The Exchange from The New Statesman. Weekly, in-depth, long-form interviews with guests including Salman Rushdie. Would you say you are in the 11th Hour of Life? I hope I'm only in about the 9th or 10th. I-Wei-Wei. So if you were to put on an exhibition called I-Wei-Wei, The Last Work, we shouldn't believe it. Actually, you shouldn't believe anything I said. And Masha Alyokina from Pussy Riot. Is there a world in which you could ever go back to Russia? Politically, we exist there. Physically, we do not exist there. Covering politics. The most governmentally illiterate Labour Prime Minister in history. Culture. I'm not in the mood to take any risks lately. Society. Should education be a commodity? No. And philosophy. Sex is both personal and political in public. Listen wherever you are listening to this. Bloomberg Audio Studios. Podcasts. Radio. News. This is the Bluebird Daybaker podcast. Good morning. It's Thursday the 16th of July. I'm Caroline Hepker in London. And I'm Stephen Carroll in Brussels. Coming up today, the head of the International Energy Agency sounds the alarm on mounting global economic risks as the United States launches yet more strikes on Iran. Hedge fund giants pay smaller rivals for market-beating ideas in the ultimate brain trade. Plus, Europe's coal mines claim their methane emissions have plummeted. So why are experts questioning the data? Let's start with a roundup of our top stories. The United States launched yet more airstrikes on Iran after President Trump pledged to intensify the bombardment until Tehran stops attacking ships in the Strait of Hormuz. An interim peace deal signed just a month ago has all but collapsed as the two sides feud over control of the vital waterway. Speaking to Bloomberg, International Energy Agency Executive Director Fatih Birrell warned the global economy will be in peril if the crisis isn't resolved within weeks. If the Hormuz state is not open end of July, when the travel season starts, which means the demand goes up, we may be entering the restroom for global economy. Thanks God, there was a ceasefire and some oil went through the state of Hormuz. It is good news. But if the current situation lasts longer and the state of foremost is quasi-closed, then we may again have some difficulties for the global economy. Birol spoke to Bloomberg as Trump reiterated his claims Iran wants to resume negotiations after US strikes degraded its missile and drone capabilities. US President also announced Iran had released an American woman detained since December 2024, calling it a gesture of goodwill. The pound has climbed to a one-year high against other major currencies on reports that incoming Prime Minister Andy Burnham will appoint Shabana Mahmood as UK Chancellor. Bluebeck's Chris Pitt reports that the prospect, though, is causing unease among the Labour MPs who helped put Burnham on the path to Downing Street. Andy Burnham becomes Labour leader tomorrow and is due to become Prime Minister on Monday. The Financial Times and iNispapers both report that he'll appoint Home Secretary Shabana Mahmood as Chancellor. She's seen by investors as a more market-friendly choice than the previous front-runner, Energy Secretary Ed Miliband. But while Burnham's team has told Bloomberg that no final decision has been made, the apparent shift away from Miliband has alarmed Labour's soft left, the faction which helped propel the former mayor of Manchester to power. Bloomberg has learned that Miliband's supporters believe passing him over risks alienating key allies before he even enters Downing Street. In London, Chris Pitt, Bloomberg Radio. The head of the CIA says Ukraine's AI-powered attack drones mean Russian troops survive just 20 to 30 minutes after reaching the battlefield, describing them as low-cost killing machines. John Ratcliffe's remarks come as Western allies move to increase support for Ukraine's drone programme. Yesterday, European Commission President Ursula von der Leyen unveiled a new defence package in Kyiv alongside President Vladimir Zelensky. And today I'm glad to announce a new disbursement of another 1 billion euros for drones specifically. But of course more is to come because we have just approved a 10 billion euro disbursement plan for more drones, for missiles and fighter aircrafts. So as I said, this is really just the beginning. von der Leyen's announcement came as the European Union remains deadlocked over a broader package of sanctions against Moscow, extending its price cap on Russian oil to next week to buy more time for a deal The talks come as Ukrainian drone attacks continue to squeeze Russia fuel supplies driving up gasoline and diesel prices as refineries reduce or halt production JP Morgan CEO Jamie Dimon has warned against broad access to Anthropics Mythos artificial intelligence model. It comes as rapid advancements in AI have both industry and government assessing potential threats. Speaking at the Pennsylvania Defence and Innovation summit, Diamond said the powerful technology raises serious risks. Methos, that's a real issue, which I know our government is on top of at this point. It's not to stop small banks from gaining. It's really just to make sure we roll out the stuff that we know is being controlled because you're giving ballistic missiles to individuals with mythos, basically. The JP Morgan CEO is speaking as his bank is among a group of companies that have been testing the model since April. Bloomberg understands that Anthropic plans to meet with investors in the coming weeks ahead of its potential mega IPO. Warren Buffett says he's ending his decades-long partnership with the Gates Foundation as Bill Gates faces renewed scrutiny over his ties to Jeffrey Epstein. The billionaire investor is instead accelerating donations to four charities run by his family with plans to give away his entire Berkshire Hathaway stake in the next eight years. Speaking to CNBC, Buffett says he discussed the decision with Gates just weeks ago. While it's distasteful, while he made mistakes, I made mistakes in hiring all kinds of people or choosing friends and then finding out later that one way or another they weren't what I thought they were. And so I found nothing in there that was beyond what I could see, I could picture myself doing. Buffett discussed his decision on CNBC after the US Justice Department released files that reignited scrutiny over Bill Gates' ties to Jeffrey Epstein earlier this year. The Gates Foundation has since launched its own review, with findings expected later this summer. And finally, England captain Harry Kane says that trying to protect a 1-0 lead backfired as his side suffered a heartbreaking 2-1 defeat to Argentina in the World Cup semi-finals. Anthony Gordon put Thomas Tuchel's side ahead before the defending champion scored twice in the closing minutes to book a final against Spain. Harry Kane says the defeat has left the squad hurting. Everyone has to process what's just happened. Everyone's guided. I'm guided for all the boys, all the staff, everyone behind the scenes because we know how much everyone puts into being a successful national team. And when you're so close, when you're 10 plus minutes away and it slips out your hands like that, yeah, obviously the lads are devastated. England will now face France in Saturday's third place playoff while Argentina take on Spain in Sunday's World Cup final Stephen it was heartbreak it was really hard to watch a really really physical match in that semi-final but you know Argentina clinched it so that's the World Cup let's think about the markets this hour semiconductor stocks are tumbling the Cosby is selling off at the moment 6.5%. The Nikkei 225 also down 3%. The information reporting the ASML plans to raise prices. We also have TSMC earnings. European natural gas prices advancing for a fourth day, but Brent is actually down 0.6% of 1%, $84.46. US inflation reports this week really easing the concern around Fed rate hikes. 4.55 for 10-year Treasury yields. Stock futures for Europe are rising about 0.2% of 1% this morning. So those are the markets. In a moment, we'll bring you a story on how the battle for talent has become a battle for ideas in the hedge fund industry. Plus, why a big drop in reported methane emissions from coal mines in Europe is raising questions among scientists. But another story that we've been reading this morning on queuing for food due to fads portrayed online. Matthew Crosberg has been writing about this for Bloomberg Businessweek. This is a phenomenon you can spot in many parts of the world. a product catches a social media trend all of a sudden there are long lines of people waiting for a day and night photos of videos of the queue then circulate and it becomes an experience in itself to spend hours waiting for whatever it is um summer is peak season for this you'll be pleased to know someone works that out um i would argue that's particularly as americans travelers every time i see this there is a strong representation shall we say of americans in the queues uh for these things especially confusing when it's somewhere that two weeks previously you know was just some was just a regular pace that you passed on the street and now all of a sudden there's a queue of 50 people outside um apparently this is something that is uh you know a recurring trend i think we can say it's you know matthew's been looking back at how there've there've been trends in the past going back as far as the 70s or even before that there is uh you know going to be an issue um that you know that this is not something that's new i suppose has been parodied by Saturday Night Live, among others. I do wonder though given the English love of queuing maybe that Britain could excel in this area What are you saying Stephen Cowell Yes I know queuing is a British thing Queue jumping is still a real no-no here. But I think this is a bit of a different kind of a beast in terms of queuing. I mean, frankly, if one has to wait a long time in a queue for the latest very sugary or fat-laden kind of food item, I think it makes you ponder whether you really want to eat it. But yes, I definitely have seen this phenomenon, you know, in and around London. I mean, is it new? Maybe it's sociable, you know, to stand in the queue to feel like, you know, you're all doing something together. Maybe that's the jolly part of it. I don't know. Yeah, exactly. I don't know. And quite frankly, I'm not going to wait around to find out is the way that I feel about it. But it is a good piece tracking both the sociology and the economics of queuing because there are companies now that you can pay to queue for you. Yes, it's even gotten that far. We'll put a link to the story in our podcast show notes. Well, let's turn to a story from the hedge fund industry now. The world's biggest hedge funds are taking a new approach to talent, tapping portfolio managers at smaller firms. But instead of hiring them, they're just paying for their trading ideas. Our chief hedge fund correspondent, Nishant Kumar, joins us now for more. Nishant, who is adopting this strategy and how exactly does it work? Good morning. I think a better question is who is not. If you look at the industry's giant, almost everyone seems to have a plan for it. This strategy really started with firms like Marshall Ways, which is a London-based, more than $90 billion hedge fund now. They pioneered Alpha Capture by collecting trading ideas from brokers, so sell-side bank analysts, and turning them into trading signals. What is new now is that the model is spreading deeper into the buy side, and the giants are adopting it. from hedge funds including Millennium, Ballyazni, Citadel, Point72, Two Sigma, you name it. They have either used it, explored it, or are building versions of these programs. The mechanics are fairly simple, although it gets very complex to execute and implement very effectively. Smaller managers or outside investors submit trading ideas, portfolio snapshots, or signals that they believe could make money. And these big hedge funds then pay them to use their ideas and filtered load ideas and remove biases, spot patterns. And they use that as trading signals in their wider portfolios. It is a booming rental market for trading signals right now. Yeah, I mean, that's really interesting, isn't it? Kind of atomizing the industry maybe. Why are they doing it? Why not just hire the best people? Well, they do hire the best people. Probably they have run out of the people they want to hire. You know, hiring the best people has become so expensive these days. And it's so slow and competitive that, you know, this is one way to access the talent that you can't hire. and maybe the manager is too niche or too small that they don't make sense for you as an employee right now. So you are just testing out who is good. Someone we quoted in the story said that it's like hiring an intern for three months and seeing whether you can give them a job or not. The biggest hedge funds already employ many of the world's best traders, but they cannot hire everyone and they are managing so much money that they constantly need new uncorrelated ideas from, you know, all kinds of people out there. So AlphaCapture lets them do that. Yeah. So what does this strategy tell us about the state of the hedge fund industry more broadly? Well, it's quite fascinating. It shows how unequal the industry has become. At the very top, you have the giant platforms who have too much money to deploy. They have the best technology and infrastructure. At the bottom, many smaller managers are struggling to raise capital, protect fees and stay independent. Alpha Capture sits right in the middle of that divide. The big firms need ideas because they have too much money to deploy. The smaller fund need revenue, visibility, and sometimes a route to future capital. So this is really a story about how things have become, how tougher it has become for smaller managers in the hedge fund industry. Human judgment is being turned into data. Talent is being rented as well as hired. and the largest hedge funds are trying to make even external intelligence part of their big machine That has been very successful of course Yeah absolutely It's a really interesting development, isn't it? Thank you so much for joining us and explaining to us what is happening in the hedge fund world. Nishant Kumar, our chief hedge fund correspondent, thank you. Stay with us. More from Bloomberg Daybreak Europe coming up after this. This week on Leaders with me, Francine Lacqua I speak to tennis legend Rafa Nadal about how he stayed competitive despite injury I was able to enjoy the victories probably more than if I will not have this issue One iconic match In my mind was, I am almost dead And whether he misses playing I don't miss tennis because there was nothing else to offer Listen and watch Leaders with me, Francine Lacqua on Bloomberg Television or wherever you get your podcasts. A change in the EU's rules for tracking methane emissions is allowing mine operators to report their own results. But a Bloomberg investigation has found the numbers don't add up. Our energy transition reporter Petra Sorge joins us now for more on this story. Now, Petra, you found that some coal mines in Poland, Germany and the Czech Republic reported huge drops in methane emissions after this rule change. Just how unusual were those figures and what's raising alarm bells for experts? Yes, good morning. So the drops were between 99% and 64% in less methane emissions between these three countries. This has been unusual because prior to the changes of the rules, countries have used like a nationwide emission factor. This is like the formula how you calculate emissions from a surface mine. The problem is that surface coal mines are difficult to measure, while for other industries, measurements are easier. But because these drops were so huge, scientists just don't believe that. And what turned out is that these tests were basically done by the miners themselves. No verification or third-party audits have been done there so far. I think that's the thing that only will come next year once the EU is doing some regulations and giving the guidelines how to do that. But this is what has raised alarm bells, this massive drop. Yeah, so concerns about the data. So what's the response, though, from the miners, but then also from the EU? Right. The miners, they all said that their measurements are state of the art and that they fully comply with the regulation. And that's correct in the sense that the regulation does not specify how they have to do that. They should actually, the new sign says you would have to test underground, like maybe 300 meters deep and not directly from the surface because the methane on the surface will already have dissolved into the air. Like when you open a soda bottle, the gas is gone, right? The Commission itself says that it is now going to prepare a request to draft standards so that also coal mines will be covered. We do expect next week that in the whole EU methane package guidelines will be presented and hopefully something more useful for the miners to test. What does all of this mean for the EU's target to help reduce global methane emissions by 30% by 2030? Honestly, it's probably going to make that goal harder because if you are saying that you have much less emissions, like we're talking of a thousandth of the values we have seen before, like three orders of magnitude less of results, then I think it is totally underestimating the effort still needed to actually reach that methane cut. Thanks for listening to Bloomberg Daybreak Europe. If you're enjoying the podcast, give us a follow, leave a rating or review, and maybe send it to that one friend or colleague who's always trying to keep up with the news. And if one podcast today isn't enough for you, you can also listen to us live every weekday from 6am in London on DAB Radio, on TuneIn and on the Bloomberg Business app. Or if you've got a smart speaker nearby, just say, play Bloomberg Radio. We'll be right back. Daily Podcast on Apple, Spotify, or anywhere you listen.
