Isomorphic Labs' $40B Valuation; WHO Urges Russia Plague Transparency

Author: Bloomberg Television · Watch on YouTube

Video authored by the channel shown, not by IANIA; all rights belong to the creator. Transcript and summary generated automatically; the original-language content is preserved.

Original language: English

Original video: Isomorphic Labs’ $40B Valuation; WHO Urges Russia Plague Transparency · Channel: Bloomberg Television · 46:49 · Watch on YouTube

Topics: AI infrastructure and hardware, Markets and economy, Health and science

Summary

Bloomberg Daybreak Europe covers a pause in the global equities rally as oil rises above $102 a barrel amid reports of possible US strikes on Iran. The program examines EU-China trade tensions, including possible limits on Chinese hybrid-car imports, alongside the high valuation sought by AI drug-discovery startup Isomorphic Labs. Other segments discuss Federal Reserve rate expectations, risks to energy supplies, and the WHO’s call for Russia to provide more information about a researcher’s death at a plague institute. The broadcast also reports on a shipment of F-35 parts rerouted through Hong Kong and questions about the future ownership of Inditex.

Key points

Asian stocks fell as higher oil prices stoked inflation concerns; European futures edged up while Brent crude climbed above $102 a barrel.
The EU is considering temporary limits on Chinese hybrid-car imports as it seeks to address a reported billion-euro-a-day trade deficit with China.
An EU-China trade dispute could escalate, but European reliance on Chinese batteries, rare earths, and other supplies may constrain Brussels’ response.
Isomorphic Labs, an Alphabet- and Google DeepMind-spun AI drug discovery company, is reportedly in early talks to raise funds at a valuation of at least $40 billion.
Reports of possible US strikes on Iran and attacks on shipping and regional infrastructure have added a risk premium to energy markets.
A Bloomberg strategist said markets showed little conviction in a Federal Reserve rate increase in October but were pricing in a December hike.
Bloomberg reported that F-35 parts reached China after a UPS employee missed an email about the shipment’s routing.
The WHO is seeking more information from Russia about the death of a researcher at an anti-plague institute; the cause of her pneumonia remained unclear.
Sandra Ortega owns an approximately 5% stake in Inditex but has no company board seat, raising questions about how the family’s shareholders may coordinate in the future.
The WTO director-general said global trade faces its most serious test in 80 years as fragmentation and unilateral action increase.

Chapters

Start	Chapter	Summary
00:02	Opening headlines and market overview	The program leads with rising oil prices, EU-China trade tensions, Isomorphic Labs’ reported fundraising, and the day’s market moves.
02:05	Asian markets and Chinese trade tensions	A Hong Kong correspondent details declines across Asian equities and explains why Chinese hybrid-car exports are drawing EU attention.
05:19	EU-China trade talks and Marco Rubio’s speech	Correspondents discuss possible EU limits on hybrid imports, Europe’s room to confront China, and Rubio’s remarks on US power and Western unity.
11:07	Isomorphic Labs’ reported $40 billion valuation	Bloomberg’s Neil Campling discusses the company’s fundraising talks, its AI drug-discovery work, and its pharmaceutical partnerships.
14:49	Iran tensions and energy-market risks	An energy correspondent outlines reported US strike planning and explains how regional attacks could threaten oil and gas infrastructure.
20:13	Fed rate expectations and F-35 shipment report	A strategist assesses the outlook for US rates and Treasury yields, followed by a report about F-35 parts routed through Hong Kong.
24:07	EU trade strategy and global trade fragmentation	An EU trade expert discusses potential measures against Chinese imports, the risk of retaliation, and challenges to European unity; the WTO chief warns of trade fragmentation.
37:08	WHO seeks information from Russia	A Bloomberg editor reviews what is known about the death of a Russian anti-plague institute researcher and the information requested by the WHO.
40:49	Sandra Ortega and Inditex’s family ownership	A report examines Sandra Ortega’s stake in Inditex and the questions her family’s future coordination may raise.
44:40	Markets, energy prices, and the day ahead	The closing segment reviews Fed rate pricing, equity-market resilience, European gas prices, and upcoming economic events.

Quotes

A billion euros a day in terms of the deficit with China. — 07:25

This one of course is very focused on that holy grail if you like of applying AI to to healthcare, medicine, and science. — 12:07

It could take years. — 19:04

Global trade is under tremendous stress — 36:05

there are a lot of things that we don’t know — 39:16

Concepts and entities

Isomorphic Labs, Google DeepMind, AlphaFold, Maroš Šefčovič, Elvire Fabry, World Health Organization, Inditex, Sandra Ortega, Amancio Ortega, TSMC

Full transcript (original language)

00:02 Live from Brussels, this is Bloomberg Daybreak Europe. I’m Stephen Carroll with your top stories. The global equities rally grinds to a halt as Brent crude climbs above $102 on a report that President Trump [music] is considering fresh strikes on Iran before the midterms. Ban for Beijing, the EU’s trade chief heads to China as Brussels gets tough over its [music] billion-dollar-a-day trade deficit. Plus, Bloomberg learns that the AI drug discovery startup Isomorphic Labs is in

00:32 talks to raise new funds at a valuation of at least $40 billion. dollars. A very good morning to you. Let’s check in on where things are moving on markets. So, we do have Asian stocks in the red for a second day trading today. [music] Chinese shares are back re-open re-opening into the red though as we’re looking at the pressure on markets. Earnings from Samsung disappointing investors and their shares lower in South Korea, too. European stock futures just nudging into the green as we come on air this morning. >> [music] >> Wall Street futures are flat after we did see the S&P 500 pull back from that

01:03 record high in trading yesterday. Taking a look at the other assets that we’re following for you this morning. Oil prices, as we mentioned, back up over $102 a barrel for Brent crude, up another 2% [music] on the day. The euro hovering around the 112 mark. The dollar holding on to much of its strength during yesterday’s session. So, we’ve still got the euro near those lows that it hit earlier on in the week and the 10-year Treasury yield creeping back up again, another two basis points this morning at 5.31%. [music] In terms of the key risk events that we’re watching for you this morning, at 7:00 a.m. UK time, we’ll get earnings

01:34 from the supermarket chain [music] Tesco, a good reading on the UK consumer that we’ll get from their first half numbers. At 12:30 [music] p.m. in the UK, 1:30 here in Brussels, the ECB will publish the minutes of its September [music] meeting, insights into the rate hike decision from the central bank there. Later on, and we do have the US jobless claims as well, 1:30 p.m. UK time for those. That’s all to come. Let’s get you set up for the day ahead. >> [music]

02:05 [music] >> The global stocks rally has ground to a halt as oil prices rise again. Let’s see how Asian markets are faring now with Winnie Seu in Hong Kong. Morning, Winnie. >> Yeah, good morning, Stephen. Well, similar to what we saw in the US, the higher oil prices, the concerns around inflation weighing on Asian stocks today. And in fact, we are seeing the MSCI Asia here having its worst day in um about 3 weeks. Now, when it comes to the drag today, though, interestingly, we are seeing a Singaporean stocks

02:39 actually down about 3%. Um also, this is being weighed down by the bank shares that are really losing ground. So, we had earlier this week in fact, a note from JP Morgan highlighting how the higher bond yields are likely going to hurt the third-quarter earnings of these companies given that this is going to hurt its um capital activity flow as well as the financial investment. So, you can see that banks really taking a hit. Now, when it comes to the Japanese 30-year bond yield, we are looking at pretty solid result from the auction

03:11 earlier today. And it is a similar picture of what we saw earlier this week with the 10-year bond yield with a 10-year auction as well. So, overall, it’s showing that with yields at these levels, investors are really seeing more having more appetite to buy further. Now, South Korea’s Kospi index also bit of a drag today, and this is coming after Samsung Electronics here taking quite a big hit after its quarterly profits still coming at a record, but investors are not quite satisfied given that it actually missed estimates.

03:42 Revenue also actually missed um estimates. And at this point, they want to see the sustainability of earnings growth going forward, especially with capex investments running high plus barring costs also rising. Now we’re going to keep a very close eye on TSMC because it’s going to be announcing monthly as well as quarterly sales in just a bit. Kioxia a bit of an outlier today. We had a very big rebalancing in terms of waiting when it comes to the topics index yesterday. So investors right now expect that Kioxia the memory

04:14 chip maker in Japan going to be able to enjoy further passive flows. Flip where we take a look at Chinese assets as mainland China coming back online after that week-long holiday. Overall not a very pretty picture especially with uh numbers when it comes to Golden Week holiday spending and travel seems quite sluggish. You are seeing CSI 300 here reversing earlier gains. A big drag today actually is in the tech sector as well. Tech heavy star 50 here down about 4% concerns around stretch valuations really weighing on sentiment and plus

04:48 that attention shifting to between EU and China. Tension seems to be escalating right now a little bit with the EU also preparing to impose a further limits when it comes to imports of China’s hybrid cars. Back to Steven. >> When you say when Hong Kong, thank you very much. Well, let’s get further into that story that Winnie just mentioned. The European Union striking this more assertive approach to China as it heads into two days of negotiations in Beijing aimed at avoiding an economically damaging trade

05:19 war. Bloomberg has learned that the EU is weighing temporary limits on imports of Chinese hybrid vehicles. Such a move would mark a new step in the block’s effort to address widening trade imbalances raising the stakes for high-level talks. With me now is our chief Europe correspondent Oliver Crook. But first let’s bring in our China correspondent Min-Min Lo who’s in Hong Kong. Min-Min, why are hybrids under the spotlight and what is China’s strategy for dealing with the EU.

05:49 >> Well, Steve Steven hybrids are under spotlight because we have seen a surge in Chinese exports to the EU. One in four hybrid cars in the EU now are from China. And if you remember, the EU has already placed tariffs up to 45% on Chinese battery electric vehicles. These are the full electric vehicles, but the hybrids have escaped those higher tariffs and that’s why we saw a surge in these hybrid exports while the BEVs that purple line over there, you see that starting to slow down. So, that’s why the EU is now looking at placing caps on

06:21 these exports. It could look like tariff rate quotas. So, above a sudden volume of exports, there would be higher tariffs. So, this is similar to what Canada has already done. Now, China previously has already indicated that it is opposed to any voluntary export caps. So, if the EU were to place these unilateral caps on China, it’s possible that China is going to find a way to retaliate. We did see on Chinese social media platform Weibo a Chinese state-linked media account posting something that says that China has the

06:53 toolbox that it needs to retaliate including for example, anti-foreign sanctions laws. It can investigate sectors that are benefiting from foreign subsidies. If you look at the last time when the EU imposed these subsidies on BEVs, China retaliated with tariffs in sectors like pork, brandy. Uh and so, potentially this is going to escalate and this is certainly something that is going to be discussed at the EU-China trade talks this week. >> Okay. Our China correspondent Minmin Low, thank you very much. Oliver here with me in Brussels. The The rhetoric that we’ve been hearing has been ramping

07:25 up going into these meetings for the from the EU side as well as from China as well. What’s the European strategy? >> Yeah, I mean I think the ultimate outcome here ideally for the Europeans and again, they’ve set a sort of informal deadline to the end of this month to try to get some meaningful progress on the relationship with China. And as you know, Steven, I mean a lot of these themes are nothing new for the Europeans. It just reaches a point where it becomes totally unacceptable. A billion euros a day in terms of the deficit with China. We talk about this hybrids potentially wiping out, you know, a large part of the domestic market here in Europe. And those things are seen as going a bit too far. And as a consequence, something needs to

07:57 happen. But even, you know, the Spain the span the Spaniards the Spanish nation who often want a closer relationship economically with China say that something needs to happen. The Germans as well sort of having more willingness to do something cuz the car makers are obviously very exposed. The real question is, is there going to be a European appetite to really take on China on a trade war? And I think there the the answer to that question is going to be potentially not. So, there’s going to be a ceiling in terms of what potentially they can bring on to the to the Chinese in terms of retaliation. Because even the sort of green transition, the Europeans are entirely dependent on the Chinese for a lot of the infrastructure, even the charging

08:29 infrastructure we talk about for the EVs for the European ones. That’s all coming from China. The batteries themselves are all coming from China. So, for Sefcovic, really the ambition here is try to get some kind of political agreement where you reduce some of the volumes coming over from China into Europe while and gaining a little bit more market access for the Europeans. But I think I suspect in order to really get a rebalancing, there’s going to be some kind of difficult conversations economically. And I suspect the Europeans right now, just given the fact where growth is and inflation is, are probably not going to be willing to take on a full trade war with China at this stage. >> Yeah, and also amazing the political upheaval in places like France and Spain

09:02 also feeding into this too. Oliver, meanwhile, the US Secretary of State Marco Rubio has delivered a robust speech in Athens warning about the dangers of Western decline and emphasizing that the US is intent on revival and dominance. >> We choose the unapologetic pursuit of national power. To take back control of our critical supply chains, to reindustrialize our economy, to rebuild our defense, to fight for dominance of the technologies and industries of the future.

09:34 >> So, strong words from Marco Rubio repeating much of what we’ve heard from Trump officials during this presidency as well. Now, he didn’t single out a particular nation in his speech, but Europe presumably is at the center of these comments, given the location at least. >> Yeah, exactly. But, I think that what’s interesting about the Trump administration they often take these opportunities when they come to Europe to basically say this is the sort of the cradle of Western civilization. This is basically where America comes from, and that the Americans really just have an interest in preserving Europe as a sort of the sort of generator in a certain sense of the United States. But, of course, the question of what Western

10:05 values and these sorts of things are is not sort of defined necessarily entirely by the United States. The Europeans have some ideas of what that means. So, for Marco Rubio, there’s another opportunity to talk about sort of the military and the defense build-out. That is something that actually there is not so much resistance on the European side. But, again, it’s used once again to talk about mass migration as one of the sort of big issues here in Europe. And you had Trump uh over the last couple of days linking the protests in France, which are obviously about educational reform and government cuts, to mass migration. So, it’s a sort of another backdrop for basically the Trump administration to advance what they see as a sort of fracture in those sort of

10:36 Western values. Um and trying to push the Europeans in the direction. Of course, what they don’t want, in many ways, is the Europeans to become completely autonomous from the United States, whether it is on the military spending, critical infrastructure. They uh certainly don’t want them to regulate the tech companies. So, in a certain way, obviously, the Americans want the Europeans to be strong in a certain sense and sort of their ally, but at the same time, not sort of to break their entire dependency or sort of make the uh life too difficult for many of the companies that are operating here in the in Europe from the United States. >> Yeah, perhaps another reminder of the complexity of that relationship and how it’s evolved under the Trump

11:07 administration. For now, our chief Europe correspondent, Oliver Crooks. Thank you. Now, Isomorphic Labs, an AI-powered drug discovery startup spun out of Alphabet’s Google DeepMind, is in early talks to raise new funds, sources tell Bloomberg. This would give the firm a valuation of at least $40 billion. Let’s bring in Bloomberg’s senior strategist, Neil Campling, for more on this story. Neil, few AI developers have even progressed to clinical trials. So, what’s the difference I suppose this time around

11:37 with Isomorphic Labs? >> I think they they the difference primarily the moment actually what stands out is the valuation. As you mentioned Steven that they this is a series C raise where they are looking to raise money on a valuation of believed to be $40 billion potentially up to $50 billion. To put that in context, in most AI labs in the in the in the wide-ranging world across multiple disciplines,

12:07 typically even in the this year where the appetite is so strong have been in the two to $10 billion range. The biggest I’ve seen mentioned of any AI lab is Enso which raised money on a $14 billion valuation. So, there’s clearly appetite for these kinds of deals. This one of course is very focused on that holy grail if you like of applying AI to to healthcare, medicine, and science. And the valuation as well is is over 100 times bigger than what Google paid for

12:40 DeepMind itself back in 2014. So, there’s a lot of appetite and interest in in this space and it also comes just five months after they raised money for a series B valuation just over about raised $2 billion. So, there’s clearly a lot of interest in this and it’s it’s something that you know is very quickly comes fruition. It it was formed out of Google’s DeepMind back in 2021. So, um and this should help accelerate to bring

13:11 to bring the development of drugs to and products to market. >> As you say moving AI into the drug sphere a huge step. How much do we know about the drugs that Isomorphic is working on? >> So, um, so what they what they’re working on are protein protein structures to to to help scientists learn about how life molecules interact. Now, they have this product this product called AlphaFold and it’s made from long-chain amino acids. Now, it’s

13:43 it’s proteins underpin every biological process in every living thing. So, you know, it really does go way into the depths of this this area of the market. Now, the other thing that they’re trying to do and the whole idea of raising this capital from what we understand is because they’re looking to create long-term commercialization of their internal pipeline. Now, this company has already made strategic partnerships with a number of the big household names in the pharma industry. So, they have deals with Eli Lilly, Novartis, Johnson & Johnson. Um, and but they are looking here to create internal

14:18 products to focus primarily on oncology and immunology. So, two massive areas in the healthcare industry. >> Yeah, really interesting development. Neil Campling, our senior strategist, thank you very much for bringing us the latest on that story. Still ahead, how a missed email led to China getting hold of parts of an F-35 stealth fighter jet. But first, energy prices climb on reports the US is drafting plans for a fresh strike against Iran. More details

14:49 next. This is Bloomberg. >> [music] >> Welcome back to Bloomberg Daybreak Europe. Oil and European gas prices are gaining this morning following a report that the US is drawing up plans for a military strike options against Iran before the midterm elections. The report

15:21 by the Atlantic runs counter to a widespread assumption that President Trump would hold off on escalating the conflict with Tehran before polls before the polls next month. For more, we’re joined now by Stephen Sapchenski who leads our team covering energy in Asia. Stephen, do we have any more detail first of all on on what the size and targets of a potential strike might be? >> Not exactly. You know, I think the the administration according to this report from the Atlantic is still considering the the scale of such a strike. But they

15:51 did provide a few small details, one of which could be that there could be a smaller strike ahead of the midterm and then a larger one followed after that. But I I think what’s what’s been happening clearly here in in the Strait of Hormuz, as we’ve seen an escalation of attacks by by Iran on ships and vessels. And that comes as there’s been an increase in traffic itself. Oil flows are essentially back to pre-war levels or very close to those levels according to analysts as well as the US government. Now, the important thing

16:25 though is what is the US government going to do in response to these attacks? While the it’s not upsetting or upending the flows, we have seen just in the last 24 hours a ship attacked deep in the in the Gulf. A ship just north of Qatar was was struck according to the UKMTO. And that would be according to their information the deepest strike within the Gulf in a month. So clearly Iran is sort of stepping up its action in the region. And with the Atlantic report as well as just looking

16:55 at what how the Trump administration generally acts, it does seem to be that there is expectation that you could at least the White House will be weighing what they’re doing to to curb this and to hit back against Tehran. >> And as you say, this is now provoking a reaction in markets that’s that I suppose is undoing some of the optimism that we’d seen about the increase of flows coming through the Strait of Hormuz. On top of that, we have the Iran-backed Houthi groups intensifying attacks against Saudi Arabia. How do energy markets interpret the broader escalation?

17:29 >> Absolutely. You know, you have the Houthi attacks on Saudi airport. There have been casualties involved in that attack. And you know, Houthis have as well been looking at attacking infrastructure across the region. They’ve hit Saudi oil infrastructure, which has been impactful on the market. So, I think you know, the way that this is being interpreted is that clearly there is a risk to a further escalation. Um it’s not just the Strait of Hormuz anymore

18:02 or even the Bab el-Mandeb Strait in in the Red Sea. It is now a risk and a threat that could spiral to the wider region as as ships in in the Gulf are are at risk and and under threat by potentially further further strikes. Now, I think that the fear though is that we spiral back into where we were in March where Iran was hitting infrastructure across all of the Middle East. They were hitting pipelines, LNG

18:32 export plants, refineries. Now, we haven’t been at that stage for for months. And that’s why oil prices are are more around $100 for Brent as opposed to $120. But there is a fear that if you see the US threatening strikes or if Iran feels that they’re losing control over the Strait with all this oil flowing out then you could potentially see them backed into a corner where Tehran does start to target infrastructure. And the

19:04 risk to infrastructure is that if you do get a damaged refinery or or pipeline, then it isn’t just a matter of, okay, when’s the peace deal between the US and Iran going to come and open up Hormuz? It is then, how long will it take for that infrastructure to be repaired? Uh you have to bring in different equipment. It could take years. For example, the uh Ras Laffan LNG export plant, when it was hit in March, two of its production trains were damaged. That will take 3 years to repair. Um so, that’s the the fear in the market and why we’re still have that risk premium. It’s that what is Iran going to do next

19:38 as this tension between Tehran and Washington sort of carries on. >> Okay, Stephen Stapczynski, leading our team covering energy in Asia. Thank you very much. Coming up, bets fade for a Fed rate hike this month. We’ll explore the path ahead next. This is Bloomberg.

20:13 Welcome back to Bloomberg Daybreak Europe. Well, the minutes from last month’s Fed meeting show that all 19 rate setters backed the decision to hike in a move to guide against the risk of intensifying inflation pressures. Let’s bring in our M Live strategist Van Ram for more on this. So, Van, what clues then can we take away from these minutes about the path ahead? Markets have been rethinking a little what the Fed’s going to do next. >> Morning, Stephen. I think that there is overwhelming evidence that the Fed does

20:43 Fed officials are looking to raise rates at least once more by the end of the year. I think that we saw that in the language of the minutes yesterday. But, I think that, you know, if you look at the uh bets for October, the bets have faltered. There is no pricing, really. There’s no conviction in the markets that they will raise rates in October, which I think is the correct call. Uh but, the markets are fully priced for a 25 basis point increase in December because that’s a fully funded trade meaning the the risk reward

21:14 favors the asymmetry of the risk reward favors receiving those swaps because there is a chance that the Fed may not go should be labor reports. I mean we’ve got two more jobs data reports coming up before the December meeting and if those reports show weakness then the Fed may be inclined to hold off. So the risk reward in those swaps is towards receiver slightly I would think although that’s not my central case but that’s purely the risk reward. >> It’s also interesting to look at the signals we’re getting from the auctions

21:46 as well. These yields are obviously drawing investors still despite the options they have out there from the likes of the AI fundraisers. >> Well I think that you know you there are quite a few investors who are thinking that look these are good levels to be buying buying treasuries at because you know these are interest rates that you have to go back many years to in history to see. So I think that in interest rates ultimately are mean reverting. So I think that you know the question is where is the turning point and the turning point is so hard to call

22:19 because of the economic resilience that we have had and we have discussed before where you know in an environment where growth is above trend and inflation is above target that would favor higher nominal yields and therefore that means you can’t hunt for duration go bargain hunting for duration. So I think what investors are doing here is scaling in. So go in at 5:30 and then maybe at 5:50 and then there abouts. So that’s what is going on and I think that that trade may continue where investors scale in.

22:52 >> Okay Van Ram will continue to watch the movements on those markets as yields tick up again today our M live strategist Van Ram there. Now on some of the top stories that we’re following this morning. Bloomberg has learned that China got hold of parts for an F-35 fighter jet after a UPS employee missed an email warning them not to route the shipment through Hong Kong. Our source says the delivery was meant to go via South Korea and Taiwan, but got rerouted through Hong Kong after a delay. The package contained an F-35

23:23 canopy and weapons bay doors that are coated with radar-absorbing material that enhances stealth capabilities. Coming up, the EU gets tough with China over trade, but will Brussels’ harder line actually work in Beijing? We’ll be asking our next guest. This is Bloomberg. >> [music]

24:07 [music] >> Live from Brussels, this is Bloomberg Daybreak Europe. I’m Stephen Carroll with your top stories. The global equities rally grinds to a halt as Brent crude climbs above $102 on a report that President Trump is considering fresh strikes on Iran before the midterms. [music] Bound for Beijing, the EU’s trade chief heads to China as Brussels gets tough over its billion-dollar-a-day trade deficit.

24:40 Plus, Bloomberg learns that AI drug discovery startup Isomorphic Labs is in talks to raise new funds at a valuation of at least $40 billion. [music] Well, let’s check in on how markets are trading this morning. So, Asian shares in the red. China back open after the holidays today, but those markets opening into the decline that we’re seeing over the rise in oil prices. European stock futures ever so slightly higher this morning but stock futures on the S&P 500 looking weaker after we did see that index inch away from its record high earlier this week. Oil prices up this morning if we take a look at our

25:14 other board of assets that we’re following for you. The Brent crude price up over $102 a barrel approaching $103 a barrel now in fact as we’re looking at the bloom the Bloomberg dollar spot index slightly weaker so the euro is trading slightly stronger today but holding on to much of its recent weakness around 112 and treasury yields moving up slightly this morning as well. 5.31% is where the 10-year is trading. Just to bring you up to date with some breaking news now from the chip sector. This is from TSMC reporting third quarter sales of just under 1.5

25:46 trillion Taiwanese dollars slightly above estimates there as well. The September number had been for rather that number is for growth of almost 55% in sales for the month of September. TSMC’s shares up about 65% year-to-date so far so further growth and strong numbers there coming from TSMC and their latest sales figures for the month of September. Well, the EU’s trade commissioner Maroš

26:20 Šefčovič is heading to China at a fraught moment for trade relations between the two economic powers. EU countries are calling for more robust defenses against Chinese imports while also relying on raw materials from Beijing. Bloomberg’s latest reporting says the EU is preparing measures to limit the imports of hybrid cars. We can discuss now with Elvire Fabry who is director of the trade and economic security program at the Jacques Delors Institute and rapporteur of the think tanks EU-China working group. Elvire, great to have you with us on the program this morning. What is the best possible outcome the EU can hope for from these talks?

26:57 >> Well, first of all, there are two immediate asks from the from Commissioner Sefcovic because once one is the rebalancing of of trade flows because as you just mentioned before, 1 billion a day of trading balances just not sustainable. So, what what we would expect from the European side would be a limitation on some strategic exports notably on in in in sectors where the the current exports are just are just crashing the European markets

27:30 and I can think for example of of course we we mention always the cars but we can think about the chemical products. And the other one is the ban on rare earth because Trump has renegotiated a truce until January but we are still under the threat that in November China could impose some again some rare earth exports ban and and could even extend that to to to other products. And then we have the

28:01 structural problems but the structural problems which are related to more opening of the Chinese markets which are related to the use of subsidies in the Chinese economy. Those one would be harder to to address. So, I would say we Sefcovic will expect some concrete responses on the rebalancing and first of all it is addressing a message to China that the Europeans are ready to use more actively their trade defense tools and maybe new tools because as we have seen

28:35 at the beginning of the week the the message that France and Germany have sent by by publishing a joint joint paper is a strong message. They were not alone until now. And the fact that Germany and France now are backing Commissioner Sefcovic will be an important step not not not only in the in the short term in this discussion, but in the future week in the future weeks because it means that the council may have some more unity to to to use

29:11 actively the current tools and a potentially new tools because this is what is cooking on the European side is the preparation of new tools. >> But what do you see as the risk of of sparking retaliation from China? You mentioned the dependence on on rare earth as being, you know, something that’s a really key part of the European economy as well. Where is a strategy where you’re talking about the potential threats a difficult one or a risky one for Maroš Šefčovič to be adopting?

29:42 >> Well, the Chinese the Chinese government is already signaling very concretely that it is ready to use retaliation. It is threatening. It is threatening the Europeans and the Europeans must be ready to handle some some retaliation. And this this is part of resilience uh strategy that to be able to to to handle that in some sectors. Uh access to the European market shouldn’t

30:16 be I mean must be conditioned on more level playing field must be conditioned on on the continuation of continuation of supply. And this is this is why I think for the Europeans this is must signal a a new phase in the bilateral relations. Currently the evolution of the relation is not sustainable and it shouldn’t be seen only as a problem for the Europeans, but it’s a more global problem. The dependency, the increasing dependency of

30:48 the global market to on the Chinese production, and notably the monopoly of China in some sectors, is not sustainable either for developing countries and and throughout the world. >> But do European companies operating in China risk being targeted if these relationships sour? >> Uh yes, they did. They But they they already they they have they have seen the benefits already decreasing in the Chinese market. Uh they need to have also the leverage of the

31:20 of the the European Commission to get more access to the Chinese market because this is not only about companies that are already they have the plans in China or they’re exporting to to China. The problem is that Chinese companies uh have been told to use more local production, Chinese production, and uh and and procurements uh have also uh are also including some some specific clauses to use Chinese production. So,

31:51 this is this has to be this has to be rebalanced. And it’s not it cannot only be also European posture. It has to be a coordinated posture with uh with the other countries throughout the world. >> What about the internal politics in the EU? How does that feed into it? We know that there’s been some disagreement over companies about how countries about how to approach China. Spain has been softer in its tone, but you have elections

32:22 looming there as well. How does that play into how Europe will be able to prevent present a unified strategy? >> That’s that’s has always been the challenge of the Europeans. That’s why you the the alignment of some member states before the summer, notably the Netherlands, Lithuania, Italy, France, was was an important step. Now, with the alignment of Germany and France, which is once again, I underline it, very important step because we know that

32:52 in Germany there are strong debates within the coalition. So, it’s a it’s a it’s a continuous challenge not only to align member states, but to have a coherent position within within member states. We see that the the interest and the exposure of companies towards China is not the same if you’re talking about a big company which has a global market or a supplier of your supplier and that you you need to to to

33:24 protect yourself and you’re more engaged on the on the you’re supporting more the industrial policy of the relaunch of the industrial policy within the within the EU. So, this cohesion has to his is is fragile. It is, of course, very exposed in France with the coming elections in in May and we start to have candidates taking position more clearly on on China.

33:55 But but the the the the fact that this is not a sustainable this is not anymore a sustainable situation and that the internal market is so exposed and not to be in strategic sectors machinery chemistry of chemistry sector and that the also the dependency that we have on some components for strategic sector like the pharmaceutical sector where where those components China has a monopoly position.

34:27 I think we we we we we heading towards a a situation where they they needs to be more alignment between the member states >> [clears throat] >> and and the Frankfurt German one needs to be a first important step. >> Okay. Elvire Fabry, trade and economic security program director at the Jacques Delors Institute, thank you for joining us from Paris this morning. Just want to bring you some breaking news now from China. Tencent mulling a $5 bond offering as the AI push ramps up an

35:00 offshore bond sale of as much as $5 billion being considered according to people familiar with the matters. This is adding to the wave of tech companies seeking debt financing in AI. These notes, according to our reporting, could be denominated in dollars and offshore yuan and the sale could come as early as this month as well. So, another sign of the fund drive fundraising rush in the AI trade from Tencent with our latest story there. The global trade is facing its sternest to test in 80 years. That’s the view of

35:31 the head of the World Trade Organization. That’s as US tariffs, disruptions, and fragmentation reshape supply lines. Speaking to Francine Lacqua on the latest episode of Leaders, the WTO’s Director-General, Ngozi Okonjo-Iweala, warned growing dissatisfaction is pushing some countries towards unilateral action and bilateral deals. >> This is an unprecedented time for global trade because we have seen disruptions to trade and emerging fragmentation in a way we’ve not seen since really 80

36:05 years. Global trade is under tremendous stress and that is because many members of the WTO are beginning to feel that the rules no longer work for them the same way that they used to work in the past. So, the dissatisfaction is leading to unilateral behavior on the part of some, meaning that they are deciding okay this doesn’t work for us we’re going to try bilateral arrangements by others is leading to a lot of complaints.

36:38 >> Subscribers can watch the full interview online and on the Bloomberg terminal airs on Bloomberg TV from Monday. Just want to show you some live pictures coming out of Greece this morning. We have the US Secretary of State Marco Rubio leaving as he comes towards the end of his trip there. Now of course the speech that we brought you a little bit of it earlier as well being unapologetic about the US making its warnings to Europe about its need to stand on its own two feet and and the necessity of what the US is doing in its

37:08 policies towards its European partners as well. So Marco Rubio speaking there as he wraps up that trip to Greece. Now the World Health Organization is pressing Russia for more information on the death of a worker in a plague lab. The organization has warned that’s what’s been disclosed so far making it impossible to determine the risk the case poses. President Trump says he will be speaking to the Russian leader about the incident. >> I have a call set up. Today is his birthday.

37:40 Today is Vladimir Putin’s birthday. I’m sure you’re going to celebrate it. Are you going to celebrate his birthday? No, I have a call set up. They’re sharing it a little bit with our people. We expect them to share it a lot with our people. We have I just met with our people. We have brilliant experts. They know everything about what’s going on and all of that information is going through them. >> Let’s bring in Russia Bloomberg’s Russia economy and government editor Greg Sullivan for more on this story. Greg, how much do we know about the original

38:12 incident, this death of a worker in a Russian lab? >> Well, we don’t actually know a whole lot. Uh there are a few things that we do know, however. We know that a 28-year-old woman died earlier this month from pneumonia. We still do not know the cause of that pneumonia, and the World Health Organization said they don’t know the cause of that pneumonia yet. We know that she worked at an anti-plague institute as a researcher. Early on, there were some rumors and unconfirmed reports spreading in local media and on social media that perhaps there was a test tube accident. That was

38:45 unconfirmed, and of course Russian health authorities denied that there was any accident with micro organisms. Uh Russian health authorities have since then said that there have been no confirmed tests of plague in the region, and that extensive testing on this woman came back with no evidence of dangerous microorganisms from her work. So, that’s the picture that we have right now. We know that the head of the Russian health agency did travel to the region early on for an emergency meeting, and that helped fuel some of this international scrutiny. But, there are a lot of things that we

39:16 don’t know, and that the World Health Organization continues to press Russia for more information regarding. >> President Trump is saying that he’s going to speak to President Putin about this. But, the WHO is also looking for more information, as you say. Are the Russians telling anyone about this lab and what material it works on? >> Uh the information out of Russia has been rather limited. Um the health agency has made certain statements. They’ve said that the situation is stable, that they have been monitoring contacts, and that

39:47 there have been no confirmed cases of plague among contacts of this woman. And of course, that the results from the testing that they released earlier. However, both the World Health Organization and the US have publicly urged Russia to share more information. The World Health Organization is specifically looking for the results of that lab work, the kinds of tests that were done. Uh we heard that the World Health Organization said, of course, that the the cause of that pneumonia remains unclear even at this stage. We know that uh the World Health Organization said that 200 people were

40:18 uh quarantined. That came after earlier reports said that there were 200 people um under medical observation. So, uh the World Health Organization has publicly said they need more information. And of course, the US has said that, too. And we have uh US President Donald Trump saying that he plans to talk to Putin soon. And it’s it’s pretty clear that he’s hoping to get some information on the situation out of that call. >> Okay. Bloomberg’s Russia economy and government editor, Greg Sullivan, thank you very much for bringing us up to date. Coming up, why Spain’s richest woman is

40:49 at the center of questions on the future of the Zara parent, Inditex. We’ll have the details next. This is Bloomberg. >> [music] >> Welcome back to Bloomberg Daybreak [music] Europe. Spain’s richest woman, Sandra Ortega, is known to be intensely private, but she’s

41:21 on the verge of becoming highly influential at the world’s largest fashion retailer. Her father is Inditex founder, Amancio Ortega. When he passes on, Sandra will be one of three children who inherit billions. That leaves investors wondering how these shareholders will deal with one another. Bloomberg’s Clara Hernandez Ferraga is in Madrid for us this morning with more on this story. Tell us a bit more then, first of all, Clara, about Sandra Ortega. >> Good morning, Stephen. Um, so Sandra’s the daughter of Amancio Ortega and

41:51 Rosalia Mera. They’re the couple behind Zara’s origins. They split in the ’80s, but her mother um remained a co-owner of the company, and when she died in 2013, her daughter, Sandra, inherited her stake. Today, it stands at around 5% and is worth 8.5 billion euros. Uh but Sandra has never held a role at the company. She doesn’t have a board seat. Um, she’s not involved. Her wealth is man- managed by a small team with holdings that range from the Inditex stake to hotels, real estate, and fund

42:26 investments. And her activities revolve largely around Paideia. It’s the charitable foundation that her her mother started, uh, which works toward social transformation through education and, um, social inclusion. So, she has immense economic power but lives a very private, very ordinary life in a town of 40,000 people in northwestern Spain. >> So, what does the story then reveal about the dynamics behind Zara and Inditex and, I suppose, the future direction of the company?

43:01 >> So, Sandra’s story shows that, um, Inditex is not just a corporate success story as most people know it. It’s also a story about family. It’s a story about ownership that’s been shaped by a long split between Amancio Ortega’s two families. Sandra’s parents started, uh, the business that became Zara and later it was Inditex. And then Amancio Ortega’s had a new family, um, that Yeah, so so now, um, there’s, uh, Sandra’s half-sister Marta

43:34 from, uh, the second marriage who is the visible successor at Inditex. She’s the chairwoman. So, Sandra is important to the ownership structure but she’s completely outside the company. She’s, uh, major shareholder but she has no board seat and little public record of how she would act in in important decisions. So, um, that that raises the question of how family owners will coordinate over time once the link between them, Amancio Ortega, is is no longer there.

44:06 >> Okay, a fascinating story and one to watch for the future of Inditex as well. Bloomberg’s Clara Hernanz Lizarraga, thank you very much for joining us with the details this morning. Well, we have plenty more coming up next. Stay with us. This is Bloomberg. >> [music] >> First of all, it’s the global phenomenon. And since President Trump came in, uh the US has been the best-performing bond market in the

44:40 10-year space. And you we can see that for the US, unlike the other countries, it’s a real rate issue. So, it’s because of growth. Growth here is strong. >> US Treasury Secretary Scott Bessent there. And thinking about where the outlook is now for the Federal Reserve after yesterday’s meeting minutes, we have seen the traders bets on a rate hike this month plunging to below 20% probability at this stage. But, ticking up much more significantly when it comes

45:11 to December meeting. We’re now at around an 80% pricing for a hike in December after that statement that most policymakers were seeing another hike in 2026 as appropriate. That’s on the Fed. But, an interesting feature of the volatility we’ve seen on the bond markets has been the relative stability in the equity markets. And actually, the S&P 500 hasn’t seen a decline of more than 1% for 49 straight sessions. It was the 29th of July the last time that it slumped by over 1% in a single day. And that was after the Fed didn’t raise interest rates in response to the inflation pressures. The VIX remains

45:45 around 15. So, reflecting a broadly complacent backdrop despite the in- some of the intraday volatility we’ve seen. The S&P 500 only only hitting a record high earlier this week. So, the strength in equity is still part of that very interesting aspect of the story despite the volatility on bond markets. Another place that had a lot of volatility has been, of course, in energy markets. Let’s take a look at what’s been happening particularly to European natural gas prices. Today, they’re back up trading close to the highest level they’ve been since the start of the Iran war. We’re talking about about 80 euros a megawatt hour this morning on the

46:15 Dutch TTF benchmark. But, the scale of the rise is shown on this greater than what we’ve seen in crude or in diesel. And, of course, diesel is something that we’re watching very carefully for the broader inflationary effect possible for there as well. The feed through into food prices from the farming sector and we know that’s been one of the things that the strategic reserve released in the D7 has been particularly important in trying to relieve some of the pressure on diesel markets because of those prices nearing [music] record highs. A reminder of the key risk events we’re watching for you today. We’ve got Tesco results coming up in a couple of minutes in the UK, the ECB meeting minutes, and the US jobless claims to come later.

46:49 And, key interviews to come for you, including Jeanette Zu Furstenberg, president of the VC firm General Catalyst. The opening trade’s up next for you. This is Bloomberg.