Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg Daybake podcast, available every morning on Apples, Spotify or whatever you listen. It's Wednesday, the eighteenth of September in London. I'm Caroline Hepkit and.
I'm Stephen Carroll. Coming up today. Exploding pagers kill nine and injure thousands more in Lebanon as Hezbala blames Israel.
Twenty five or fifty, the Fed decides today as traders lock themselves into record bets on a half point cut.
Plus the Hedge Fund, Family, Tree, Millennium, and Citadel nurture a fourteen billion dollar new generation, but there's no guarantee of replicating their elder's success.
Let's start with a roundup of our top stories.
At least nine people have been killed and some three thousand injured after thousands of pagers exploded across Lebanon. The militant group Hezbollah has accused Israel of orchestrating the attack, raising fears of an escalation and the conflict that's seen near daily skirmishes for much of the last year. Israel has declined to comment. Here's how US State Department spokesperson Matthew Miller reacted, we.
Are always concerned about escalation. We are always concerned about any type of event that may cause further escalation, and it remains our message to both Israel and to other parties that they needed to do everything they can to try and reach a diplomatic resolution.
Matthew Miller says the United States was not aware of the incident in advance or involved with the device blasts.
It is not yet clear how the pages exploded, but theories range from the batteries being triggered to overheat to hidden explosives in the devices. The New York Times reports that US officials and others briefed on the operation say small amounts of explosive and remote trigger switches were implanted into the devices, which had been ordered from a Taiwanese company. Bloomberg has not been able to verify those reports, and the Taiwanese firm god Apollo has denied it manufactured the
pages used in the attacks. The firm did confirm it licenses its brand to at least one other company, but declined to provide any names.
The attack adds to tentions that have been building since July, when Israel assassinated a key commander of his BILA in Beirut, the prospect of a wider war in the Middle East, Russia's ongoing the invasion of Ukraine, and growing China US tensions are now an increasing focus for diplomats and world leaders. Speaking yesterday, JP Morgan, Chair and CEO Jamie Diamond, reiterated that he believes we should be more concerned about geopolitical
risks than whether the United States goes into recession. Here are some of his key thoughts from a conversation at the Financial Markets Quality Conference in Washington.
The most important thing that dwarfs all other things, that's really important, far more important today there's been probably since nineteen forty five, is this war Inkra, what's going on in Israel, in the Middle East, or americantal Asia with China and the attack fundamentally on the rule of law there was set up after World War Two. This may affect the free and democratic world for the next one hundred years. And I think that's the most important thing.
I think people overly focused on your game for soft LANDI and hard landing. Honestly, mosto has been through all that stuff. It doesn't matter as.
Much Jamie Diamond also weighed in on today's highly likely FED rate cut. The JP Morgan CEO says that whether the center bank goes for a quarter point or half point cut, the move is quote not going to be earth shattering.
Record wages have been placed though, on the FED easing rates later as the day, with most targeting a half point cut. Bets on October. FED fund futures have topped any activity since nineteen eighty eight, and some risk sharp losses if policymakers opt for a standard sized reduction. Forecasters are largely anticipating a quarter point cut to five five percent, but economists at JP Morgan expect a bigger half point move.
The hedge fund founder Ray Dallio says that a quarter point adjustment would be beneficial for creditors.
What does that that have to do. FED has to keep interest rate high enough to satisfy the creditors that they're going to get a real return without having them so high that the debtors have a problem. So, now, if we're looking at this, whether it's twenty five or fifty basis points, twenty five basis points would be the right thing to do. If you look at the whole picture as a whole.
Ray Dallio from Bridgewater Associates speaking there beyond today, investors see a more aggressive path of reductions this year than the series of quarter point cuts expected by economists. We will have live coverage on Bloomberg of the Fed's decision at seven pm London time, and have chaired your Own Powers press conference at seven thirty pm.
Blackrock and Microsoft teaming up to invest in data centers and other infrastructure supporting artificial intelligence. The story Bloomberg's Charlie Pallace.
The companies say the strategy, dubbed the Global AI Infrastructure Investment Partnership, while aimed to attract thirty billion of private equity capital, leveraging that to as much as one hundred billion to invest. According to a statement, the infrastructure investments, including energy projects, will be mostly in the US, with a portion of the funds being deployed in US partner countries.
The firms are also teaming up with Global Infrastructure Partners and Abu Dhabi's MGX, which was created specifically this year to invest in AI in New York. Charlie Pellett Bloomberg Radio.
Steve Cohen has stopped trading fer point seventy two, where he will remain Cocio, the billionaire hedge fund founder and owner of the New York Mets, plans to focus on driving growth and developing talent. The firm that Cohen founded manages a record thirty five point two billion dollars as of the first of July, by giving him a net worth of nearly fourteen point seven billion dollars and making him one of the one hundred richest Americans.
The German finance Ministry is sticking to its commitment to sell off its entire stake in Comerence Bank. That's despite Unicredit's takeover ambitions. Bloomberg's teama at A Baio has the story.
Unicredit's sudden move on Commertz Bank may have caught Germany's government off guard, but it hasn't altered their plans to offload shares in the firm. Bloomberg understands that divesting from the lender completely remains the goal, as previously agreed by the country's ruling coalition. However, it's not clear whether Chancellor Olaf Schultz agrees with the Finance Ministry's intentions. Any decision on further stock sales will need approval from a committee
including officials from his office. For now, at least, the path ahead remains uncertain. A ministry representative sent a decision on how to proceed will be made in due court following further analysis in London. Tea Adebayo Bloomberg Radio.
In a moment, we'll bring you more on that attack using exploding pagers in the Middle East. Plus we'll look ahead today's much anticipated Federal Reserve decision. But another story that copp Meyer this morning, a household name filing for bankruptcy. This provoked an unusual response in the newsroom when the headlines came through a little bit earlier this morning. I didn't think that so many people were without attach to Topperware.
No, I've never a bit. Have you been to a Topperware party ever? No, No, neither vibe. But obviously it's such a huge and well known historic brand in the US.
Yeah.
Indeed, And look, it's been a company that's been struggling since twenty twenty. Back then it warned of its ability to stay in business. As of June this year, the plan to close its only US factory and layoff almost one hundred and fifty workers. So this bankruptcy filing in Delaware has been long in the preparation. They've been long negotiations running up to it. The company has more than
seven hundred million dollars in loans. Founded though in nineteen forty six, Yeah, to bring its plastic products to the world.
Yeah, there were so many plastics makers now though, to compete, aren't they? I mean, I think the equivalent in Europe is probably TetraPak Switzerland, which was actually founded only a few years later in nineteen fifty one. So anyway, that's of interest this morning, a historic brand filing for bankruptcy. One of the stories you can read on the Bloomberg terminal.
That's bringing more now in our top story though, the exploding pages and Lebanon that have killed a number of people and left thousands injured. Hezbela and Labanon have blamed Israel for the attack. Our eme Ands director Roslind Matson joins us now for more raz How did this attack unfold?
That is that it seems to have been nearly simultaneous.
This was not a long series of pages exploding, but largely.
At the same time. We know that about three thousand people were wounded.
We've heard from one official that about half of those were hes Balah fighters and several people have been killed. Hospitals have been inundated with people seeking treatment, and these explosions took place mainly in the southern area of Beirut, and that's where Hesbelah does have a strong presence. Of course, Hesbela the militant group that's backed by Iran, and there's lots of footage obviously on social media of these blasts happening.
It's interesting, of course, because most people use mobile phones now less so pages, although there are used we understand by medical workers in places including Lebanon and hesbler.
Has relied on these kind of low tech.
Devices walkie talkies and pages to try and avoid interceptions.
So it was actually, in the end quite a smart target to go for when.
It comes to Hesbolah. And of course Hesbla and Lebanon have immediately blamed Israel for this, and there's been no comment back the other way from Israel claiming responsibility.
What's known though about how this might have been orchestrated, Well, it's the.
Sort of attack that would take many many months to play and if not years. This is not something that was probably just pulled together in the past week. It's one of what we should we say, maybe the more
creative attacks we can recall in recent times. The initial theory was that it had been potentially malware and that the pages simply heated up to the point they exploded, but that doesn't explain how they did so all at once, and so now experts are theorizing and some reports say that microscopic amounts of explosive could have been added to each page at some point along the manufacturing and supply chain, and then they were triggered remotely.
There were reports that pages could have.
Been sourced from Towan, although a small manufacturer there has denied making the devices. But wherever they originated, there's a long and complex supply chain in getting them to Hesbella fighters, where anything could have happened by others. So obviously whoever carried this out at some point along that supply chain has intervened to potentially plant explosives pager.
Now Hesbela and Lebanon's government have blamed Israel for this. What is that the wider significance of this attack? Could this lead to an escalation?
Well, that is the fear.
Of course, we have reports that US officials, so they do believe this was orchestrated by Israel. There's a long history of action by Israel. They have claimed publicly the killing a few months ago of a senior Hesbela figure in Beirut, and of course they've been exchanging fire on
almost a daily basis across the border from Lebanon. Hesbela says they're acting out of solidarity with Hamas, which is fighting Israel in Gaza, and so the fears of that broader war there, and Hesblo is obviously better trained and armed frankly than Hamas, and while you know, fifteen hundred injuries is significant, it doesn't really make a dent in
their fighting force, which is much bigger. And there's been those concerns also because Israel is now saying it once the residents in the north of Israel who'd been displaced by these skirmishes with Hesbelah to return, and that's a war objective. So again it's all seemingly building to the potential for a more large scale offensive between Israel and Hezbalas that would open up the wars that.
Israel is fighting into two proper fronts.
Okay, roslyin, thank you so much for being with us. That is Blimberg's EMEA News director Roslyn mathieson joining us this morning.
So to another story, Now, will the Federal Reserve cut by twenty five or fifty basis points? Markets will finally get an answer later to the question that's been occupying investors for weeks. Now to help us look ahead to the decision, our market's live executive answer, Mark Codmore is with us. Mark, great to have you on. So market's pricing in around thirty nine basis points of easing today from the Fed. That doesn't tell us much. What's your view?
I think they'll do fifty. I don't think they want to surprise the market. In fact, just so walk to the studio, we're actually getting closer to forty than thirty nine. I think that's kind of the tipping point for them to do fifty. And I think that you know, it is still in balance, much more in balance than we're used to, but this it would be a much bigger shock to do twenty five. So I think they will deliver fifty, and I think it'll be a boost to the market in the short term.
Yeah, I was going to say, what does that mean for markets, which outcome creates more volatility? But it seems like you think that the twenty five would would be would perhaps have a more volatile reaction.
Yeah, at this stage, it's absolutely twenty five to be upsetting. I think there's a perception in much of the market, whether true or not, it doesn't matter. At the perceptions out there that the Fed has helped guide towards fifty through various media stories over the past week, and therefore the twenty five would be really confusing now will be more confusing. I accept there's a bit of divice don
the market either way. So absolutely the much more negative outcome, a knee jerk would be on twenty five, much more volatility as people recalibrate to that. I will say, though, in either outcome, we've got so much rate cuts priced into the curve over the next year and a half that it doesn't really make a difference. If they do twenty five today, everyone assume fifty next time. If they
do fifty today, everyone assumes twenty five time. So in the bigger picture, after the massive volatility we get short term, I don't necessarily think it's volatility into next week.
What are you looking out for then in terms of the messaging that we'll get from Jerome Powell when he speaks, and what to look for in the quarterly projections.
So what I think is going to be really really interesting today is how they justify the move that they go for. With my base case assumption they go fifty, is it fifty with a very positive message that we are getting more folks in the labor market, but you know, we're just being preemptive. We think that the economy, you know, rates are high enough and we can slightly ease policy. Rather than a panicked message of like concern that is
my base case. I actually think this will be a very very bullish fed meaning I think it'll be like December last year, where they didn't seem to be any kind of economic validation to the sudden aggressive signaling that they are moving towards an easing stance, and that kind of extended the economic cycle, which is why we've not seen any rate cuts yet. I think that could be similar today that if they go fifty, but say look,
we're trying to get ahead the curve. This extends the whole economic cycle again and we get we really push out the bull market. Now the bull market formulation will change in terms, will be less tech focused, will be a broadening at the valley.
After the FED decision though, Mark interesting what you say it sets up the Bank of England meeting of course, and the Bank of Japan. I mean we get the August reading of CPI for the UK also the day before the Bank of England. How does the FED set us up for the rest of the decisions this week?
So obviously the Fed sets the kind of the tone of whether we're going to see more dubbishness or more hawkishness globally. So if they do deliver on the dubbish end of the spectrums, I expect that will kind of weigh on yields globally. But again I go back to the fact there is so much price in the curve.
I think we get a douvish FED today. We got fifty basis points and the two year yields bottom this week, and we actually see yields rising to year end despite the fifty basis points cut, because people are going to realize they're abandoned. There are complacent non inflation, they're bullish on the economy, or at least they're extending the economic cycle, and that means that ultimately yields need to price out the amount of right cuts that are priced. So I
run enough. I expect a bigger cut today, and I think that'll actually see yields globally tick up towards the year end after the new jerk reaction.
Mark Ledmore, our executive editor for Markets Live, thanks very much for joining us on the program. More from Market and his team MLIV. It's the function on the terminal.
With hedge fund titans Citadel and Millennium closed to outside cash amid a dearth of talent able to manage their money, some of the firm's traders are seizing the chance to go it alone, and investors are backing them with an avalanche of assets. The choice for the multi strategy funds founders Ken Griffin and is the Englander, is whether to fight this migration or whether to embrace it. Our senior hedge funds reporting Nishan Kumar, joins us now for more
details on today's Bloomberg Big take. Nichant, really good to speak to you. Who are these new hedge fund cubs?
Then?
Hi, good morning, So first of all, like, who are cubs? You know, it's a female nomenclature in the hedge funds industry. You can call it as a group of famed hedge fund managers who all trained under Julian Robertson and now Julian Robertson was one of his generations most renowned hedge fund managers, spawning dozens of cubs, essentially former employees of his, who all learned the trade at his firm before heading
out on their own. He was the founder of Tiger Management and played like this sort of a godfather to a new generation of hedge fund stars. He unfortunately died in twenty twenty. But we are starting to see, you know, others taking that role, whether they like it or not, and Cedadel and Millennium are dominating that trend at the moment.
So what sort of money are these newer entrants attracting?
I mean, it's really unprecedented to say. The list the three biggest startups this year, led by Bobby jan who comes from Millennium, Diego Megia also from Millennium, and Todd Barker who was at Citadel. Between them, they have raised fourteen billion dollars. It's a requird amount in such a short period of time, and this is at a time when the hedge one industry as a whole is bleeding tens of billions of dollars, you know for investor withdrawals.
So it's quite unprecedented. The hedge one industry has never seen this sort of activity led by startups ever.
Okay, so a new generation then coming to the foe. How are the giants of the industry then responding? You sort of mentioned that.
Well, they don't have much choice, you know. I mean, they are become affcting of their own success. They are training this new generation of hedge fund stars who are seeing their careers sort of maxed out at those firms, and they're always thinking what's next. We have to remember these are highly trained, skilled, ambitious people, so they are not going to be satisfied within the confines of their
current homes. So multistrats can't do much about it beyond maybe imposing longer non competes to discourage them from spinning out. But some are responding by backing the outgoing managers. As we have said in the story, the next best thing to keeping talent is keeping your money with them so that you could continue taking advantage of that talent.
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