Musk Starlink Controversy Grows, Griffin AI Bubble Warning, Meloni's Far-Right Test

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0:09 This is the Bloomberg Daybreak here at podcast. Good morning. It's Wednesday, the 21st of October. I'm Caroline Hepke in London coming up today. Reporting suggests that Elon Musk gave the direct order for Ukraine's Starlink access to be slowed. Citadel's Ken Griffin warns the AI boom is almost certainly a bubble. Plus, why Georgia Maloney's party is ruling out new coalition allies ahead of next year's election. Let's start with a roundup of our top stories. Elon Musk reportedly ordered the slowdown of Starlink's satellite technology used to defend Ukraine.

0:45 The Wall Street Journal cites unnamed American officials who suggest that Musk restricted the speed of Ukraine's access to the system. Democrat Representative Adam Smith has told CNN that Musk and Trump are siding with Russia over Ukraine.

1:02 It certainly seems like, you know, Musk and Trump decided to weaken Ukraine, put them in a weaker position.

1:08 Now, why?

1:09 I mean, I guess they would argue, well, we want to force them to the bargaining table. But again, I think it's just Trump siding with Putin and Musk being part of it.

1:18 That was Adam Smith, the top Democrat on the House Armed Services Committee, speaking to CNN. The Wall Street Journal also reports that Musk discussed the Starling decision with President Trump after the shortfall became publicly known.

1:31 U.S.

1:32 Secretary of State Marco Rubio says Trump has nothing to do with Starling's decisions.

1:37 Starlink is a private company. They have a contract. They have contractual terms upon how that technology can be used. The important point is we cannot direct a private company as to the decisions they make or not make. What I can tell you with certainty is the President of the United States, nor anyone in our system ever requested that any changes to that system be made.

1:57 That was US Secretary of State Marco Rubio. Elon Musk has previously denied personal responsibility. Meanwhile, Ukraine's President Volodymyr Zelensky says he hopes Ukraine's darling service will be fully restored. He sought to draw a line under the escalating feud with the US after meeting with Trump's envoys in Norway.

2:17 We spoke about sensitive issues like connection, Starlink, about interceptors, which are very important, about intelligence. So, I mean, we've been very concrete, and the conversation was very positive. We shared the things which we have to manage, and we will manage, I'm sure, and we decided that maybe in 48 hours we will have, again, connection.

2:47 Zelensky added that he was hoping for a trilateral meeting with the US and Russian leaders. Hours later, however, President Trump questioned Zelensky's will to end the war, saying that he's holding up talks. And away from the controversy over Starlink, Elon Musk is also making headlines on the corporate front.

3:05 The world's richest person is pushing to combine SpaceX and Tesla in what would be the biggest merger of all time. It comes after SpaceX posted on $ 4. 4 billion in quarterly profit, more than double analysts' expectations, Musk says that there is merit in bringing the two companies together.

3:24 I do think there's a lot of merit to combining the companies as we are pretty much in the superintelligence singularity. And there's a lot to be gained from cooperating on developing superintelligence software.

3:40 Musk also disclosed for the first time that SpaceX and Tesla have formed special committees to consider the idea. Shares in both companies extended gains following his comments. Tech stocks may head higher after results from SpaceX and Supermicro beat expectations, but concerns over the durability of the AI boom remain.

4:02 Citadel founder Ken Griffin is the latest major investor to warn about an AI bubble. He says that game-changing technologies have often gone hand-in-hand with investment bubbles.

4:14 The big picture is there's almost certainly bubbles within this moment in time. And any radical transformation of our economy is generally intertwined with a bubble.

4:24 All right?

4:25 I remember back in 1999, 2000, the metrics that we used to value Internet companies. And let's be clear, some of these Internet companies had pretty fanciful business models. But, I mean, I just wish I'd kept my Amazon stock from that.

4:38 Moment in time.

4:40 And the internet, which was the great bubble, could it be more of a part of our daily life today than it is?

4:48 Ken Griffin was speaking to Bloomberg's Danny Berger in New York. His comments come as the Wall Street Journal says that Anthropic could spend three quarters of a trillion dollars on computing power. The AI startup is also expected to file soon for what could be one of the largest IPOs ever. Asset manager Franklin Templeton says that current French bond turmoil risks escalating into a euro debt crisis worse than 2012.

5:16 Speaking at a company event, Sonal Desai, global chief investment officer for fixed income, said that France has more than 10 times the debt that Greece did at the time, meaning that a simple bailout is not on the cards. Subitha Subramanian, who is chief economist at Saracen and Partners, also expressed concern about the situation.

5:38 I suspect we have some sort of weak agreement on budgeting until the elections come into play. And in the intervening period, you know, we are going to see bond markets continue to be quite sort of aggressive at any signs of slippage.

5:53 Sabitha Subramanian speaking there on Bloomberg Radio to me yesterday. Now, according to Desai, Franklin Templeton's bond portfolios are skewed towards shorter duration assets in Italy and France, in contrast to a more constructive view on Spain and German debt. And of course, France's 10-year yield premium over Germany, we watched that yesterday, closed above 1.5 percentage points on Tuesday for the first time since January 2012. So, you saw that yield spread really widened between OATs and bunts yesterday. More than half of Britons think that markets could severely lose confidence in the UK within five years. The poll from Ipsos and the National Institute of Economic and Social Research found that respondents also expect tax hikes in the coming

6:42 budget next week. NISA's director, David Aikman, says that Britain must avoid provoking the bond market.

6:50 In these circumstances, we want to be the best looking horse in the glue factory. And I think that for me is another way of framing the opportunity that Andy described. If we do put the finances in a better place and investors view us in those terms, we can see our borrowing costs fall quite a lot. And that just feels like such an opportunity right now where there's so much attention focused on continental Europe.

7:15 Aikman was speaking alongside former Bank of England chief economist Andy Haldane ahead of next week's budget at the event. Haldane said that he expects a budget for backbench MPs rather than for business and bond markets. He also talked about the fiscal hedgerow and what they can get away with on the day they may not get away with by Christmas. So that's in the UK, the event between Ipsos and NISA. Britain's Business Secretary Jonathan Reynolds is signalling that he is open to aligning with the EU's plans for higher tariffs on Chinese EVs. Reynolds told lawmakers the UK faces a shared set of concerns with the EU.

7:55 It is absolutely the case that we should work together with the EU on that agenda. I think we're trying to manage the same problems. I think we are trying to. Make sure that we're in the strongest possible position and if you look at for instance the integrated nature of automotive supply chains across the EU it is to the detriment of both the EU and the UK if we're not continuing what we have.

8:25 The UK business secretary there, the British government, is under political pressure from Brussels to match EU tariffs on subsidised car imports from China. The UK in turn wants access to the EU-wide procurement model, which is called Made in Europe. And lastly, Bloomberg understands that the government here in Britain is set to approve drilling at the Jackdaw gas field in the North Sea. It comes as European natural gas prices rise as more attacks on ships around the Strait of Hormuz threaten to slow energy flows. Bloomberg's Ewan Potts has more now.

9:00 The relatively small Jackdaw gas project has become a symbol of a bitter political fight over Britain's energy transition. We're told the Energy Secretary will give the go-ahead for the project later today. Approving Jackdaw risks a backlash from some on the left of the Labour Party and the Greens. Rejecting drilling would have fuelled criticism from... from reform, the Conservatives and the oil industry, that climate policies are costing jobs and investment. The company behind Jackdaw says the field could provide more than 6% of UK gas supply this coming winter. In London, I'm Ewan Potts, Bloomberg Radio.

9:33 Those are our top stories for you this morning. Looking at the markets, a turnaround in terms of the AI trade. The KOSPI is up by 2.6% this morning. The TAIX in Taiwan also up by 1%. And NASDAQ futures gaining 0.7% of 1%. US stocks 50 futures up by 0.4% of 1%. This as bond markets, 10-year treasury yields at 5.12%. We did see the spread between German and French yields. Yes, blow out. So, now at more than 152 basis points. So, this is a story that will continue to watch the pressures in Europe. The Euro trades at 1.1225, weakening a tenth of 1%. Brent crude up by 1.2% trades above $ 110. 00 a barrel. Those are the markets. In a moment, we're going to get into the details around the AI trade, also what's happening with Starlink, and talk a little bit

10:23 about one, just one of the European elections that is coming next year. But firstly, another story caught my eye, Nordic skiing this morning. Apparently, cross-country skiing has gone up in the world. There are almost 20,000 Nordic skiers who are trying to to complete the World Loppet Circuit, which involves skiing marathons in 20 countries. Today, though, this sport is about money and about ski selection. In the US, Zach Caldwell is the guy, apparently, if you want high-end cross-country skis. This, according to Bloomberg's Bill Donoghue, who has a beautiful piece in Bloomberg Businessweek. I really love a story that gets into a niche hobby because there's always a world around that niche hobby. Zach Caldwell sells roughly

11:12 600 pairs, only 600 pairs of curated cross-country skis. This is in Vermont, but he buys the skis, of course, at the four big factories in Europe, Fischer, Madhus, Rossignol and Salomon. Look, I thought there wasn't much difference. skiing to be had anymore in the alps but apparently this is also why nordic skiing is becoming so popular and there are also lots of these nordic skiing holidays long-standing tour company is actually a british one in travel anyway love that story i'm going to put a link to it in our podcast show notes so that you can find out a lot more about nordic skiing figure out if it's one thing you want to do you know strengthen those legs anyway let's think about other things Strong

11:56 results from technology companies SpaceX and Supermicro has revived the AI trade this morning after a bruising sell-off that took place last week. Shares in Elise rebounded from one of South Korea's worst ever IPOs. The CEO, Jaiwon Kim, gave his reaction to Bloomberg to that brutal trading debut yesterday.

12:19 For the first day view, I think it was very volatile and it was very interesting for me to see how it's volatile so much in first day and second day. But in the long term, in the end of this year or next year, we're looking at the very explosive growth.

12:37 So I'm not.

12:38 Worried about this volatile issues.

12:40 In the first week.

12:42 So, that was the CEO of Elise, Jai Won Kim, speaking exclusively to Bloomberg's Sherry. And the stock jumped 30% the daily limit on the COSDAC in Seoul today after it slumped on its trading debut yesterday. Having said that, billionaire Ken Griffin says that investors are almost certainly in the midst of an artificial intelligence bubble. Joining us now is Bloomberg's Annabelle Droolers in Hong Kong for more on this. Annabelle, good morning. I'll get into the AI trade in a moment.

13:11 In terms of Starlink first, though, there does seem to be a growing row about this. Yeah, that's right.

13:16 I mean, Starlink has certainly been top of mind and really big question marks, particularly in Kiev over exactly what happened. But we do have some reporting out on this and also from the Wall Street Journal. They're saying that actually that order to slow down the satellite system came from Elon Musk, that, of course, being the company's CEO. So, the understanding here, perhaps, is that he actually restricted the speed of that satellite system that, of course, as we know, hampered the ability of Ukraine's drones to carry out defensive and offensive missions as well. This is a question of really what was the relationship and the knowledge between Elon Musk and also the White House on this. But we

13:57 do have Representatives Adam Smith, Senator Adam Schiff as well, faulting Musk, also Trump, but Representative Schiff calling for Congress to investigate that incident and also for Musk to come to Congress and testify under oath.

14:12 Yeah, absolutely. The Secretary of State, Marco Rubio, adding that Ukraine would not exist without US support. So, that's then on the Starlink issue. Let's get back into the kind of business, though, in terms of the earnings, which do seem to have revived the AI trade. I mean, the Nasdaq sank 5.5% last week. And the earnings, you know, it does look like quite a big turnaround in that AI trade.

14:35 Why?

14:36 Yeah, absolutely.

14:37 I think you mentioned the two key companies here. There's SpaceX and then there's also Supermicro. So, SpaceX was just in the last few hours late trade and really what analysts are calling a blowout third quarter. So, we saw revenue surging more than 160%. EPS tripled the consensus net income coming in at $ 4. 4 billion. That was double what Wall Street had been expecting. So, the star of the show here really was the AI and data centre business But Elon Musk is saying that the company could have up to 20 gigawatts of data center capacity by the end of next year. And then Supermicro, of course, the other story here, but a surprise preliminary update. So it's raised its first quarter revenue guidance to up to $ 19. 5 billion.

15:20 The consensus had been just $ 15 billion. That's a nearly $ 4 billion beat. And that is really what investors are reacting to here. And also markets that have got that deep AI supply chain exposure. And that's why you're seeing, again, being led by the KOSPI, the TAIX in Asia as well.

15:36 Yeah.

15:37 Also, Musk saying that there is merit, you heard him say it just in the news roundup there, of combining SpaceX and Tesla. Now, this is really hotly debated amongst investors. Give us a few pros and cons.

15:49 Yeah.

15:50 This was sort of the big one that was dropped at the end of the earnings webcast. Certainly has captured a lot of attention today. But I think, okay, on the pro side, you've got that sort of strategic logic around AI data infrastructure.

16:02 That's real.

16:03 You've got a lot of analysts out there, including RBC, that are saying there are synergies here. These companies are already customers of each other's goods. Gene Munster is someone who's saying the odds of this happening are 95%. The con side, of course, I mean, there's that huge governance risk Elon Musk is the CEO of both companies. He actually can't be in the conversation. And he has, of course, pulled himself out. He's not taking part in these special committee discussions, for instance. But it is really a sensitivity here.

16:31 And you've also got investors that need to buy into this because Tesla shareholders, for instance, the majority of them need to agree to this, not just the voting majority, but actually the entirety of the investor base.

16:44 Yeah.

16:44 Just briefly on anthropic spending plans, I mean, maybe just tell us the number because it's so enormous. You know, that has also boosted tech sentiment. Yeah, exactly.

16:54 $ 750 billion. That is the number, but $ 750 billion is what they're looking to spend on additional computing power in the coming years. So, this is the reporting from the Wall Street Journal. What they're referencing here is the S1 filing, which is part of that regulatory build-up to an eventual listing here. You just need to put it in context because the company reported a net loss of more than $ 80 billion in just the first half of 2026. That compared to $ 13 billion in the same period a year earlier.

17:22 But you're looking at a six-fold increase in losses in 12 months. But markets are looking at this like it's a positive because it's a positive trend. spending here. It's a demand signal for the entire AI infrastructure stack. So, chips, servers, data centers, power. This is really why markets are looking at this quite optimistically today.

17:43 Okay. Fascinating. Annabelle, thank you so much for being with us this morning. Very good to have you on Bloomberg's Annabelle Droolers there on the latest when it comes to the AI tech trade. Thank you. Stay with us. More from Bloomberg Daybreak Europe coming up after this. 2027 is a really crowded year for elections in Europe, among them Italy.

18:05 But Italian Prime Minister Giorgia Maloney is going into the election with no plans, apparently, to broaden her coalition, even though she is championing a law that would give bonus seats to a government with a larger coalition. Bloomberg's Italy Bureau Chief Chiara Albanese joins us now to discuss this. Chiara, good to have you on the programme. Now, firstly, just can you explain, Maloney's government has overseen this rare period of political stability for Italy, but her voting reforms are contentious.

18:38 Can you explain the idea of these bonus seats?

18:43 Yes, of course.

18:43 And good morning.

18:44 So it was quite hard to pass that law just because it favors so much the government, like the ruling coalition, the coalition that gets most votes. And that means that it really encourages large alliances. And that holds both for the left and for the right. And both groups are basically head to head at the moment in polls.

19:09 Yeah.

19:10 And Maloney's brothers of Italy are actually already in a coalition government, but apparently they're not looking to expand that either with the far right National Future Party or the centrist group, which is called Azione. What has been said about that?

19:29 Yeah, exactly.

19:29 So they already like the coalition is already formed of three parties and like expanding it further would give Meloni an electoral boost, clearly. But at the same time, it may also change a bit the program and the scope and really integrate too many parties. many different views and political parties.

19:56 So at the moment, we have an interview out this morning with the agricultural.

20:02 Minister, who actually is one of Meloni's closest aides. And he said....

20:09 There is no space to kind of broaden it further.

20:12 Yeah.

20:12 Okay.

20:13 So, the agriculture minister. When's the election then in Italy expected to happen? And what does the polling look like right now?

20:20 So, the election will be held by the end of 2027, and the expectation is it may be as soon as spring or October, which is the end of the legislation.

20:36 But polling, it varies and it moves quite a bit.

20:40 And as I was saying at the moment, Both center-right and center-left are similarly in polls, around 44%. And there are plenty of small parties that are scattered around, including the far-right group that is about 5-6%.

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