fascinating, isn't it. HSBC very enthusiastic
about it, although of course there's still much debate about
a quantum computing what it can do. There are also
issues a bit like with AI on kind of error rates.
But anyway, I think it's a very interesting story to
think about and if you want to understand a bit
more about this mind blowing technology. I do also highly
(14:45):
recommend watching mathematician Hannah Fries bloomberg documentary series on this.
It's called The Future with Hannah Fry, and of course
she made an Emmy Award winning episode called the Quantum
Arms Race. She actually got to go to IBM look
at the research facility. So if you want to have
a view of what this computer actually looks like, Fry
(15:07):
talks about it, she sees it, she explains the technology.
So yeah, you can have a look at that documentary.
I really recommend it highly My thanks to Bloomberg's Tea
and aabio then for taking us through that HSBC quantum
computing story. Stay with us more from Bloomberg Day bakup
coming up after this. Now, in the past month, more
(15:28):
than two billion pounds of investment has been paused or
scrapped here in the UK. Why Well, it's all to
do with pharmaceutical companies who are calling the country the
worst in Europe for drug prices. Now, Patrick Valanced, the
UK's Science Minister, says that the government needs to fix
the commercial relationship, even if it means paying more are
(15:50):
UK politic reporter of James Walcock joins me now to
discuss how bad have relations between the UK government of
the pharmaceutical sector actually come.
Speaker 8 (16:00):
Now, Well, life science is one of the government's eight
growth areas in their industry strategy, So that's where they
think they can actually get serious economic growth if they
pour money. You wouldn't think that if you would look
at some of the comments of pharmaceutical executives in recent weeks.
I mean, Eli Lilly, you just mentioned the UK is
probably the worst in Europe for drug price sig ne
Vatis's UK boss called Britain largely uninvestible. Merk pulled out
(16:25):
a billion in investment just recently in the past two weeks.
Speaker 3 (16:28):
They had already built.
Speaker 8 (16:30):
Their office at King's Cross they will leave it unoccupied.
And then as well as that, you have astra Zenka,
who back in January walked away from forty four hundred
and fifty million, and so there is this massive mismatch
between the UK had genuinely does have a very strong
biotech sector. You look at the likes of astra Zenica,
you look at the likes of GSK got to Smith
Klein and what is going on here is worth saying, Caroline.
(16:55):
A lot of these announcements came right before the US
President state visit and that is something that plays into
this where US tariffs and also NHS drug pricing have
become key sticking points.
Speaker 2 (17:08):
Yeah, and given the political importance, the huge significance of
the NHS for voters in Britain, it's amazing that this
story seems to be flying somewhat under the radar. I
think in the UK, why are the two sides so
far apart?
Speaker 8 (17:25):
Well, on your flying under the radar point, this has
been a slow burn.
Speaker 2 (17:29):
Yeah.
Speaker 3 (17:30):
There are two things.
Speaker 8 (17:31):
There is the firewood, which is UK drug pricing policy,
and there is the spark, which is the US tariff policy. Now,
the drug pricing if you're looking to buy a drug.
The UK assesses on what's called a quoi, which is
how much it will improve your life for how much
of a cost. And in Britain the NHS broadly goes
between about twenty pounds to thirty thousand pounds a year
(17:51):
is a good price. The pharmaceutical sector says, no, no, no,
that should be close to fifty thousand pounds a year.
It's worth saying that Britain's measure has not been adjusted
for inflation in twenty five years. So the drug companies say,
look broadly, most healthcare sort of society organizations around the
world spend about fifteen to twenty percent of their sort
(18:11):
of income a year on drugs. The NHS it's nine percent,
So they go, you're getting a much better deal here
than most others. Now that's the firewood. There is then
the spark. The US has said two things. One is
weighing and threatening task prices on drug imports. Trump has
said as much as two hundred and fifty percent. He's
(18:32):
floated that would be crippling. And for a lot of
these pauses in the UK investment it's in tandement ounts
with US investments, So many are reorientating the resources of
to America. The other is there is talk in the
US of what's called the most Favored Nation policy, which
is where you take the cheapest drug price around the
world and apply it to America and a lot of
these drug companies going well, that would be Britain. And
(18:53):
so unless we get prices higher in the UK, we
are at risk of having to put UK prices onto
the US.
Speaker 3 (19:01):
Take those two together and.
Speaker 8 (19:02):
You give even sort of normally quite mild mannered CEOs
the excuse used language like the sort of things I
just said to you.
Speaker 2 (19:10):
Where does this leave then the public voters and also
the UK economy.
Speaker 8 (19:16):
So after the doctors themselves, the NHS spends its second
largest part of its budget on drugs themselves, about twenty
billion a year, give or take. If you were to
see that start rising, and I will say, there is
an agreement that's part of the drug pricing called the
Voluntary Agreement on Price. It's called VPAG that limits drug
(19:37):
prices to going up about two percent a year to
limit NHS costs. Some drug makers would see it closer
to nineteen percent increases. So you take that twenty billion.
When they announced this for a voluntary agreement that the
government announced it saved fourteen billion, so at the very
least you could see that unwinding, and it comes at
a moment when really the government doesn't really have much
(19:57):
money to spare. It would much rather be platlunk's health
sector budget into the doctors and into productivity rather than
to drugs. However, the standoff has been going on since
the summer, when West Street and the housef You walked
away from drug price negotiations. The comments this morning from
the Science Minister Patrick Valance suggests the government may be
looking to try and resolve that, and he told both
the FT, the BBC and Press that pricing may have
(20:20):
to be an issue.
Speaker 3 (20:21):
So currently it seems like.
Speaker 8 (20:22):
The government are working their way towards increasing drug prices.
Speaker 3 (20:28):
This is Bloomberg Daybreak Europe.
Speaker 9 (20:29):
You're a morning brief on the stories making news from
London to Wall Street and beyond.
Speaker 2 (20:34):
Look for us on your podcast feed every morning on Apple,
Spotify and anywhere else you get your podcasts.
Speaker 9 (20:40):
You can also listen live each morning on London DAB Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 2 (20:46):
Our flagship New York station is also available on your
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Speaker 3 (20:53):
I'm Caroline Hepka and.
Speaker 9 (20:55):
I'm Stephen Carroll. Join us again tomorrow morning for all
the news you need to start your day, right here
on Bloomberg day Break Europe.
Speaker 5 (21:03):
M m
Speaker 8 (21:09):
Mm hmm
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
This is the Bloomberg Daybreakerate podcast. Good Morning, It's Thursday,
the twenty fifth of September in London and Caroline Hepca
coming up today. Is this a spot Nicker moment? HSBC
says it's made a world first breakthrough in quantum computing
for financial markets.
Speaker 3 (00:27):
Not a bubble but the new normal.
Speaker 2 (00:28):
Bank of America says that sky high US stock valuations
may be warranted more than in the past. Plus a
bitter pill for the UK the government offers an olive
branch after pharmaceutical companies publicly condemned the country. Let's start
with the roundup of our top stories. HSBC says that
it has made a breakthrough in quantum computing for trading
(00:52):
using IBM's processor. The lender says it is the first
time real trades have been used at scale to show
the potential benefits of this emerging technology. Bloomberg's Chris Pitt
has the details.
Speaker 1 (01:06):
A Sputnik moment. That's how HSBC's executive in charge of
quantum computing described their successful deployment of the technology in
financial markets. The London headquartered banks said it had used
a heron quantum processor to deliver a thirty four percent
improvement in predicting how likely a bond is to trade
(01:28):
at a given price. HSBC's trial marks the first time
a bank has used real trades at scale to demonstrate
the benefits of quantum computing, which could now lead to
a flurry of activity as financial companies step up efforts
to harness the technology. In London, Chris Pitt Bloomberg Radio.
Speaker 2 (01:51):
Intel has approached Apple about an investment in a bid
to secure its future. Bloomberg understands the two firms have
had early stage talk about working more closely together. Our
US Deals reporter Ryan Gould says an agreement could be
pivotal for Intel.
Speaker 4 (02:08):
This obviously comes on the beck of both the US
government investing in Intel directly one of its largest shareholders,
and also would potentially follow a five billion dollar investment
from both in Nvidia and a two billion dollar investment
from SoftBank. I guess one way to put this all
together is you know Intel is on the.
Speaker 2 (02:29):
Comeback, Bloomberg's Ryan Gould speaking there a deal with Apple
would represent further validation of the chip maker's turnaround efforts,
although it's unlikely that Apple would switch back to Intel
processes in its devices. Shares of Intel rose by six
point four percent to thirty one dollars twenty two on
Wednesday in New York after Bloomberg reported on the discussions.
(02:54):
Strategist at Bank of America are making the case that
sky high valuations in the S and P five hundred
may be appropriate. In a note, the lenders head of
Equity and Quantitative Strategy has said that the higher quality
makeup of the index and the potential for a boom
in sales could justify the pricey levels, adding perhaps we
(03:16):
should anchor to today's multiples as the new normal. The
comments come as the US equity index has taken a
breather in the last forty eight hours, following gains of
more than thirty percent from aprils low. Amy wu Silverman
is the head of Derivatives strategy at RBC.
Speaker 5 (03:34):
Whenever I'm speaking at a relatively large meeting, so you know,
maybe thirty or more investors, everyone's going around that they're
talking about their bearish sentiment. And then if I say
show of hands, who thinks the market is going to
be higher by your in like ninety percent of folks
raise their hands so with the it's a reluctance in
the rally for sure, But then again there's this impulse
(03:55):
to be very concerned about that right tail and feel
like they still have to chase it because they know
that they cannot be left behind.
Speaker 2 (04:03):
Amy wou Silverman speaking there as the S and P
five hundreds twelve month forward price to earnings ratio hit
twenty two point nine this week. Now, that is a
level that has been topped only twice this century, the
other times the dot com bubble and the twenty twenty
pandemic rally. Now, the US has cart tariffs on EU
(04:25):
auto imports to fifteen percent. It's retroactive, so back to
the first of August. It locks in terms of trade
that were struck in a deal almost two months ago.
The move will help to ease tensions with Brussels, with
shares in European car makers arising on the announcement. New
(04:46):
car registrations across Europe also rose by four point seven
percent in August, according to the Continents also lobby the ACEA,
their latest data out today on tariffs. Most other new
rates take effect from September, while exemptions remain for aircraft, pharmaceuticals,
and certain raw materials. Talks continue on steel and aluminium,
(05:11):
where EU exports still face tarifs of up to fifty percent. Meanwhile,
the Trump administration launches investigations into imports of robotics, industrial
machinery and medical devices, setting the stage for fresh duties.
So that's all the news when it comes to the
US and the EU on tariffs. Now Here in the UK,
(05:32):
the Bank of England governor and a key policy maker
publicly disagreed about the rates path ahead, showing the split
at the top of UK monetary policy. Andrew Bailey says
that there is further to go on interest rate cuts
due to the weakening labor market, but then hours later
Megan Green proposed skipping a cut in November due to
(05:53):
fears around high inflation. The divide shows how macroeconomics is
struggling to find easy answers to the trade will or traders. Meanwhile,
see little prospect of the Bank of England moving rates
in either November or December, and they have only one
quarter point reduction fully priced in for twenty twenty six. Last,
(06:14):
the Russia plans to run a budget deficit for a
fifth year as the cost of its war with Ukraine
mounts to the Finance Ministry projects a fiscal gap equivalent
to about fifty five billion dollars in twenty twenty six.
War spending is climbing while all in gas revenue is falling,
pushing Moscow to raise value added tax rates and to
(06:34):
borrow more. This comes as President Donald Trump is pointing
to those strains, saying the Russian economy is weakening. He says,
with EU support, Ukraine is in a position to win
back all the territory at lost. Since twenty twenty two,
Ukrainian President of Losomierzelinsky has urged allies to take stronger
action against Russia.
Speaker 6 (06:55):
If it takes weapons to do it, if it takes
pressure on Russia, then it must be done, and it
must be done now. Otherwise put In will keep driving
the war forward wider and deeper.
Speaker 2 (07:10):
Ukraine's Watamus Zelenski, speaking there at the UN General Assembly.
Trump's shift on the country's chances of victory was hailed
by officials in Kiev and Europe, but the President has
offered no new US measures to support Ukraine. Privately, officials
are more concerned it puts the responsibility onto Europe to act.
(07:31):
Those are our top stories for you this morning. Let's
think about the markets then, stop Futures for Europe are
down a tenth of one percent. S and P five hundred,
and now is that EMAILI futures though are higher despite
the drops that we saw on War Street yesterday. The
S and P five hundred down one and a half percent,
the Hangkseng Tech index this morning jumping almost two percent,
CEUSI three hundred index almost one percent higher, TENNY Treasury
(07:55):
yields easier basis point to four fourteen. And you also
have the dollar this morning on the Bloomberg Dollar Spot
Index down by about a tenth of one percent. Of
those are the markets right now. In a moment, we're
going to bring you more on the news that HSBC
says it's used a quantum processor to vastly improve bond
(08:15):
trading as a trial result. But let's discuss it, and
also why there's a growing standoff between the UK government
and global farmer giants over medicine prices. Before we get
to that, though, another story caught my eye Disney Jimmy
Kimmel the issue of free speech in the United States.
So Bloomberg's Beth Cohen has an opinion column out that
(08:36):
I just thought was really interesting because it detects a
shift in the balance of risks for corporate leaders, which
I thought was very fascinating. The only other person with
more on the line, maybe than Kimmel returning to the
screens this week was Disney's CEO Bob Iiger, Beth Courh
writing that he was the one who sidelined Kimmel, then
(08:56):
he was the one who brought him back because of
a backlash. Figer had been a strong critic of President
Trump and the Trump administration during the president's first term.
Then when he returned to office, rather than sort of
standing his ground, Eiger cut back on Disney's de efforts.
But then the backlash about canceling Jimmy Kimmel has Iger
(09:18):
really under pressure again. Trump's also threatening to sue ABC.
But as Beth Carrot explains, Eiger's decision to reinstate Kimmel
is a sign that companies are realizing that perhaps they
need to find their redlines and push back against the
Trump administration. I thought this was interesting simply for the
discussion around trends and what's going on with the Trump
(09:40):
administration and how corporate America is thinking about it. I
think it also has kind of global ramifications. But I'm
going to put a link to Beth Cawrott's opinion piece
in our show notes for you can have a think
about it. Whatever your view on the subject, I think
it was an interesting discussion. Now, HSBC says that it
has achieved a break deploying quantum computing and financial markets
(10:03):
using IBM's Heron quantum processor. Joining me now to discuss this,
bilion boxed Tia ad a Bio. Good morning.
Speaker 3 (10:09):
Look.
Speaker 2 (10:10):
I to even understand this story too. I think you
have to wrap your mind around what quantum computing actually is.
Can you just give us an idea of why people
are just so excited about this?
Speaker 7 (10:21):
Yeah? Well, I mean just a quick breakdown. Quantum computing
is essentially computing that harnesses the power of quantum physics,
and that's a series of core principles that are only
true at a quantum level, so very different to the
assumptions that we see in classical physics. And just like
the differences between quantum and classical physics, quantum and SUPERCC
(10:43):
computers also operate differently, so unlike the computers that we
have now at power your laptop, your phone. Quantum computers
do their calculations in parallel, and that's key because they
don't try and find answers one step at a time.
They use quantum bits to simultate solve those problems. So
a practical example for you, if you asked a supercomputer,
(11:05):
perhaps to solve a maze, it would basically explore every
single possibility one at a time, so it would eliminate
the ones that don't work before eventually finding the solution.
And that's a process which, depending on how big the
maze is, could take weeks or even years. But with
a quantum computer, it compares and considers all of the
possibilities at once, so in theory, it gets to the
(11:26):
answer much quicker. And that's why people are so excited
about what HSBC says they've done. They've said they've figured
out how to apply this to financial services, So what.
Speaker 3 (11:36):
Have they actually achieved?
Speaker 2 (11:38):
And you know how easy would it be to reproduce this.
Speaker 7 (11:41):
While they're saying that their test show early indicators that
quantum computing can be used to improve trading performance. So
it wasn't based on live trading. It was a trial,
but in collaboration with IBM, they've shown a thirty four
percent improvement in predicting how likely a bond is to
(12:01):
trade at a given price point. But this is really
significant because it's the first time that any bank has
used real trades to demonstrate what quantum computing can do.
To date, we've seen it used mostly within the confines
of academic research or by specialist tech firms. So this
is an important development according to HSBC.
Speaker 2 (12:23):
Yeah, and so that's why you've got them talking about
a sput Nick moment.
Speaker 3 (12:27):
Why is that phrase important?
Speaker 2 (12:28):
It basically it unleashed the competition between Russia and the US,
you know, to get to space, basically created NASA. So
that's why it's kind of maybe seeing a big galvanizing
effect in terms of the financial titans. Then, who are
already putting a lot of money into this area, What
are they doing and then what could we see coming
next potentially?
Speaker 7 (12:49):
Yeah, So really, up until this point, it's been tech
firms that have been really driving the development in this space,
but we are seeing financial services providers begin to invest
as well. So the likes of JP Morgan, Goldman, Sachs
City Group, they're all exploring the area and I think
they're definitely very interested in the potential benefits, and as
I mentioned, they're really key not to let competitors get
(13:12):
ahead of them. But in terms of the payout actually
from this angles, there's some research from McKinsey that says
revenue from quantum computing could surge as much as seventy
two billion dollars in a decade from about four billion
last year, and that's going to be fueled by developments
in industries such as chemicals, life sciences, and finance. So
(13:33):
there's definitely this idea that, as we see so often
in the sector, that if one Wall Street player is
able to be successful in deploying the technology, there will
be this sort of big snowball effect and others will
really strive to keep up. And that's why some experts
are saying that when quantum computing is adopted on mass
in the financial services sector, it could be explosive. We
(13:56):
could see it come all at once, all of a sudden.
We've already seen Google saying last year that its latest
quantum process as a Winner, has solved a problem in
five minutes that the world's most powerful supercomputers couldn't do
even if they had been working on it since the
universe began to so that's quite a big difference. So
(14:18):
it seems like we could be well on our way
to change in the sector.
Speaker 2 (14:22):
Yeah, that is so fascinating, isn't it. HSBC very enthusiastic
about it, although of course there's still much debate about
a quantum computing what it can do. There are also
issues a bit like with AI on kind of error rates.
But anyway, I think it's a very interesting story to
think about and if you want to understand a bit
more about this mind blowing technology. I do also highly
(14:45):
recommend watching mathematician Hannah Fries bloomberg documentary series on this.
It's called The Future with Hannah Fry, and of course
she made an Emmy Award winning episode called the Quantum
Arms Race. She actually got to go to IBM look
at the research facility. So if you want to have
a view of what this computer actually looks like, Fry
(15:07):
talks about it, she sees it, she explains the technology.
So yeah, you can have a look at that documentary.
I really recommend it highly My thanks to Bloomberg's Tea
and aabio then for taking us through that HSBC quantum
computing story. Stay with us more from Bloomberg Day bakup
coming up after this. Now, in the past month, more
(15:28):
than two billion pounds of investment has been paused or
scrapped here in the UK. Why Well, it's all to
do with pharmaceutical companies who are calling the country the
worst in Europe for drug prices. Now, Patrick Valanced, the
UK's Science Minister, says that the government needs to fix
the commercial relationship, even if it means paying more are
(15:50):
UK politic reporter of James Walcock joins me now to
discuss how bad have relations between the UK government of
the pharmaceutical sector actually come.
Speaker 8 (16:00):
Now, Well, life science is one of the government's eight
growth areas in their industry strategy, So that's where they
think they can actually get serious economic growth if they
pour money. You wouldn't think that if you would look
at some of the comments of pharmaceutical executives in recent weeks.
I mean, Eli Lilly, you just mentioned the UK is
probably the worst in Europe for drug price sig ne
Vatis's UK boss called Britain largely uninvestible. Merk pulled out
(16:25):
a billion in investment just recently in the past two weeks.
Speaker 3 (16:28):
They had already built.
Speaker 8 (16:30):
Their office at King's Cross they will leave it unoccupied.
And then as well as that, you have astra Zenka,
who back in January walked away from forty four hundred
and fifty million, and so there is this massive mismatch
between the UK had genuinely does have a very strong
biotech sector. You look at the likes of astra Zenica,
you look at the likes of GSK got to Smith
Klein and what is going on here is worth saying, Caroline.
(16:55):
A lot of these announcements came right before the US
President state visit and that is something that plays into
this where US tariffs and also NHS drug pricing have
become key sticking points.
Speaker 2 (17:08):
Yeah, and given the political importance, the huge significance of
the NHS for voters in Britain, it's amazing that this
story seems to be flying somewhat under the radar. I
think in the UK, why are the two sides so
far apart?
Speaker 8 (17:25):
Well, on your flying under the radar point, this has
been a slow burn.
Speaker 2 (17:29):
Yeah.
Speaker 3 (17:30):
There are two things.
Speaker 8 (17:31):
There is the firewood, which is UK drug pricing policy,
and there is the spark, which is the US tariff policy. Now,
the drug pricing if you're looking to buy a drug.
The UK assesses on what's called a quoi, which is
how much it will improve your life for how much
of a cost. And in Britain the NHS broadly goes
between about twenty pounds to thirty thousand pounds a year
(17:51):
is a good price. The pharmaceutical sector says, no, no, no,
that should be close to fifty thousand pounds a year.
It's worth saying that Britain's measure has not been adjusted
for inflation in twenty five years. So the drug companies say,
look broadly, most healthcare sort of society organizations around the
world spend about fifteen to twenty percent of their sort
(18:11):
of income a year on drugs. The NHS it's nine percent,
So they go, you're getting a much better deal here
than most others. Now that's the firewood. There is then
the spark. The US has said two things. One is
weighing and threatening task prices on drug imports. Trump has
said as much as two hundred and fifty percent. He's
(18:32):
floated that would be crippling. And for a lot of
these pauses in the UK investment it's in tandement ounts
with US investments, So many are reorientating the resources of
to America. The other is there is talk in the
US of what's called the most Favored Nation policy, which
is where you take the cheapest drug price around the
world and apply it to America and a lot of
these drug companies going well, that would be Britain. And
(18:53):
so unless we get prices higher in the UK, we
are at risk of having to put UK prices onto
the US.
Speaker 3 (19:01):
Take those two together and.
Speaker 8 (19:02):
You give even sort of normally quite mild mannered CEOs
the excuse used language like the sort of things I
just said to you.
Speaker 2 (19:10):
Where does this leave then the public voters and also
the UK economy.
Speaker 8 (19:16):
So after the doctors themselves, the NHS spends its second
largest part of its budget on drugs themselves, about twenty
billion a year, give or take. If you were to
see that start rising, and I will say, there is
an agreement that's part of the drug pricing called the
Voluntary Agreement on Price. It's called VPAG that limits drug
(19:37):
prices to going up about two percent a year to
limit NHS costs. Some drug makers would see it closer
to nineteen percent increases. So you take that twenty billion.
When they announced this for a voluntary agreement that the
government announced it saved fourteen billion, so at the very
least you could see that unwinding, and it comes at
a moment when really the government doesn't really have much
(19:57):
money to spare. It would much rather be platlunk's health
sector budget into the doctors and into productivity rather than
to drugs. However, the standoff has been going on since
the summer, when West Street and the housef You walked
away from drug price negotiations. The comments this morning from
the Science Minister Patrick Valance suggests the government may be
looking to try and resolve that, and he told both
the FT, the BBC and Press that pricing may have
(20:20):
to be an issue.
Speaker 3 (20:21):
So currently it seems like.
Speaker 8 (20:22):
The government are working their way towards increasing drug prices.
Speaker 3 (20:28):
This is Bloomberg Daybreak Europe.
Speaker 9 (20:29):
You're a morning brief on the stories making news from
London to Wall Street and beyond.
Speaker 2 (20:34):
Look for us on your podcast feed every morning on Apple,
Spotify and anywhere else you get your podcasts.
Speaker 9 (20:40):
You can also listen live each morning on London DAB Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 2 (20:46):
Our flagship New York station is also available on your
Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty.
Speaker 3 (20:53):
I'm Caroline Hepka and.
Speaker 9 (20:55):
I'm Stephen Carroll. Join us again tomorrow morning for all
the news you need to start your day, right here
on Bloomberg day Break Europe.
Speaker 5 (21:03):
M m
Speaker 8 (21:09):
Mm hmm
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