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Bloomberg Audio Studios podcasts radio news. This is the Bloomberg Daybreak podcast. Good morning. It's Wednesday the 17th of June. I'm Caroline Hepka in London and I'm Steven Carol in Brussels. Coming up today, the final draft of the US Iran deal reveals the scale of the economic incentives on offer to Tehran. Elon Musk's fortune rockets towards $2 trillion as SpaceX overtakes Amazon as the world's fifth most valuable company. Plus, HSBC bets on Alphabet. Europe's biggest bank says Google's AI tools will deliver it more than $100 million in gains.
Let's start with a roundup of our top stories. Bloomberg News has seen a near final draft of the 14point deal between the United States and Iran that's due to be signed on Friday. The memorandum of understanding outlines a range of significant financial incentives for Tehran. They include allowing Iran to sell oil immediately, tapping a $300 billion development fund, and eventually unlocking frozen assets. European countries including France, Italy, and the UK say they're ready to help clear the straight of Hormuz of mines once a deal is agreed. Here's the British Prime Minister Kier Starmer.
This is a really important breakthrough. the G7 here. We've been discussing the details of that deal and how we get the straight up moves open as quickly as possible. President Matron and I put together a group of countries prepared to play their part. Despite Kier's offer of support, European leaders remain wary of potential risks to their ships and are skeptical that the strait can be fully reopened by Friday as President Trump has promised. The final signing ceremony is set to take place in Switzerland. US Vice President JD Vance is expected to head the American delegation while Iran will likely be represented by its parliament speaker.
European Central Bank officials are signaling that the US Iran peace accord won't necessarily stop them from raising interest rates further. ECB President Christine Lagard and others have welcomed the reopening of the straight of Hormuz. But a range of policy makers say that significant economic damage has already been done. Colin Hunt, CEO of Irish lender AIB, expects the central bank to wait for more data. I think the president of the ECB made it very clear that they are not in any way precommitted to any more moves. I think they were somewhat precommitted to the 25 basis point uh move we had last week and that was sort of very well
heralded. Market is speculation we're going to see another quarter maybe two quarters between now and the end of the year. uh but she has made it clear we are not precommitted to a particular path and I think it's going to be very very uh data dependent. Colin Hunt was referring there to market expectations for at least one additional quarter point rate hike this year that would take the ECB's key interest rate to 2.5%. The Federal Reserve is expected to hold interest rates steady in its decision today. It's the first major test for the central bank's new chair Kevin Worsh. He faces an inflation backdrop that makes it harder to deliver the cuts President
Trump wants. Andrew Hollenhorst, City Research's chief US economist, says Wart can still make a dovish case for future cuts. So this inflationary pressure has now reversed and become a deflationary pressure. Can wars fully pivot to that all at this meeting? It's probably going to take a couple meetings. It's probably going to take weeks of discussion and rhetoric, but it gives him that opening this week. Andrew Hollenhurst there as several Fed officials have outlined scenarios that could warrant rate hikes. Investors see more than an 80% chance of a hike by December. SpaceX jumped for a third straight day in US trading, overtaking Amazon to become the fifth largest stock in the world. Shares in
Elon Musk's rocket and AI firm closed 4.8% higher, pushing its market cap to $2.65 trillion. Here's Sequoia Capital Sha Maguire. I am personally going to hold my shares in this company forever like quite literally and sure there are some things that could change politically or you know in the macro 10 years from now but this is the biggest vision the biggest mission of any company in history going after the biggest markets of any company history with the biggest moa capital Sha Maguire making the bullish case for SpaceX the surge in Elon Musk's wealth over the last four trading days alone was greater than the GDP of Norway and puts his fortune at more than $1.3 trillion.
HSBC says it will use Alphabet's Google Cloud to roll out artificial intelligence across its global operations. Bloomberg's human pots has more. HSBC says the multi-year partnership with Alphabet will enable more than 200 new AI use cases over the next 2 years. The company will work with Google Cloud and Google DeepMind engineering teams to build new AI tools and programs using Alphabet's latest Aentic AI capabilities. HSBC is among the first global lenders to lay out how it plans to deploy AI to generate revenue and boost efficiency. Earlier this year, Bloomberg learned that the bank is weighing cuts to about 20,000 ROS in the coming years as a result of AI adoption. In London, I'm Yuan Pods,
Bloomberg Radio. Now, here in the UK, a fringe far-right party could splinter the anti- labor vote in tomorrow's bi-election in Makerfield. Polls suggest that Ribert Lowe's restore party could take 7% of the vote locally. Labour's Andy Burnham and reforms Robert Kenyon are both polling at close to 40%. The local race is taking on a national significance as it would pave the way for Andy Bernham to challenge Prime Minister Khalmer for the top job in UK politics. And Apple plans to launch AirPods with built-in cameras late next year. Bloomberg understands the new earbuds are not designed to capture video, but to help Siri AI is a visual sensor.
There'll also be new iPhone and foldable phone models. Now, those are our top stories looking at the market. So bonds have been rallying around the world ahead of the Fed decision today. No change is expected in terms of interest rates, but there is huge focus on what this new Fed chair, the 17th, Kevin Walsh, is actually going to say in his first remarks and press conference. Uh he's facing a very difficult economic backdrop demands from the US president to cut interest rates, but obviously hot inflation in the US. Oil prices though, are we over the worst of it? Because oil prices down 15% in four sessions for Brent crude trading now at $7844. We're down 7/10en of 1% this morning. Stock futures for Europe on the US stock 50
futures down 210 of 1%. NASDAQ futures gaining seven yeah 610 of 1% this morning. So that's a look at where we are in market. In a moment more details on the draft peace agreement between the US and Iran. Plus SpaceX surpasses Amazon in market value. But are they comparable? First though to another story that caught her eye this morning about the person coaching the humans behind AI. Kevin Lincoln has been writing about Joe Hudson who's an executive coach who's worked with the architects of AI including Sam Alman to make them more emotionally intelligent. Alman had praised Hudson in a recent social media post saying that he had a superpower which was that he deeply understands emotional clarity and how to get there.
Alman saying this will be one of the most critical skills in a post AGI world. I mean you could argue it's always been a rather critical skill to be able to read and understand other humans especially when you work with them day in day out. But interesting that these conversations are being highlighted among people who are at the forefront of this new technology which many people can argue is quite dehumanizing. Yeah absolutely. I mean you know the whole world is worried about it aren't they? Um I mean the article though I think is really interesting about this individual and his coaching style about the idea of kind of vulnerability
and empathy keeping hold of wonder. Um I mean as you say others will point maybe to the lack of diversity among the handful of those who are really on the cutting edge of AI leaders. Uh that's why I think it's so interesting Bloomberg's interview with the siblings who lead anthropic and I thought that was really refreshing. they were very open about the failures of the social media companies that had come before them, you know. So, I don't know, maybe people have learned something. One of the things that I did find interesting about um Kevin's conversation with Joe Hudson is him talking about the difference between wisdom and knowledge. And just because AI can access so much
uh knowledge for you doesn't make you wise and actually you do have to essentially make mistakes and learn from them and live a life that involves interacting with other people and that even if there are more tasks that are going to be done by AI, they're not necessarily going to be changing the necessity of having uh those basic people skills. Yeah. Uh, it's a really interesting story. We're going to put a link to it in our podcast show notes for you. Now, shares in SpaceX have surged for a third day, gaining 49% since listing. This is the G7 discussed gaining access to the latest advanced US AI model. So, we're continuing the AI theme. Joining us now has been senior strategist Neil Campling. Good to see you. I mean, isn't
it extraordinary the relatively few shares of SpaceX that are actually available to trade? Very, very strong demand from investors. What is driving that surge? I think the main driver since the IPO has mainly been retail investors. There is going to be obviously some index inclusions that mean some of these passive funds that follow indexes will have, you know, have to be positioned for the shares. But it would we have some kind of signs that it is mainly retail. And the reason I say that is because the options market um started trading um the stock as well um yesterday. So taking really dated bets on where the stock will be at certain points in time. Now often you would see people playing these through
longer dated longer time horizons. However, yesterday there were some strike prices which means where people expect the stock to be on an expiry which happens this Thursday. People were buying these at even $300 or $300 $380 a share compared to the $200 the stock was at yesterday. So that's some risk takingaking in terms of within the markets as well. And there are even some I think we may have mentioned before there's a there are certain ETFs that are leverage plays on this stock. So there's one listed in London. Um and the ticker is Elon EOL N Space LN and that stock at one point yesterday was up 60%. Because it's a three times leveraged product on SpaceX stock move. So there
are definitely signs it's retail mainly participating at the moment. Does that set us up for a moment then? And perhaps it's the earnings report that we're going to get from SpaceX in the second quarter where that excitement could pop. Interestingly, the company um sort of spokespeople came out last week on the day of the IPO saying, "We are in, you know, we are looking at long-term strategies, long-term visions, and we're not we've not focused on quarterly results." The problem is, of course, as a public listed company, uh investors are focused on quarterly results. So I would agree that in the middle of August the earnings is going to be closely watched and you may see enormous
volatility around that event followed very closely 2 days later when some of those shares that are not available at the moment um are become on lockup expiry enabling insiders to sell stock. So that could be a very volatile week. Yeah. Lastly though away from this um the G7 have been discussing AI. The US told Anthropic that it couldn't give foreign nationals any access to Fable 5 or Mythos 5 without US government permission. Countries outside of the US have been really worried about just this exact source of eventuality. It is very much a concern. It's very different from say some of those open-source technologies available to any government or any company. And I noticed that some somebody at
the G7 yesterday mentioned that the concern is that these leading AI tools can be controlled by a government and actually and the alternative to that is that somebody said a nation can be unplugged overnight by the actions of another country. So there is a concern that others will have to look to diversify to use alternative tools that don't have those restrictive risks. But it's definitely something that we need to keep an eye on. Okay, Neil Campling, our senior strategist. Thank you very much for joining us. Stay with us. More from Bloomberg Daybreak Europe coming up after this.
Let's bring you more details now on the deal struck between the US and Iran to end the war. Bloomberg has seen a copy of the final draft of the document that is due to be signed on Friday. Our Middle East correspondent Abir Abi Omar joins us now for more from Dubai. A key point in this document, broad financial incentives for Iran, including being allowed to sell oil and to tap into $300 billion in a development fund. How significant are those? A beer? Quite significant, Caroline. I mean, you just said it right. This is a 14 provision uh draft of the MOU that Bloomberg was able to get a hold of. We still have to wait and see what the draft will look like on Friday when the signing ceremony
happens. But let me just run you through some of the clauses if you were in this draft. An end to the war on all fronts, including in Lebanon. There's an explicit clause there that says an end to the war in Lebanon. So, we'll have to wait and see what Israel's response to that is. A final agreement of a 60-day negotiation period essentially on Iran's nuclear program. That is the negotiation or the tactical negotiation that will take place over the next 60 days after theou is signed. And then some other things that we've talked about in the past two months or so and that is lifting the naval blockade by the US over the next 30 days and for the US to withdraw its troops over the next 30
days. But what I want to talk about here really is what you alluded to and that is the financial incentives that Iran will seemingly get. That is the unlocking of an economic fund if you were of at least $300 billion. And the US said that this will be handled in uh with Gulf allies for example or um allies in the region. and JD Vance told Fox News that it will be with some GCC countries that will unlock about $300 billion to help salvage those economic damages that Iran had suffered throughout the war and then lifting the oil sanctions and then negotiations to unblock those frozen assets that Iran had accumulated over the years. Now, we don't have a specific timeline for that,
but it certainly does feel like the way this is worded is that throughout the negotiations, Iran would get those frozen assets as it succumbs to some US demands. But a lot of financial incentives that we're seeing for Iran in this draft of the MOU that we have. So again, we'll have to wait and see how the signing ceremony takes place. that it will be headed by JD Vance the vice president of the United States and Khalibah the uh Iranian parliament speaker. So lots of unclarity still about just how these clauses will be implemented. Uh but for now it does feel like the way this is interpreted is Iran is set to win a little bit more than what the US is set to win which is Iran's nuclear program or ne negotiations on that and the reopening
of the street of Hermuz which was open before uh the USIsraeli attacks on Iran in late February. 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 a day isn't enough for you, you can also listen to us live every weekday from 6:00 a.m. 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.
