July 31, 2025 • 20 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) Meta is taking advantage of its lucrative advertising business and stepping up spending next year, with executives saying now is the time to seize on investment opportunities in artificial intelligence.
(2) Microsoft said it will spend more than $30 billion in the current quarter to build out the data centers powering its artificial intelligence services.
(3) Standard Chartered announced a fresh $1.3 billion share buyback as it reported second-quarter earnings that beat expectations amid the tumult caused by US President Donald Trump’s tariff war.
(4) Societe Generale increased the amount of money it wants to return to investors and improved its profitability guidance, highlighting how it has turned a corner under Chief Executive Officer Slawomir Krupa.
(5) Housing developers are claiming that the UK's tough post-Grenfell checks are making it too complicated to build new high-rise buildings, worsening its housing shortage.
(6) US President Donald Trump announced a trade agreement with South Korea that will impose a 15% tariff on imports, while issuing a barrage of new tariff announcements.
(7) The global copper market is reeling from President Trump's 50% tariff on imports of the metal as the president exempted key products - including refined metal - from the levy.
Podcast Conversation: Wharton Experiment Finds ‘Dumb’ AI Bots Collude to Rig Markets
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Transcript
Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
This is the Bloomberg daybaq At podcast. Good Morning, It's Thursday,
the thirty first of July. I'm Caroline Hepkeitt in London and.
Speaker 1 (00:16):
I'm Stephen Carroll. Coming up today. Keeping things magnificent, Meta
and Microsoft deliver bumper results as big tech powers stock
market gains.
Speaker 2 (00:25):
The Fed keeps interest rates steady, but Powell's Committee sees
dissent from not one but two FED governors for the
first time since nineteen ninety three.
Speaker 1 (00:36):
Plus an exclusive report on why developers say safety regulations
imposed after the Grenfell terror tragedy in the UK have
made it too complicated to build new high rises in
the country.
Speaker 3 (00:48):
Let's start with a roundup of our top stories.
Speaker 1 (00:51):
Meta is taking advantage of its lucrative advertising business to
spend more aggressively on artificial intelligence after it reported second
quarter earn that beat Wall Street estimates. The Silicon Valley
Giant forecast third quarter sales that could go higher than
fifty billion dollars and raised its twenty twenty five capital
spending forecast up to up to seventy two billion dollars.
(01:13):
Here's more from Bloomberg Technology anchor Caroline Hyde, the.
Speaker 4 (01:16):
Generative AI is making the advertising more easy to use.
Speaker 5 (01:20):
Marketeers want to lean into it.
Speaker 4 (01:22):
And one you're seeing the pricing of those ads going
up by about nine percent.
Speaker 5 (01:25):
They're able to charge more and more broadly.
Speaker 4 (01:27):
And they're also trying to articulate what does the superintelligence
labs mean for them. Yes, they've been spending in capex,
but boy, they've been spending big on talent. We've heard
about the two hundred million dollar pay packages, the amount
they spent on scale AI.
Speaker 5 (01:38):
But all of this is about making it.
Speaker 1 (01:39):
More personable Bloomberg's Caroline Hyde. There as Meta executives including
Mark Zuckerberg, said it's AI technology is already producing quote
meaningful revenue.
Speaker 2 (01:49):
Microsoft is expected to reach a four trillion dollar market
cap after it reported quarterly earnings that beat Wall Street estimates.
The big text Allotz would be only the second company
to hit that milestone, after the chip maker en Vidia
at the beginning of July. The jump in shares was
fueled by a thirty nine percent increase in revenue from
(02:12):
Microsoft's Azure cloud computing unit. Dan Ice, Global, head of
Tech research at web Bush Securities, shared investors optimism.
Speaker 5 (02:23):
Massive beat on cloud.
Speaker 6 (02:26):
You've see more and more of these use cases, these hyperscalers,
those are the best indicators that just should where the
next spending in AI is gone.
Speaker 5 (02:33):
And that's why right now, if you're a tag.
Speaker 1 (02:35):
Bear, you're in hibernation, moved in that cave, and you
can't find AI in the spreadsheet.
Speaker 2 (02:40):
Dan, I'm speaking there, the global head of Tech research
at Webb Bush Securities. After the Microsoft CFO, Amy Hurd,
told analysts that she expects to see full year revenue
growth in the double digits.
Speaker 1 (02:53):
Standard Charters reported expectation, beating Second quarter earnings adjusted pre
tax profit came in at two point four billion, beating
estimates of one point nine billion. The lender also announceday
Fresh one point three billion dollars share buyback as part
of a plan to return at least eight billion to
shareholders between twenty twenty four and twenty twenty six. Shares
(03:14):
and Standard chartered up slightly after the break in. Hong Kong.
Speaker 2 (03:17):
Sausage is General raised it's profit guidance and announced a
one billion euro buyback in a show of strength for
the bank's turnaround. Sockgen says that it expects return on
tangible equity to be nine percent this year. That's above
the eight percent it had previously full costs, The French
lender has been cutting costs and getting rid of poor
(03:37):
assets in a bid to change its fortunes. It shares
have had a seller start to the year, rising ninety
two percent as investors see a return to profit.
Speaker 1 (03:48):
The Fed Schargeronne pals as interest rates are in the
right place, as the Central Bank opted to hold borrowing
cost steady for a fifth straight meeting. However, for the
first time in over thirty years, two Federal Reserve governors
from the majority to call for a rate cut, Michelle
Bowman and Christopher Waller, dissented in favor of a cust
highlight and growing divisions within the board. Speaking to reporters
(04:10):
after the decision, Chair Powell addressed, the vote splits.
Speaker 6 (04:14):
What you want from everybody and also from a the
center is a clear explanation of what you're thinking is
and what are the arguments you're making, and that's we.
Speaker 3 (04:24):
Had that today.
Speaker 6 (04:24):
So I think basically this was quite a good meeting
all around the table where people were, you know, thought
carefully about this and put their positions out there.
Speaker 1 (04:34):
The nine to two fo MC vote split comes as
intrigue grows over who will replace Powell once his term ends.
As President Trump continues to pressure him to cut rate
cut rates. Meanwhile, traders have paired bets for immediate rate cuts.
Markets are now pricing in around a fifty to fifty
chance of a reduction at the next meeting in September.
Speaker 2 (04:54):
Well, US President Donald Trump has reached a trade deal
with South Korea, will issuing up bart of new tariff announcements.
The US will impose a fifteen percent one sided levey
on imports from South Korea, one of the world's largest exporters.
President Trump also said that he would start applying taxes
to small packages from all countries coming into the US,
(05:17):
and would up tariffs on India to twenty five percent.
Speaker 7 (05:22):
They don't do very much business in terms of business
with US. They sell a lot to us, but we
don't buy from them. You know why, because the tariff
is so high. They have one of the highest tariffs
in the world. Now they're willing to cut it very substantially,
but we'll see what happens. We're talking to Indian now,
we'll see what happens. And it doesn't matter too much
whether we have a deal or whether we charge them
a certain tariff. But you'll know at the end of
(05:44):
this week.
Speaker 3 (05:45):
Now, that was US President Donald Trump.
Speaker 2 (05:47):
Many of the US leaders negotiations are going down to
the wire his self imposed deadline for trade deals that
comes tomorrow. Malaysia, Thailand, and Cambodia are expected to formally
announce steals ahead of that. The US also delayed the
implementation of a fifty percent tariff on Brazil's exports and
exempted a large number of goods though from that levee.
Speaker 1 (06:11):
The global copper market is reeling from President Trump's fifty
percent tariff on imports of the metal, as the President
exempted key products, including refined metal, from the levee. The
unexpected move triggered a record plunge for US prices, hurting
traders who tried to anticipate the changes by hurrying the
metal into the US. Copper futures on comics in New
(06:31):
York plunged by more than twenty percent, the most ever,
as traders reacted to a move that recalibrates the value
of metal in the US versus the rest of the world.
According to a White House statement, a semi finished products
such as pipes and copper intensive goods like cables will
now be subject to the new tariffs.
Speaker 2 (06:50):
Those are our top stories for you this morning. Let's
look at the markets. So STOP futures then for the
US are absolutely surging on the back of a bomb earnings.
Microsoft shares gained a percent after as Meta up more
than eleven percent, and nasdag stop future at the moment
to hire by one point four percent. European stock Future
(07:11):
is also up by a quarter of one percent. South
Korean stocks down this morning alongside Indian shares because of
those tariff announcements. Copper price differentials between the Europe and
the US have really collapsed, China's factory activity worsening in July.
You've also got CSI three hundred stocks down by one
percent on the back of that, and then after the
(07:32):
FED decision to hold interest rates steady, two year treasury
notes were seven basis points high yesterday, although little changed
this morning. So that's a look at where we are
on the markets.
Speaker 1 (07:42):
In a moment, will bring you more on the market
reaction to those megacap tech earnings and the latest trade headlines,
plus why higher rise building projects are facing increasing delays
in the UK put in the story that we've been
reading this morning. This is about artificial intelligence and its
use in financial markets, and a study by researchers at
the Wharton School of Finance have been looking at a
(08:05):
fundamental flaw is that essentially, even when humans aren't involved,
AI bots are ganging up together.
Speaker 2 (08:12):
Well, this is the initial conclusion of this researcher. It's
a trio of researchers at Wharton, including finance professor Ith Goldstein.
So they carried out a simulation of real world markets
and trading. Obviously that's difficult, but they did this with
artificial intelligence bots or traders. Now, the conclusions of this
(08:32):
are that instead of battling it out for returns, the
AI traders actually ended up fixing prices, they hoarded profits,
and they sidelined human traders, i e. The kind of
worst nightmare for regulators. And this has got a lot
of attention from asset managers, from regulators, even though the
research doesn't say that AI collusion is happening in the
(08:56):
real world, even though a lot of traders are already
using But yeah, it's a really kind of fascinating view.
Speaker 1 (09:03):
My favorite part of this is that Essentially, the AI
figured out that once they've done a good enough job,
they could just give up and stop looking for new strategies,
which sounds to be fair very familiar. So I think
that this is, you know the fact that I almost
respect the AI from basically saying I've done enough.
Speaker 3 (09:19):
Actually, yeah, I've made enough money. That's good enough for me.
Speaker 2 (09:22):
Well, my addition to this is that I really want
to shout out to Wharton for their YouTube channel because
I got to actually listen and we wrote a long
piece about it which is very interesting. But we also
got to hear from the professor himself on the Wharton's
YouTube channel.
Speaker 3 (09:39):
So yeah, so shout out to them.
Speaker 1 (09:40):
I think we'll put a link to our story by
lu Wang in our podcast show notes. But let's turn
to the markets now and investors navigating a barrage of headlines,
central bank decisions, tariff agreements, and those big corporate earnings
as well. We've got our markets live strat as Mark
Cranfield with us for more on all of this.
Speaker 3 (09:56):
Mark, good to talk to you.
Speaker 1 (09:57):
Let's start them with those results shares matter and Microsoft
surging after hours on Wall Street and that's really rippling
across markets elsewhere too.
Speaker 8 (10:06):
It's kind of reassuring for global investors. They're a little
bit uncertain about which way tariffs are going to go,
how quickly before they make a serious impact on global growth.
There's been all kinds of warnings, and yet these huge
companies continue to make tremendous profits. We saw it also
from Alphabet last week as well, and they post very
(10:27):
positive outlooks as well. So there's a kind of reassuring
factor to equity investors around the world that companies can
continue to do extremely well even under these uncertain conditions.
And they still think that the AI story is so
big and so profitable that it can override whatever uncertainty
you see in terms of central bank policy, government policy,
(10:48):
wherever you see there's a lack of clarity in different
parts of the investing landscape. Don't need to worry because
AI will overwhelm all of that. That was a particular
part of the meta story. They see it's time to
even increase their investment into AI because the opportunity there
is so big. So that's something that investors can look
(11:09):
at and they can decide, yes, that's somewhere where we
can put our money because it's tangible and we can
see the results reasonably quickly, and that even though we're
not sure about some of the other parts of the
global world.
Speaker 2 (11:22):
Yeah, maybe justifying the record highs in terms of US
stocks that we've seen recently, I suppose would be the argument.
But you mentioned the uncertainty about policy. So the FED
held interest rates steady. Powell shrugged off all the pressure
from the White House. But we mentioned that two FED
governors dissented, and that is highly unusual, so we're next
to the FED.
Speaker 8 (11:43):
Yeah, governor's dissenting is it's been a couple of decades
since that, but it's not unusual to have dissenters in general.
We've had FED people, voters on the day going against
the FED decision, some of the regional people. So it's
a bit of a nuance really, as won't be too
excited the fact it happens to be governors, And obviously
(12:03):
they would also be looking at a bit of a
political aspect to it as well, considering that there's been
so much talk about who might take over from Jerome
Power and that at least one of the candidates could
be somebody who's currently on the FED board at the moment.
So there's a pinch of salt with all of that.
What it does do is it pushes back pretty hard
(12:24):
against the idea that September was. At one stage we
were thinking it was almost a shoe in for an
interest rate cut in September. That's certainly not the case.
Now is becoming a bit more of a coin toss,
And even by the time we get there, if Jerome
Power hasn't really changed his narrative at all, we might
even be thinking that it's going to be another hold
in September as well, quite a way before we get
(12:44):
to that decision. But certainly his press conference in particular,
he wasn't like a man who's there's certainly no need
to panic. It doesn't sound as though as any rush
wants a lot more time to assess the data. And
if he looks at the stock market, for example, as
an indicator of what people think about the US economy,
then there's certainly no rush to lower interest rates on
that basis.
Speaker 1 (13:05):
And perhaps that's also factoring into the thinking around trade
as well. We've had another raft of tariff announcements fifteen
percent for South Korea, twenty five percent are for India,
fifty percent for Brazil with some exemptions though as well.
I mean, how are markets taking this latest deluge of
trade headlines.
Speaker 8 (13:23):
Generally in their stride?
Speaker 7 (13:25):
Really?
Speaker 8 (13:26):
I think it's partly because there's just a lack of details.
Every single deal that's been wheeled out this week really
has been very scarce on hard details. There's a lot
of exemptions as well for people to get their head around.
There's nothing apart from some of the headline numbers. There's
not too much that investors can say that that well,
that really applies to this transaction or that transaction. So
(13:48):
a lot of head scratching on what it really means.
And when they look at the US markets the way
that equity are performing so strongly there, they'll think, well,
if America among companies can continue to perform as strongly
as that, then that's a pretty good indicator for what
we can expect in the rest of the world. So
not definitely not the scare mongering that we had at
the beginning of the year when people were very concerned
(14:10):
where we were going with this. It doesn't mean to
say it's a non event, but the bar is much
higher for making people worried that tarists are really going
to bring the world to a grinding halt. It doesn't
look like that way considering the people are investing their money.
It doesn't look as though people are really scared about
the outlook for the global economy.
Speaker 1 (14:28):
Okay, Mark Cranfield, our Markets Live Trusts, thank you very
much for joining us, and as we're thinking about today's
European trading session as well. Just to mention the other
banking results we've had out from Europe, a set of
beats from BBVA significantly higher four hundred million is the
beat on their profit number for the second quarter, coming
in at two point seventy five billion I also higher
than expected. And in France Credi Agricola also beating by
(14:51):
around four hundred million euros as well their net income
two point thirty nine billion as well. So some positive
reports out of those big European banks too.
Speaker 2 (15:00):
Now to Britain's housing crisis. Developers in the UK say
that safety regulations imposed after the Grenfell Tower tragedy in
London have made it too complicated to build new high
rise buildings. Twining intent has been in both Global Business.
Reporter Jennifer Creary on this story, Jennifer, good morning, to
what exactly is the problem and how did it come about?
(15:21):
According to the developers.
Speaker 9 (15:23):
After the Grenville tower fire in twenty seventeen, so that's
the tragedy where seventy two people died in a tower
block laze in London, the government brought in a bunch
of reforms the high rise construction because basically one of
the key issues was low adherents and enforcement to existing
safety regulations. On top of that, there wasn't really a
single authority overseeing the issue.
Speaker 5 (15:44):
Now.
Speaker 9 (15:45):
These reforms, which came into effect in October twenty twenty three,
were meant to ensure that developers passed certain checkpoints before
construction even begins, you know, for example, giving detail plans
for viral arm placements, exits etc.
Speaker 5 (15:59):
The problem is, under this new regime is just.
Speaker 9 (16:01):
So much red tape and so much confusion over what's
required from applicants that they're simply taking too long.
Speaker 5 (16:07):
So there's essentially a backlock.
Speaker 9 (16:08):
Now. One of the private equity firms we spoke to
bought a plot of land in Battersea in twenty twenty
one for thirty one million pounds. To this day they're
still waiting for permission to build, and you know, when
we spoke to the regulator, they told us that the
average weight time for approval to begin building these new
builds of twenty one weeks. But we've interviewed companies that
are waiting up to a year for approval and that's
(16:29):
simply too long for them.
Speaker 1 (16:31):
How dire is the situation at the moment for these
developers who are trying to build, Yeah.
Speaker 5 (16:38):
I mean for them, the.
Speaker 9 (16:41):
Longer they wait, you know, the higher the risks there
is of lower returns. So either they'll have to shoulder
you know, higher financing costs via a higher interest rates.
There's inflation, demand could fall, so you can see the
incentive to build very quickly. We spoke to one of
the UK's largest housebuilders who said that their firm is
waiting for roughly five hundred of their homes to be
(17:02):
signed off. Now that's going to make it harder for
builders to secure construction loans from banks because lenders now
have to include year's worth of deferred interest payments to
their calculations. So the situation is getting pretty die for them.
Speaker 2 (17:15):
Yeah, And the backdop to this is the government wants
to build many more homes and wants to see many
more homes being built and London development's actually falling off
a cliff in the last in the latest kind of
the detail's latest numbers twenty twenty three to twenty twenty four.
How are the developers trying to address all of this
(17:36):
and trying to adapt to the new system.
Speaker 3 (17:37):
I mean, what are they thinking about?
Speaker 9 (17:40):
Yeah, so, so parts of the industry are trying to
find loopholes around the new safety regime, so for example,
building new builds that are under eighteen stories so they
don't have to apply for this kind of approval. We've
also spoken to some firms that are shifting away from
residential buildings, looking at of co working spaces things like that.
Speaker 5 (18:00):
Some of them are shifting investments in the middle least.
Speaker 9 (18:03):
We've heard of some companies laying off construction teams because
money is so tight. So the industry is trying to
find a way around this. I think the broader picture
here is, you know, the government needs them to build
homes as well. The government has this ambitious target to
build one point five million new homes by twenty twenty nine.
That's three hundred thousand homes on average per year. That's
(18:24):
a very ambitious target and if these delays continue at
the same rate, that target's getting further and further out
of reach.
Speaker 3 (18:31):
What about the kind of reaction to this.
Speaker 1 (18:35):
Has the government a regulator doing anything to actually address
the issues.
Speaker 9 (18:39):
Yeah, so the regulator acknowledges that there's a problem, you know,
there's no doubt about that. They said that they're trying
to boost staff. We submit in the fo WIRE requests
that showed that they're only about seventy staff leafing through
more than one thousand applications in one month, so you know,
there's a serious crunch in that aspect. But the regulator
is also pushed back. They argue that a lot of
(18:59):
these applications are poor quality, so applicants who you know,
didn't read the fine print or they're not submitting the
right application and the right documents.
Speaker 5 (19:08):
Their argument is, you know, how.
Speaker 9 (19:10):
Can they build safe homes when they can't fill in
an application like this. Another point that the regulator made
was that thirty thousand out of the one point five
million homes the government wants to build are currently going
through this process, and that's only a very small proportion
of the overall targets, about two percent. I think if
we step back You know, the people that we've spoken
(19:30):
to in the industry, they are broadly in support of
these safety reforms. You know, no one wants a repeat
of the Grenville tragedy, but the issue is how do
they bring about these reforms in a system that's already
understrained and struggling to meet demand.
Speaker 1 (19:45):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 2 (19:51):
Look for us on your podcast feed every morning, on Apples, Spotify,
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Speaker 1 (19:58):
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Speaker 3 (20:11):
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Speaker 1 (20:12):
I'm Stephen Carol. Join us again tomorrow morning for all
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on Bloomberg Daybreak Europe.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
This is the Bloomberg daybaq At podcast. Good Morning, It's Thursday,
the thirty first of July. I'm Caroline Hepkeitt in London and.
Speaker 1 (00:16):
I'm Stephen Carroll. Coming up today. Keeping things magnificent, Meta
and Microsoft deliver bumper results as big tech powers stock
market gains.
Speaker 2 (00:25):
The Fed keeps interest rates steady, but Powell's Committee sees
dissent from not one but two FED governors for the
first time since nineteen ninety three.
Speaker 1 (00:36):
Plus an exclusive report on why developers say safety regulations
imposed after the Grenfell terror tragedy in the UK have
made it too complicated to build new high rises in
the country.
Speaker 3 (00:48):
Let's start with a roundup of our top stories.
Speaker 1 (00:51):
Meta is taking advantage of its lucrative advertising business to
spend more aggressively on artificial intelligence after it reported second
quarter earn that beat Wall Street estimates. The Silicon Valley
Giant forecast third quarter sales that could go higher than
fifty billion dollars and raised its twenty twenty five capital
spending forecast up to up to seventy two billion dollars.
(01:13):
Here's more from Bloomberg Technology anchor Caroline Hyde, the.
Speaker 4 (01:16):
Generative AI is making the advertising more easy to use.
Speaker 5 (01:20):
Marketeers want to lean into it.
Speaker 4 (01:22):
And one you're seeing the pricing of those ads going
up by about nine percent.
Speaker 5 (01:25):
They're able to charge more and more broadly.
Speaker 4 (01:27):
And they're also trying to articulate what does the superintelligence
labs mean for them. Yes, they've been spending in capex,
but boy, they've been spending big on talent. We've heard
about the two hundred million dollar pay packages, the amount
they spent on scale AI.
Speaker 5 (01:38):
But all of this is about making it.
Speaker 1 (01:39):
More personable Bloomberg's Caroline Hyde. There as Meta executives including
Mark Zuckerberg, said it's AI technology is already producing quote
meaningful revenue.
Speaker 2 (01:49):
Microsoft is expected to reach a four trillion dollar market
cap after it reported quarterly earnings that beat Wall Street estimates.
The big text Allotz would be only the second company
to hit that milestone, after the chip maker en Vidia
at the beginning of July. The jump in shares was
fueled by a thirty nine percent increase in revenue from
(02:12):
Microsoft's Azure cloud computing unit. Dan Ice, Global, head of
Tech research at web Bush Securities, shared investors optimism.
Speaker 5 (02:23):
Massive beat on cloud.
Speaker 6 (02:26):
You've see more and more of these use cases, these hyperscalers,
those are the best indicators that just should where the
next spending in AI is gone.
Speaker 5 (02:33):
And that's why right now, if you're a tag.
Speaker 1 (02:35):
Bear, you're in hibernation, moved in that cave, and you
can't find AI in the spreadsheet.
Speaker 2 (02:40):
Dan, I'm speaking there, the global head of Tech research
at Webb Bush Securities. After the Microsoft CFO, Amy Hurd,
told analysts that she expects to see full year revenue
growth in the double digits.
Speaker 1 (02:53):
Standard Charters reported expectation, beating Second quarter earnings adjusted pre
tax profit came in at two point four billion, beating
estimates of one point nine billion. The lender also announceday
Fresh one point three billion dollars share buyback as part
of a plan to return at least eight billion to
shareholders between twenty twenty four and twenty twenty six. Shares
(03:14):
and Standard chartered up slightly after the break in. Hong Kong.
Speaker 2 (03:17):
Sausage is General raised it's profit guidance and announced a
one billion euro buyback in a show of strength for
the bank's turnaround. Sockgen says that it expects return on
tangible equity to be nine percent this year. That's above
the eight percent it had previously full costs, The French
lender has been cutting costs and getting rid of poor
(03:37):
assets in a bid to change its fortunes. It shares
have had a seller start to the year, rising ninety
two percent as investors see a return to profit.
Speaker 1 (03:48):
The Fed Schargeronne pals as interest rates are in the
right place, as the Central Bank opted to hold borrowing
cost steady for a fifth straight meeting. However, for the
first time in over thirty years, two Federal Reserve governors
from the majority to call for a rate cut, Michelle
Bowman and Christopher Waller, dissented in favor of a cust
highlight and growing divisions within the board. Speaking to reporters
(04:10):
after the decision, Chair Powell addressed, the vote splits.
Speaker 6 (04:14):
What you want from everybody and also from a the
center is a clear explanation of what you're thinking is
and what are the arguments you're making, and that's we.
Speaker 3 (04:24):
Had that today.
Speaker 6 (04:24):
So I think basically this was quite a good meeting
all around the table where people were, you know, thought
carefully about this and put their positions out there.
Speaker 1 (04:34):
The nine to two fo MC vote split comes as
intrigue grows over who will replace Powell once his term ends.
As President Trump continues to pressure him to cut rate
cut rates. Meanwhile, traders have paired bets for immediate rate cuts.
Markets are now pricing in around a fifty to fifty
chance of a reduction at the next meeting in September.
Speaker 2 (04:54):
Well, US President Donald Trump has reached a trade deal
with South Korea, will issuing up bart of new tariff announcements.
The US will impose a fifteen percent one sided levey
on imports from South Korea, one of the world's largest exporters.
President Trump also said that he would start applying taxes
to small packages from all countries coming into the US,
(05:17):
and would up tariffs on India to twenty five percent.
Speaker 7 (05:22):
They don't do very much business in terms of business
with US. They sell a lot to us, but we
don't buy from them. You know why, because the tariff
is so high. They have one of the highest tariffs
in the world. Now they're willing to cut it very substantially,
but we'll see what happens. We're talking to Indian now,
we'll see what happens. And it doesn't matter too much
whether we have a deal or whether we charge them
a certain tariff. But you'll know at the end of
(05:44):
this week.
Speaker 3 (05:45):
Now, that was US President Donald Trump.
Speaker 2 (05:47):
Many of the US leaders negotiations are going down to
the wire his self imposed deadline for trade deals that
comes tomorrow. Malaysia, Thailand, and Cambodia are expected to formally
announce steals ahead of that. The US also delayed the
implementation of a fifty percent tariff on Brazil's exports and
exempted a large number of goods though from that levee.
Speaker 1 (06:11):
The global copper market is reeling from President Trump's fifty
percent tariff on imports of the metal, as the President
exempted key products, including refined metal, from the levee. The
unexpected move triggered a record plunge for US prices, hurting
traders who tried to anticipate the changes by hurrying the
metal into the US. Copper futures on comics in New
(06:31):
York plunged by more than twenty percent, the most ever,
as traders reacted to a move that recalibrates the value
of metal in the US versus the rest of the world.
According to a White House statement, a semi finished products
such as pipes and copper intensive goods like cables will
now be subject to the new tariffs.
Speaker 2 (06:50):
Those are our top stories for you this morning. Let's
look at the markets. So STOP futures then for the
US are absolutely surging on the back of a bomb earnings.
Microsoft shares gained a percent after as Meta up more
than eleven percent, and nasdag stop future at the moment
to hire by one point four percent. European stock Future
(07:11):
is also up by a quarter of one percent. South
Korean stocks down this morning alongside Indian shares because of
those tariff announcements. Copper price differentials between the Europe and
the US have really collapsed, China's factory activity worsening in July.
You've also got CSI three hundred stocks down by one
percent on the back of that, and then after the
(07:32):
FED decision to hold interest rates steady, two year treasury
notes were seven basis points high yesterday, although little changed
this morning. So that's a look at where we are
on the markets.
Speaker 1 (07:42):
In a moment, will bring you more on the market
reaction to those megacap tech earnings and the latest trade headlines,
plus why higher rise building projects are facing increasing delays
in the UK put in the story that we've been
reading this morning. This is about artificial intelligence and its
use in financial markets, and a study by researchers at
the Wharton School of Finance have been looking at a
(08:05):
fundamental flaw is that essentially, even when humans aren't involved,
AI bots are ganging up together.
Speaker 2 (08:12):
Well, this is the initial conclusion of this researcher. It's
a trio of researchers at Wharton, including finance professor Ith Goldstein.
So they carried out a simulation of real world markets
and trading. Obviously that's difficult, but they did this with
artificial intelligence bots or traders. Now, the conclusions of this
(08:32):
are that instead of battling it out for returns, the
AI traders actually ended up fixing prices, they hoarded profits,
and they sidelined human traders, i e. The kind of
worst nightmare for regulators. And this has got a lot
of attention from asset managers, from regulators, even though the
research doesn't say that AI collusion is happening in the
(08:56):
real world, even though a lot of traders are already
using But yeah, it's a really kind of fascinating view.
Speaker 1 (09:03):
My favorite part of this is that Essentially, the AI
figured out that once they've done a good enough job,
they could just give up and stop looking for new strategies,
which sounds to be fair very familiar. So I think
that this is, you know the fact that I almost
respect the AI from basically saying I've done enough.
Speaker 3 (09:19):
Actually, yeah, I've made enough money. That's good enough for me.
Speaker 2 (09:22):
Well, my addition to this is that I really want
to shout out to Wharton for their YouTube channel because
I got to actually listen and we wrote a long
piece about it which is very interesting. But we also
got to hear from the professor himself on the Wharton's
YouTube channel.
Speaker 3 (09:39):
So yeah, so shout out to them.
Speaker 1 (09:40):
I think we'll put a link to our story by
lu Wang in our podcast show notes. But let's turn
to the markets now and investors navigating a barrage of headlines,
central bank decisions, tariff agreements, and those big corporate earnings
as well. We've got our markets live strat as Mark
Cranfield with us for more on all of this.
Speaker 3 (09:56):
Mark, good to talk to you.
Speaker 1 (09:57):
Let's start them with those results shares matter and Microsoft
surging after hours on Wall Street and that's really rippling
across markets elsewhere too.
Speaker 8 (10:06):
It's kind of reassuring for global investors. They're a little
bit uncertain about which way tariffs are going to go,
how quickly before they make a serious impact on global growth.
There's been all kinds of warnings, and yet these huge
companies continue to make tremendous profits. We saw it also
from Alphabet last week as well, and they post very
(10:27):
positive outlooks as well. So there's a kind of reassuring
factor to equity investors around the world that companies can
continue to do extremely well even under these uncertain conditions.
And they still think that the AI story is so
big and so profitable that it can override whatever uncertainty
you see in terms of central bank policy, government policy,
(10:48):
wherever you see there's a lack of clarity in different
parts of the investing landscape. Don't need to worry because
AI will overwhelm all of that. That was a particular
part of the meta story. They see it's time to
even increase their investment into AI because the opportunity there
is so big. So that's something that investors can look
(11:09):
at and they can decide, yes, that's somewhere where we
can put our money because it's tangible and we can
see the results reasonably quickly, and that even though we're
not sure about some of the other parts of the
global world.
Speaker 2 (11:22):
Yeah, maybe justifying the record highs in terms of US
stocks that we've seen recently, I suppose would be the argument.
But you mentioned the uncertainty about policy. So the FED
held interest rates steady. Powell shrugged off all the pressure
from the White House. But we mentioned that two FED
governors dissented, and that is highly unusual, so we're next
to the FED.
Speaker 8 (11:43):
Yeah, governor's dissenting is it's been a couple of decades
since that, but it's not unusual to have dissenters in general.
We've had FED people, voters on the day going against
the FED decision, some of the regional people. So it's
a bit of a nuance really, as won't be too
excited the fact it happens to be governors, And obviously
(12:03):
they would also be looking at a bit of a
political aspect to it as well, considering that there's been
so much talk about who might take over from Jerome
Power and that at least one of the candidates could
be somebody who's currently on the FED board at the moment.
So there's a pinch of salt with all of that.
What it does do is it pushes back pretty hard
(12:24):
against the idea that September was. At one stage we
were thinking it was almost a shoe in for an
interest rate cut in September. That's certainly not the case.
Now is becoming a bit more of a coin toss,
And even by the time we get there, if Jerome
Power hasn't really changed his narrative at all, we might
even be thinking that it's going to be another hold
in September as well, quite a way before we get
(12:44):
to that decision. But certainly his press conference in particular,
he wasn't like a man who's there's certainly no need
to panic. It doesn't sound as though as any rush
wants a lot more time to assess the data. And
if he looks at the stock market, for example, as
an indicator of what people think about the US economy,
then there's certainly no rush to lower interest rates on
that basis.
Speaker 1 (13:05):
And perhaps that's also factoring into the thinking around trade
as well. We've had another raft of tariff announcements fifteen
percent for South Korea, twenty five percent are for India,
fifty percent for Brazil with some exemptions though as well.
I mean, how are markets taking this latest deluge of
trade headlines.
Speaker 8 (13:23):
Generally in their stride?
Speaker 7 (13:25):
Really?
Speaker 8 (13:26):
I think it's partly because there's just a lack of details.
Every single deal that's been wheeled out this week really
has been very scarce on hard details. There's a lot
of exemptions as well for people to get their head around.
There's nothing apart from some of the headline numbers. There's
not too much that investors can say that that well,
that really applies to this transaction or that transaction. So
(13:48):
a lot of head scratching on what it really means.
And when they look at the US markets the way
that equity are performing so strongly there, they'll think, well,
if America among companies can continue to perform as strongly
as that, then that's a pretty good indicator for what
we can expect in the rest of the world. So
not definitely not the scare mongering that we had at
the beginning of the year when people were very concerned
(14:10):
where we were going with this. It doesn't mean to
say it's a non event, but the bar is much
higher for making people worried that tarists are really going
to bring the world to a grinding halt. It doesn't
look like that way considering the people are investing their money.
It doesn't look as though people are really scared about
the outlook for the global economy.
Speaker 1 (14:28):
Okay, Mark Cranfield, our Markets Live Trusts, thank you very
much for joining us, and as we're thinking about today's
European trading session as well. Just to mention the other
banking results we've had out from Europe, a set of
beats from BBVA significantly higher four hundred million is the
beat on their profit number for the second quarter, coming
in at two point seventy five billion I also higher
than expected. And in France Credi Agricola also beating by
(14:51):
around four hundred million euros as well their net income
two point thirty nine billion as well. So some positive
reports out of those big European banks too.
Speaker 2 (15:00):
Now to Britain's housing crisis. Developers in the UK say
that safety regulations imposed after the Grenfell Tower tragedy in
London have made it too complicated to build new high
rise buildings. Twining intent has been in both Global Business.
Reporter Jennifer Creary on this story, Jennifer, good morning, to
what exactly is the problem and how did it come about?
(15:21):
According to the developers.
Speaker 9 (15:23):
After the Grenville tower fire in twenty seventeen, so that's
the tragedy where seventy two people died in a tower
block laze in London, the government brought in a bunch
of reforms the high rise construction because basically one of
the key issues was low adherents and enforcement to existing
safety regulations. On top of that, there wasn't really a
single authority overseeing the issue.
Speaker 5 (15:44):
Now.
Speaker 9 (15:45):
These reforms, which came into effect in October twenty twenty three,
were meant to ensure that developers passed certain checkpoints before
construction even begins, you know, for example, giving detail plans
for viral arm placements, exits etc.
Speaker 5 (15:59):
The problem is, under this new regime is just.
Speaker 9 (16:01):
So much red tape and so much confusion over what's
required from applicants that they're simply taking too long.
Speaker 5 (16:07):
So there's essentially a backlock.
Speaker 9 (16:08):
Now. One of the private equity firms we spoke to
bought a plot of land in Battersea in twenty twenty
one for thirty one million pounds. To this day they're
still waiting for permission to build, and you know, when
we spoke to the regulator, they told us that the
average weight time for approval to begin building these new
builds of twenty one weeks. But we've interviewed companies that
are waiting up to a year for approval and that's
(16:29):
simply too long for them.
Speaker 1 (16:31):
How dire is the situation at the moment for these
developers who are trying to build, Yeah.
Speaker 5 (16:38):
I mean for them, the.
Speaker 9 (16:41):
Longer they wait, you know, the higher the risks there
is of lower returns. So either they'll have to shoulder
you know, higher financing costs via a higher interest rates.
There's inflation, demand could fall, so you can see the
incentive to build very quickly. We spoke to one of
the UK's largest housebuilders who said that their firm is
waiting for roughly five hundred of their homes to be
(17:02):
signed off. Now that's going to make it harder for
builders to secure construction loans from banks because lenders now
have to include year's worth of deferred interest payments to
their calculations. So the situation is getting pretty die for them.
Speaker 2 (17:15):
Yeah, And the backdop to this is the government wants
to build many more homes and wants to see many
more homes being built and London development's actually falling off
a cliff in the last in the latest kind of
the detail's latest numbers twenty twenty three to twenty twenty four.
How are the developers trying to address all of this
(17:36):
and trying to adapt to the new system.
Speaker 3 (17:37):
I mean, what are they thinking about?
Speaker 9 (17:40):
Yeah, so, so parts of the industry are trying to
find loopholes around the new safety regime, so for example,
building new builds that are under eighteen stories so they
don't have to apply for this kind of approval. We've
also spoken to some firms that are shifting away from
residential buildings, looking at of co working spaces things like that.
Speaker 5 (18:00):
Some of them are shifting investments in the middle least.
Speaker 9 (18:03):
We've heard of some companies laying off construction teams because
money is so tight. So the industry is trying to
find a way around this. I think the broader picture
here is, you know, the government needs them to build
homes as well. The government has this ambitious target to
build one point five million new homes by twenty twenty nine.
That's three hundred thousand homes on average per year. That's
(18:24):
a very ambitious target and if these delays continue at
the same rate, that target's getting further and further out
of reach.
Speaker 3 (18:31):
What about the kind of reaction to this.
Speaker 1 (18:35):
Has the government a regulator doing anything to actually address
the issues.
Speaker 9 (18:39):
Yeah, so the regulator acknowledges that there's a problem, you know,
there's no doubt about that. They said that they're trying
to boost staff. We submit in the fo WIRE requests
that showed that they're only about seventy staff leafing through
more than one thousand applications in one month, so you know,
there's a serious crunch in that aspect. But the regulator
is also pushed back. They argue that a lot of
(18:59):
these applications are poor quality, so applicants who you know,
didn't read the fine print or they're not submitting the
right application and the right documents.
Speaker 5 (19:08):
Their argument is, you know, how.
Speaker 9 (19:10):
Can they build safe homes when they can't fill in
an application like this. Another point that the regulator made
was that thirty thousand out of the one point five
million homes the government wants to build are currently going
through this process, and that's only a very small proportion
of the overall targets, about two percent. I think if
we step back You know, the people that we've spoken
(19:30):
to in the industry, they are broadly in support of
these safety reforms. You know, no one wants a repeat
of the Grenville tragedy, but the issue is how do
they bring about these reforms in a system that's already
understrained and struggling to meet demand.
Speaker 1 (19:45):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 2 (19:51):
Look for us on your podcast feed every morning, on Apples, Spotify,
and anywhere else you get your podcasts.
Speaker 1 (19:58):
You can also listen live each morning on London and
Dab Radio, the Bloomberg Business app, and Bloomberg dot Com.
Speaker 2 (20:03):
Our flagship New York station, is also available on your
Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.
Speaker 3 (20:11):
I'm Caroline Hepka and.
Speaker 1 (20:12):
I'm Stephen Carol. 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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