UPDATE: A Mining Mega Takeover, Barclays, BNP Paribas, Deutsche Bank Post Earnings, & Meta…
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Bloomberg audio Studios podcasts radio
news this is the blomberg Daybreak C
podcast available every morning on Apple
Spotify or wherever you listen it’s
Thursday the 25th of April here in
London I’m Caroline heer and I’m Tom
Mackenzie coming up today mining giant
BHP confirms that it’s made a 31 billion
pound takeover offer for Anglo American
in what could be the biggest deal this
year fixed income trading helps to boost
Deutsche bank’s earnings but disappoints
at BMP parba and Barkley’s plus
defending Tik Tok on Tik Tok the social
media firm says it will win its fight
against a possible us ban let’s start
with a Roundup of our top stories the
world’s largest mining company has made
a takeover bearded for its UK rival
Anglo American BHP confirming it has
made an AllShare proposal to Anglo
valuing the smaller Mining Company at
31.1 bill ion pound Bloomberg’s James
walock has more it could be the biggest
shake up in mining for a decade and
copper is at the heart of it Anglo
American has long been seen as an m&a
Target the $34 billion company owns Big
South American copper operations which
are a key metal for electrification and
renewable energy it’s possible the bhp’s
bid for Anglo could prompt other Giants
to make a move regardless if it happens
it may be the largest m&a deal of the
year in London James wock Bloomberg
Radio Barkley has reported its latest
set of results on a big day for European
earnings Investment Bank revenue and net
interest income met estimates at the
British lender pre-tax profit beat
forecast coming in at 2.28 billion
pounds for the quarter now speaking
exclusively to Bloomberg CEO CSV katak
chrishan said that the results are
entirely in line with expectations Ben
Kat Krishnan also shared thoughts on the
London IPO Market I think the equity
Market in the UK and Equity risk culture
needs uh a short in the arm to be frank
I think that it’s important for
companies to list in the UK especially
For Life Sciences technology companies
and it needs many things which are
slowly coming together there’s a part of
it which is regulation there’s a part of
it which is equity investment and people
buying more stocks Pension funds buying
more stocks um and we think that some of
the initiatives for instance the public
flotation of the government share of net
West should be important aspects of
that V Kat Krishnan was more upbeat
though on the UK political situation
saying that a great strength of the UK
is relatively little difference in
Economic Policy between labor and the
conservatives getting back though to the
company story Barkley share price
jumping as much as 3% this morning
currently up by 2.6% okay staying in the
banking space Bas and Deutsche Bank over
in Germany seeing a 7% jump in earnings
from fixed income trading in the first
quarter that is more than analysts had
expected and better than most of the
bank’s biggest US Rivals income from an
advising on deals and stock and bond
sales jumped 54% as the Investment Bank
made up for a boost from interest rates
fading CFO James Von muler hailed strong
momentum in the Investment Bank we’re
very pleased with the results there 133%
up year- on-ear um our fi business and
also within that the financing business
doing very well um so we see very strong
momentum and and client engagement there
we’re also seeing resilience and growth
across the other three businesses so
it’s it’s nice to have a shining star
but but seeing resilience on the more
balance sheet sensitive businesses of
our corporate bank and private bank is
is
encouraging Von mker added he sees
optimism and growth coming back to
Europe shares in deuts Bank have rallied
by almost 50% over the past year so far
in the session they’re down just 1.3% so
far BMP PBA share price up this morning
2.1% right now income from fixed income
currencies and commodity trading at BMP
parba slumped by 20% year on year that’s
worse than had been expected the
disappointment taking the Shine off the
stronger performance in other parts of
the French lenders Investment Bank
overall BMP parar saw net income and
revenue come in ahead of estimates in
the first quarter shares in meta
dropping by 16% around 16% in after
hours trading after the social media
giant said it plans to spend billions of
dollars more than expected this year the
parent company of Facebook and Instagram
says investments in artificial
intelligence will increase meaningfully
with capital expenditure of up to $40
billion this year CEO Mark Zuckerberg is
warning investors that it could take
time for the AI bets to pay off as we’re
scaling capex and energy expenses for AI
uh we’ll continue focusing on operating
the rest of our company efficiently uh
but realistically even with shifting
many of our existing resources to focus
on AI we’ll still grow our investment
envelope meaningfully before we make
much revenue from uh some of these new
products Mark Zuckerberg’s comments on
spending along with a warning that sales
growth would be slower than expected in
the second quarter overshadowed the
first quarter numbers Revenue increased
by 27% to 36 billion while profits more
than double to
12.4 billion US okay so lots of earnings
news but there are some other stories to
think about the US has been secretly
sending Ukraine its long range Army
tactical missile systems or known as
attacks for short they’ve been doing
that since February President Joe Biden
signed a new Aid Bill to provide Ukraine
with $61 billion in military aid last
night which was expected to include uh
this ordinance however the state
Department spokesman Vidant Patel said
that the US leader had privately already
given the green light for the ballistic
missiles to be sent the United States
provided Ukraine with longrange attacks
at the president’s D Direction he
quietly directed um his National
Security team to send attacks to Ukraine
uh for use inside Ukrainian Sovereign
territory in February uh they started
moving as part of the military aid
package we announced on March 12th uh
and those missiles arrived in Ukraine
this month the US had avoided sending
the missiles that Patel spoke of until
now because the Biden Administration
considered that it would be seen as
escalatory by the Kremlin the missiles
can hit targets over a range of 300
kilometers the New York Times reports
that they you used for the first they
were used for the first time in recent
days to strike an Airfield in Crimea and
Russia has veto vote a un Security
Council resolution on not deploying
nuclear weapons in space China abstained
The Proposal would have reconfirmed a
global commitment that dates back to
1967 which bans nuclear weapons in orbit
the vote comes just months after the US
told allies that Russia could deploy a
real or mock Warhead into space as early
as this year the Kremlin alleged
ambition underscores what Security
Experts and Washington say is growing
competition between the US Russia and
China to develop anti-satellite
weapons in a moment we’re going to be
bringing you uh more on the mining story
this Mega deal potentially we’ve got
more details of it this morning uh but
before we get to that there’s a piece I
bet you’re going to be interested in
this Tom look I always try to bring you
know something a bit lighter something a
bit more fun um which uh is all about
how you choose your football team um
this comes because the blue pinion
colonist Howard Jan who’s been in the UK
for 6 years has done this long piece
about what is it what are the questions
that you ask how do you pick your
football team if you haven’t grown up
with one um do you follow the same men’s
and women’s side or do you does that
matter loyalty to one club or not he’s
asked like a million questions he’s also
asked listeners and viewers to write
readers to to write in to tell him how
did you choose your side it’s very easy
I mean there just one choice isn’t there
it’s Arsenal obviously both the women’s
team which are currently top of the
league uh and outperform all of their
Rivals um and of course the men’s team
also by the way top of the league so
it’s an obvious choice um I don’t see
what the Dilemma is um word go yeah you
have to tell them exactly uh no it’s a
really lovely piece about
um social press how to it’s a social
lubricant being able to talk I’m frankly
a bit of a fair weather sport but it
does help in certain social situations
to be able to dig into the back pocket
for a bit of a chat about football yes
and if you don’t have that sometimes you
can be kind of left out in the social
cold so I get that was mentioning yeah
okay so a fun read then for you on the
Bloomberg terminal this morning let’s
also though uh get to um let’s get to
our top story then as I mentioned the
mining story are we in for a big shakeup
in the industry the price of copper has
been soring this year BHP has confirmed
that it made an AllShare proposal to
Anglo American valuing the small
slightly smaller Mining Company at 31.1
billion pound joining us now as
blomberg’s Commodities reporter Martin
Richie Martin thanks for getting back on
the radio with us this morning now that
we have that figure what do we know then
about the
deal the top line is this is all about
copper uh BHP is going to become if this
deal goes ahead successfully it’s going
to become the world’s biggest copper
Miner uh passing companies like uh
codelco and Chile and freep Port um and
that’s because uh the minor are
expecting a big wave of demand for
copper and we’ve seen over the past few
years a number of quite big transactions
and a lot of talk about how they want to
gain exposure to Copper but this is the
first really big deal um in the sector
uh Anglo has some other bits and pieces
uh it has a metallurgical coal business
it produces diamonds uh it produces some
potach that’s made in fertilizer and
it’s got iron ore um but at the core of
it is uh is the copper um and this is
not just the biggest deal in in mining
this year but probably one of the
biggest ma transa m and transactions
we’ll see all year Martin what’s your
assessment of of the likelihood of this
of this deal going through and what what
it means more broadly uh for the sector
then um so obviously with any major deal
you you you you look at who the rivals
might be were there be any other
companies that could could put in uh
competitive bids um now those likely
candidates in the mining space are are
Glen cor uh riotinto and Valley um so
people are saying you know they could
make bids but I I would just point to a
couple of things that those those
companies all have their own reasons not
to make a bid uh riotinto is is has
invested a lot in building its own
copper mines for example huge mine in
Mongolia it’s it it has said it prefers
that approach to making big deals uh
Glen core is trying to take over
Canadian company Tech resources uh to
get it its copper and zinc assets um and
then Valley is actually trying to
demerge its Metals business so they’re
all tied up in their own kind of
strategy towards metals
which is kind of left the door open for
BHP I guess to try and swallow up uh
Anglo the smaller rival yeah absolutely
it’s a really interesting story uh and
one that we’ll follow closely thank you
so much for the update Martin Richie
Bloomberg’s Commodities reporter then uh
the BHP uh proposal for Anglo American
anglo-american Share Price uh currently
up more than 12% we’ve also got to dig
into the bank earnings from the European
uh lenders Deutsche bank’s first quarter
uh fixed income uh commodity Revenue
Rising 7% BMP parar a worse than
expected 20% slump in fix trading
Barkley’s Investment Banking Revenue
meeting expectations joining us now the
man who knows far much far more about
this uh than me Bloomberg’s EMA head of
finance and investing Tom meta really
massively busy morning for you Tom so
thanks for sparing us some time what um
of those three interests you most I
suppose yeah you’ve had three big big
Europe Banks come through um look we’re
in London I think Barkley is maybe the
most interesting story here uh and
particularly at share price where you
know often the first thing I look at for
bark is how did those fixed rate Traders
do and in the past that’s really
underpinned the results this time around
they sort of disappointed but they were
sort of uh you know helped by the acc’s
trading doing very well and perhaps more
importantly at the moment the UK bank
this outlook on Nim uh you know being a
real support here and effectively what
Barkley had done had they had a strategy
update in February and they’ve
absolutely hit right on the nail what
they said they’d do which I think for
shareholders is a real kind of Boon you
know they want to see just that steady
delivery you me being a journalist I
love the volatility and the excitement
offered by trading but actually I think
what today shows is Barkley is maybe
becoming a bit more boring uh but for
shareholders that is uh what they really
want going forward is is Deutsche Bank
becoming more boring or is that in terms
of the trading part of that business
they’ve got that exposure to fixed
income how how did that come together
for Deutsche Bank over in Germany yes
very similar structure to Bar who’s Big
invest bank and fixed income is a huge
part of that and I think it’s
fascinating because their fixed Traders
did really well they they were up 7%
which is basically in line with some of
the best Wall Street Banks so before the
earn shares started trading I was like
probably deutche Bank Shares are going
to be up they actually fell and I think
are may be flat which again goes maybe
back to this point of this you know very
volatile earnings the Investment Bank is
just not valued as highly as say that
more stable recurring Revenue um but
yeah those two I always think of as a
pair Deutsche Bank and Barkley they kind
of both European Banks big Investment
Banking or big trading presences um and
sometimes they move in lock step but
today it looks like Barkley’s maybe has
a slight Edge okay um other interesting
stories I mean loan loss Provisions or
bonuses or BuyBacks I mean those are
always interesting stories too yeah and
you had um I think it was the CFO saying
they’re a little bit worried over in
Frankfurt when they look at the UK and
there’s this bonus cap which has been
removed allowing you know some banks to
take advantage of that so right now in
the UK there was a rule is EU rule that
you could only have effectively twice
the bonus of your salary where you
compare that to New York where bonuses
can be many multiples so you might get a
smaller fixed bit but your bonus can
really jump and effectively in the UK
that’s now been rolled back post brexit
it’s a very very difficult thing uh to
sort of implement in terms of a change
if you can imagine everyone’s on
contracts how many people are going to
want to sort of move away from a very
high fix pay into bonuses But as time
goes on I’m expecting that to sort of
effectively rolled out and and that is
potentially a bit of a competitive
Advantage I say bit of um but it’s
interesting that Deutsche Bank chose to
sort of raise this and you know it’s one
of those classic messaging you know by
an executive going hey Regulators take
notice of this we think it’s a bit of a
problem is there anything you can do to
kind of help us out to Tech now and a
disappointing earnings report from Met
has Tech investors on edge the Facebook
owner’s outlook for weaker sales and it
was the Outlook rather than the
quarterly uh results themselves it was
the Outlook plus the higher costs
forecast um underlining the questions
about the impact of AI shock horror to
investors you actually have to spend to
make that AI uh come to the for and it’s
expensive let’s bring in Bloomberg’s
Tech editor uh here in London Olivia
Solen um Olivia kind of talk to us about
about the investor reaction to this why
are they so surprised it costs $40,000
for a GPU from Nvidia we know they’re
buying thousands of these I I think
everyone just got so excited about AI
there’s been so much hype over the last
year ever since chat gbt was Unleashed
on the world and so I think perhaps
people have been expecting more
immediate Returns on on that investment
but yes as you say it it’s very
expensive to hire the engineers to build
these models um to to kind of get all
the infrastructure the data centers this
the chips to do the training and so and
then figure out how to put this into
their business you know so and I guess
we’re specifically talking about
generative AI rather than AI more more
broadly because meta and others have
been using that very effectively for
years yeah we also get earnings out
today Microsoft alphabet and Intel out
of the USC evening um thinking about
that 9:00 p.m. London time how do you
think that that is going to play out
because actually the kind of
disappointment around meta had such a
widespread impact on shares yesterday
yeah well I think Microsoft probably has
the biggest head start in terms of
rolling out generative AI tools across
its it’s paid for products um alphabet
is kind of playing catchup we know it’s
been a leader in AI in AI breakthroughs
for like other types of machine learning
but for generative AI it’s sort of been
kind of trying to play C up and so it
has announced a bunch of ways that it’s
it’s rolling these kind of generative AI
tools throughout its products but I
don’t think we’re going to see the kind
of gains from that quite yet yeah and
then there was the controversy around
its Gemini um model as well and the
Fallout from that um you’ve been writing
about about how some Executives at least
are not are not ready for AI really
really interesting um piece worth
checking out on the terminal and on
bloomberg.com what what’s behind that
right this was a survey of Chief
Information officers so it people within
I think 700 uh companies and the general
sense was as you know as we we’re kind
of seem to be learning that most
companies haven’t really figured out how
to make money from Ai and they need at
least a couple more years to really
integrate AI tools into their into their
products and services um some of the
main kind of concerns are how long it
takes to implement uh security concerns
potential biases in AI systems um and of
course um intellectual property
issues this is Bloomberg break Europe
your morning brief on the stories making
news from London to Wall Street and
Beyond look for us on your podcast feed
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Bloomberg 11:30 I’m Caroline heer and
I’m Steven Carol join us again tomorrow
morning for all the news you need to
start start your day right here on
Bloomberg Daybreak Europe
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Your morning briefing, the business news you need in just 15 minutes.
On today’s podcast:
(1) BHP Group proposed a takeover of Anglo American that values the smaller miner at £31.1 billion ($38.8 billion), in a deal that would catapult the combined company’s copper production far beyond its rivals while sparking the biggest shakeup in the industry in over a decade.
(2) Deutsche Bank’s trading revenue rose 7% in the first quarter, more than analysts had expected and better than most of the biggest US investment banks
(3) Barclays posted first-quarter revenue that topped analyst estimates after its stock traders collected a surprise windfall from tumultuous global markets.
(4) BNP Paribas fixed-income traders trailed all of the large Wall Street banks in the first quarter, taking the shine off a strong performance in other parts of the investment bank.
(5) President Joe Biden signed a $95 billion national security package into law and said assistance to Ukraine would begin to move within “hours,” capping off a bruising fight with Republicans over long-delayed assistance for Kyiv and other besieged US allies.
(6) Shares in Meta have dropped by as much as 19% in after-hours trading, after the social media giant said it plans to spend billions of dollars more than expected this year.
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