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Good morning.
I'm Nathan Hager and I'm Amy Morris. Here are the stories we're following today.
We begin with a big deal in the financial industry. Capital One Financial is buying Discover Financial Services. We get the details from Bloomberg's Doug Prisner.
It's an all stock deal valued at thirty five point three billion dollars, and it creates the largest US credit card company by loan volume. Historically, Capital One is catered to subprime customers who carry a balance on their cards each month. In recent years, the bank's been trying to attract premium customers. Discover is long focused on prime customers with better credit ratings. This deal comes after major declines and Discover shares during the second half of last year.
It followed a warning on lapses in compliance. The issue ultimately led to the resignation of then CEO Roger Hawkschild in New York. I'm Doug Prisner Bloomberg Radio. He Doug, thank you and checking shares of both companies. Discover Financial shares are up more than eleven percent this morning. Capital One is down more than five and a half percent.
And the financial industry is also in focus in Europe, shares of Barclays up more than four percent. The British bank is going on a major cost cutting drive and returning billions to shareholders. We get more from Bloomberg Financial reporter Tom Metcalf.
The big number is ten billion pounds both by dividends and buybacks, and that's coming through I think between twenty twenty four and twenty twenty six. So yeah, that is a nice focus on returns and obviously they're sort of very much embracing that. The other thing is is really
relation to the investiator bank. That's in many people view why the shares might be a bit depressed just because it takes up something like sixty three percent of risk weighted assets for the whole group and what the bark is sent today as expected, we're going to see that reduced down or we're going to try and make that reduced down to about fifty percent. And that's not by necessarily cutting the investment bank, but that's by really focusing on the retail side of things.
Bloomberg Financial reporter Tom metcalfs as Barclays is also overhauling its operations and reorganizing into five new divisions. Those will consist of its UK retail bank, a UK corporate bank, a private bank and wealth management arm, an investment banking division, and a US consumer bank.
Well, we also have earnings out of the Asia Pacific. Today, amy shares of BHP are down about two percent. First half net income plunged eighty six percent from the year before after oversupplying the nickel market forced the world's biggest minor to write down the value of key assets. We talked about the results with CEO Mike Henry.
Balance sheet remained strong, with netded at twelve point six billion dollars and all of that has allowed us to declare an interim dividend of seventy two US since per share. Now, yes, we have had a couple of exceptionals, including in our nickel business. Now, by way of a bit of context, the nickel business is the smallest by some margin business within the BHP portfolio.
And beyond nickel, BHP CEO Mike Henry says, iron ore remains the company's most important revenue earner. Prices for steelmaking material surged twenty eight percent over the reporting period and remain historically high, and that's prompting major producers like PHP to consider development of once stranded deposits.
Back here in the US, earning season is nearing an end, but it's not over yet. This week's big focus comes tomorrow when high flying chip maker and Video releases results. Bloomberg's Charlie Pellett says it'll put a big spotlight on artificial intelligence.
The stock is up almost fifty percent this year. Sarah Hunt, chief market strategist at Alpine Woods Capital Management, says there's a lot riding on this report.
This is the big question. Yes, this is great technology, can you monetize it? And Vidia is the poster child for that because it's the demand for those chips that's fueling everybody's usage of all of this. If they have any kind of wobble that anyone can say, well, maybe this isn't as fast and as quick as we thought it was going to be. I think that the whole story comes into question.
It's lofty valuation means there's little room for disappointment in New York. Charlie Pellett, Bloomberg Radio.
All right, Charlie, thank you. Let's turn to geopolitics now, starting with developments in the Middle East. The US is preparing to warn Israel not to attack the southern Gaza city of Rafa. This is coming in a draft text, and we get the details from Bloomberg's Ed Baxter.
This is a UN Security Council resolution warning against a Rafa assault, as well as calling for a temporary cease fire. The resolution would say that an offensive would result in further harm to civilians and further displacement, including potentially into neighboring countries. The draft says that could have serious implications
for regional peace and security. Up to now, the US has been reluctant to back cease fire proposals and stood strong with Israel, but now apparent Biden administration frustration with Prime Minister Benjamin nettan Yahoo, who says he plans to go ahead with the assault if hostages aren't returned by Ramadan at Baxter Bloomberg Radio.
All right, thank you, Ed, And we should note that Ramadan starts in roughly three weeks on March eleventh. Meantime, Russia's in Ukraine goes on, and this morning the Ukrainian Air Force says it shut down all twenty three drones and missiles fired from Russia overnight. Our regional governor says three people were hurt. The war continues without fresh assistance from the US and now. President Biden says he is willing to meet with House Speaker Mike Johnson to discuss
stalled aid for Ukraine and Israel. He says the death of jailed Russian opposition leader Alexi Nevali adds to the urgency of the moment.
The way they're walking away from the President Russia, the way they're walking away from NATO, the way they're walking away from leading our obligations.
He I guess you're shocking.
I've been for a while.
I've never seen you like it.
President Biden says he's considering new sanctions on Russia over the death of Alexi Nevali, but with sanctions already on Russia over the war, it's not clear how much more the US can do.
Man Russian President Putin may be violating UN sanctions with his latest move to boost ties with North Korea. According to state media, Putin gave North Korean leader Kim Jong un a brand new car. A Kremlin spokesman says it's an Oorus. It's a Russian made alternative to Mercedes. Luxury vehicles are on the UN Security Council's list of banned items for export to North Korea, but there's little the Council can currently do to punish Putin.
And in China, the weak property market remains a major concern for authorities, and now China is ramping up support for the property sector with one of its biggest rate cuts ever. Bloomberg Daybreak Asia anchor Brian Curtis has more from Hong Kong.
Chinese banks cut the five year loan prime rate by twenty five basis points to three point nine to five percent. It was the first cut in the rate in eight months and the biggest ever. The one year rate was maintained at three point four to five percent. Now, the move on the five year raises expectations of more aggressive measures in the coming months. The lower rate will allow more cities in China to reduce the minimum mortgage rates for home buyers, although we have to say the reaction
in the markets today was underwhelming. In Hong Kong, Brian Curtis, Bloomberg Radio.
And that's time to take a look at some of the other stories making news in New York and around the world. For that, we're joined by Bloomberg's Michael Barr, Good morning, Michael.
Good morning, Nathan. Former President Donald Trump is now comparing the sudden death of Russian opposition leader Alexing Navaldi to his own political problems. According to Trump, Navaldi's death has quote may be more and more aware of what is happening in our country and that rigged elections and grossly unfair courtroom decisions are destroying America. Presidential rival Nikki Haley jumped on Trump for refusing you condemned Vladimir Putin.
I don't know why he keeps getting weak in the knees when it comes to Russia. But I'll tell you what Russia is not getting weak in the knees.
Haley spoke on the campaign trail in Camden, South Carolina. President Joe Biden is said to have raised forty two million dollars for his re election campaign and the Democratic Party in January. The president now heads the West Coast for events with deep pocketed donors. Biden's campaign and says the president ended January with the one hundred and thirty million dollar war chest for his re election effort. Nearly the entire California coastline is under flood advisories affecting about
thirty seven million people. Days of heavy rain in the drought stricken state has left the soil saturated, causing the risk of dangerous flash flooding in the Bay Area of The rain washed out part of Highway eighty four in Almeda County, causing traffic delays. Caltrans spokesman Bartney.
The pavement slips down right or becomes unnavigable, so we can't have people driving on.
Residents of San Francisco say they are afraid for the homeless because of the flooding. Supporters of a ceasefire between Israel and Hamas held a rally in Paterson, New Jersey. One of the attendees included Reverend Barry Graham, pastor at Canaan Baptist Church of Patterson. We see the death, we see the destruction, we see little children being carried out, and I can't understand how anyone of good faith could stand and not be convicted by what they see. Other
attendees said the US cannot remain complicit. The anger from the New York Archdiocese continues over the funeral of a transgender community leader at Saint Patrick's Cathedral in Manhattan. The Roman Catholic Archdiocese of New York condemned Thursday's funeral of Cecilia Gentilli. Tintilly, who was fifty two, was known as a leading advocate for other transgender people, as well as sex workers and people with HIV. Her funeral drew hundreds
of enthusiastic people to the church. Kathy run, a communications director for the National LGBTQ Task Force, told ABC seven it was more celebratory than we normally see in a Catholic church, and actually it was kind of refreshing.
I think when one of the eulogists, you know, used the word for prostitute in Spanish, and I looked at the person sitting next to me and said, wait till they translate that.
In a written statement, the past here of Saint Patrick's, the Reverend Enrique Salvo, said they had no idea our welcome in prayer would be degraded in such a sacrilegious and deceptive way. Global News twenty four hours a day and whenever you want it with Bloomberg News. Now, I'm Michael Barr. This is Bloomberg.
Nathan all right, Michael, thanks time out for the Bloomberg sports Update brought to you by Tri State out of Years John stash All Ranks.
Nathan Jack Vaughn joined the Brooklyn Nets as an assistant back in twenty sixteen. Four years later, the Nets fired Kenny Atkinson, Vaughn philed in. Steve Nash was then brought in his coach and Vaughn went back to being an assistant, and then early twenty twenty two, Nash got fired, Vaughan returned his head coach, held the job until yesterday. Fired with the Nets twenty one and thirty three. Their most recent game was a loss in Boston by fifty points.
Assistant Kevin Ollie takes over. He coached Yukon of the National championship a decade ago in Tampa. Full Yankee team workout, including the prize offseason pickup Juan Soto. He's only signed for this upcoming season.
For me, I'm just focusing in twenty four I'm here to play baseball. I'm focusing on playing this year and try to win as much as you know we can and being a championship to New York.
Yanke you GM. Brian Cashman recently admitted the odds are this is a one years situation, but for now Aaron Judge will have another star joining him in the lineup.
I'm excited. I'm excited.
You know.
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We give up quite a few, you know, special pitchers in the package. But I think everybody, everybody in Pinchtrofts is looking forward to having won Soto Grissom, you know, due all those guys you know in Pinchtrops. So it's going to be a fun years.
Also from baseball, Red Sox signed the leader William Hendricks for two years. He may not pitch much, if at all, this season due to Tommy John surgery. The Giants signed thirty seven year old Pablo Sandoval for if he makes the team a third stint in San Francisco, part of three World Series Championship Teams Series MVP back in twenty twelve, sand of bal hasn't played the Major se The Lerner family has owned the Washington Nationals since six two years ago,
they put the team on the market. Now they're taking them off. William Byron won the rain del A Daytona five hundred hockey. The Ruins beat Dallas four to three and a shootout the Stars at the Garden tonight to play the Rangers of one seven in a row Minnesota Big Vancouver with a football like score of ten to seven. The Wild scored seven goals in the third period. John Stashaway Bloomberg.
Sport from coast to coast, from New York to San Francisco, Boston to Washington, DC, nationwide on SYRIASXAM, the Bloomberg Business app in Bloomberg dot com. This this is Bloomberg day Break.
Good morning.
I'm Nathan Hager on a morning where we have two big stories in the financial sector. Capital One is buying Discover Financial and a thirty five billion dollar all stock deal that will create a credit card juggernaut. And Barclays is embarking on a major cost cutting drive with a goal to return at least twelve billion dollars to shareholders in the UK. For more on these stories, we're joined by Bloomberg's Charlie Wells. And Charlie, let's start off with
this Capital One Discover deal. What is the goal here for both these companies to engage in this massive tie up.
Well, the goal here really is to compete. And I mean, you know, there have been such intense credit card wars in the United States over the past few years. And what really happens here is Capital One gets size, they get size, and they get the technology that comes from Discover. So what is so unique about Discover is that they have their own payment networks and that is something that is actually very enviable for a lot of credit card companies because it gives them a lot of control over
how much they can charge merchants. Now, what's also interesting about Discover and what is really attractive for Capital One. We know that Capital One has been trying to get more prime borrowers over the past few years, and finally with Discover, they're getting a huge tranch of those prime Discover borrowers.
That's a really interesting point because in their history Capital One and Discover have both catered to a very different type of customer, haven't they.
That's exactly right, and look, Capital One largely subprime. These are the sorts of borrowers who tend to have balances, you know, on their books at the end of the statement period. Over the past few years, we've really seen a lot of marketing, you know, celebrities like Jennifer Garner, Samuel Jackson in commercials asking that question what's in your wallet, whereas Discover, you know, they have that more prime borrower.
And what's great about prime borrowers for credit card companies, they tend to spend more and they tend to be more loyal.
And on the opposite side of the coin, Barclays sounds like it's going to be spending less or at least cutting costs with this major cost cutting drive, and it's going to involve a pretty major restructuring as well.
That's exactly right. So this is Barkley's first major strategy update since twenty sixteen, and it is a really big test for the ceocs than kind of Krishnan. And what is actually happening at Barkley's is really this pressure to
improve share price performance. So Barkley's has lagged a lot of peers, and the goal here really is to kind of bring expenses under control, to return capital to investors via share of buybacks and dividends, and to simplify the bank in a lot of ways, to overhaul its operations, reorganizing into five new divisions UK retail Bank, UK Corporate Bank, a private bank, and a wealth management arm, as well as an investment bank. Decision and a division excuse me, and US Consumer Bank.
So how could a restructuring like this get Barclays toward this goal that it's put out there of a twelve percent or more return on equity in the next two years.
It's difficult, and I think a lot of this points back to that investment banking division, because that just soaks up so much capital that Barclays has, you know, at the expense of other parts of the business. You know, what we're seeing at Barclays is a little bit of
an increased focus on the retail business. So you saw in recent weeks that it announced it would acquire a lot of Tesco Plc's banking business, and that is a very high street bank here in the UK, and that seems to indicate an attempt to go into some of these to these parts of banking that you require less capital but could be potentially more lucrative.
This is Bloomberg Daybreak Today, your morning brief on the stories making news from Wall Street to Washington and beyond.
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