OpenAI Spying Arrest, Aramco HQ Bombed, McIlroy Talks LIV Golf

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0:09 This is the Bloomberg Daybreak Europe podcast.

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0:12 It's Wednesday, the 14th of October. I'm Caroline Hepka in London. Coming up today, an OpenAI employee is charged with hiding a recording device inside the company's U.S. headquarters. As a missile attack hits Saudi Aramco's headquarters, we look at how Qatar is rewriting its own playbook with old tankers and new tactics. Plus, live in on borrowed time. Rory McIlroy tells us that he doubts the breakaway golf league can survive bankruptcy. Let's start with a roundup of our top stories.

0:47 An OpenAI employee has been arrested and charged with hiding a recording device inside the company's San Francisco offices. The US Justice Department says that the Saudi Arabian National allegedly placed the device behind a TV in a conference room. With more, here's Bloomberg's Freddie Fulston.

1:06 OpenAI says the room was used for meetings involving highly confidential technical, commercial and strategic information. The company says it found evidence Abdulrahman Alfosan planned to secretly record meetings in other parts of the office using other devices. It says Alfosan was fired on the day of his arrest and that it has no indication he improperly accessed model weights, source code or customer data. In London, Freddie Fulston, Bloomberg Radio.

1:36 Artificial intelligence could put more pressure on Britain's labour market, with many large businesses expecting to cut jobs as they adopt the technology. The warning comes as the UK economy expands with fewer new roles being created. Bloomberg's Ewan Potts has more.

1:53 Just over half of CFOs surveyed by Deloitte expect to cut headcount as a result of AI over the next year. Two thirds of the company leaders said they've achieved just a quarter of the changes they ultimately expect from the technology. The impact on profits is less certain, though, with just the third believing AI will increase margins in the next year.

2:14 The report adds to evidence of the UK's jobless growth revival exactly two weeks ahead of the government's budget. In London, I'm Ewan Potts, Bloomberg Radio.

2:23 ASML has reported third quarter net sales of € 11. 7 billion, almost exactly in line with estimates. The chip equipment maker posted net income of € 5 billion with its margin slightly higher than expected. ASML expects full-year sales of between € 44 billion and € 45 billion, but says that planned supplies won't fully meet demand. So, some interesting results out from ASML today.

2:54 Saudi Aramco's headquarters have been hit by a missile attack. Saudi Arabia's energy ministry says that the office complex was targeted by Houthi militants in Yemen. Clearview's director of research, Kevin Book, says it's a worrying sign for energy markets.

3:10 It's very good news that nobody, there were no casualties. It's also bad news that the Houthis were able to outline this target. Brigadier General Yaya Sarri, who is the spokesperson for the militia, posted on X this morning that that was going to be one of their targets.

3:26 And indeed, they seem to have hit it.

3:28 Kevin Book there from the energy research firm Clearview. The strike is the latest in a string of attacks on Saudi Arabia's oil industry at a time when oil prices are already high. Europe's two key central banks are thinking differently, though, about those high energy prices. European Central Bank President Christine Lagarde told CNN she is yet to see those high prices feed into the wider economy.

3:53 We can look at the situation, analyze the data, understand the development and determine how much indirect effects are traveling through the economy and and see how best we can anticipate if second round effects are showing up. We are not seeing any of that yet.

4:16 So not yet, says Christine Lagarde. But unlike the ECB president, Bank of England Governor Andrew Bailey says the spectre of inflation is getting harder to avoid in the UK. Bailey and other swing voters on the UK's Central Bank Committee have signalled that they're considering a rate hike at their meeting next month. The split comes as bond markets brace for inflationary fallout from America's war in the Middle East. So, traders are pricing in for Bank of England hikes, while the ECB weighs another increase with inflation approaching 4%. China's trade surplus has ballooned to $ 938 billion in the first nine months of the year. It's now on track to top a trillion dollars this month. Customs data shows exports

5:03 jumped by 36% in September from a year earlier, pushing the monthly surplus above $ 133 billion. Goldman Sachs estimates that 82 countries now run trade deficits with China exceeding 3% of their GDP. UK Prime Minister Andy Burnham will host Ukraine's President Vladimir Zelensky in London as Kiev scrambles to respond to President Trump's diesel agreement with Vladimir Putin. It comes as the head of MI5, Ken McCallum, has said that Russia remains aggressor number one when it comes to Britain's national security. He warned the UK must be more resilient in the face of escalating hybrid warfare.

5:45 Today, I want to talk directly to the British public. When you hear national security, don't just think of Ukraine, subsea cables, armed drones, or cyber weapons. Think also of the place where you live, where you work. Think of a flicker in the power grid supplying your home. Think of your local synagogue or mosque having to install enhanced security.

6:07 Think of a toxic or manipulative post on social media. Think, perhaps, of what online algorithms are feeding your teenagers in their bedrooms. We all have a stake in our national security.

6:19 Ken McCallum added that he is greatly concerned that hostile actors could use AI to, quote, change the stakes on bioweapons. To Switzerland, UBS is facing another regulatory setback after Swiss lawmakers backed a new special tax on major banks. The levy would be charged... for access to government-backed emergency liquidity that could be deployed during a crisis. However, the tax would only apply to major banks with substantial foreign operations, effectively making UBS its only target. Now, nearly all football teams in England are reporting losses amid rising costs, according to an independent regulator. Bloomberg's Siwa Adebayo has more.

7:00 The Premier League may have some of the world's best players, but English football is facing financial relegation. New research shows nearly all clubs are losing money, struggling with the cost of players and infrastructure. The sport's independent UK regulator says many clubs are taking on debt or relying on owners to survive. They say about two-thirds wouldn't last 90 days without that support. The gulf between clubs is also widening.

7:26 The highest-earning Premier League club makes 605 times the revenue of the lowest-earning National League side. In London, Tiwa Adebayo, Bloomberg Radio.

7:36 Those are our top stories for you today. Now, looking at the market, stocks are gaining, the dollar weakening. The MSCI Asia-Pacific Index rising 0.6% Samsung Electronics and SK Hynix rebounding. Chinese stocks close to a bear market. We get, of course, key U.S. inflation data out today. The CPI expected to rise by six-tenths of one percent. Ten-year U.S. Treasury yields of 5.2 percent. On Tuesday, European stocks fell. The close of play down by a tenth of one percent. Crude oil this morning. Brain crude futures are up by seven-tenths of one percent, so above $ 106 this barrel. Those are the markets. In a moment, we're going to bring you an in-depth report on how Qatar, the world's fifth largest

8:17 LNG exporter, is trying to keep up those exports. And AI in Europe, some of the big industry names are in Dublin today. Before that, though, another story has caught my eye this morning. There is hope for us all. A 44-year-old former theatre director turned screenwriter in L.A. is beating Wall Street at predicting U.S. inflation figures. Brian Golden is the most successful trader on CalSheet when it comes to predicting the next inflation print he has made. $ 2 million in profit across Kalshi contracts tied to economic questions.

8:53 By his own admission, he says he's not a maths person. He puts it down to deep research. The photos alone are worth your time. Just brilliant. Brian having a coffee, looking very relaxed, loafing on his sofa. One commentator saying that she's never come across anyone doing this successfully without a qualification in maths, science, finance or economics. And apparently...

9:17 This chap went to Kalshi firstly because he was betting on who was going to win the Oscars. Why am I just so tickled by this story? You can find a weird niche skill later in life without any of the right qualifications and make a ton of money from it. There you go. There is hope for us all. I'm going to put a link to that Bloomberg story in our podcast show notes so you can enjoy it as much as I clearly have. The AI age is dawning, isn't it? Just think about the news that we've had out in the past few hours. Overnight, an OpenAI employee being charged with using a hidden, seemingly homemade recording device, while a survey of chief financial officers in big UK businesses.

10:00 shows that more than half of them expect to cut headcount thanks to AI and the technology is only just being adopted. Plus, we have the results from Europe's big tech company, ASML, today. Into this comes Ireland, which is holding the rotating presidency of the Council of the EU and is hosting an international AI summit in Dublin today, where we find Bloomberg anchor Tom McKenzie. Tom, good morning.

10:25 Good to speak to you. I want to discuss this age of AI and start with NVIDIA's CEO, who has announced plans to invest $ 2 billion in European deals. Here's some of what he said.

10:38 This is the beginning of AI in Europe. In the last year alone, we have invested $ 8 billion in European startups. And in the next week, I'm going to announce another two more billion dollars. And so we've invested tremendously in just about every single layer of the AI infrastructure here in Europe. And so the next layer above that is investments.

11:03 These are going to be the superstar companies of the next generation.

11:07 So the beginning of AI in Europe. Tom McKenzie, what do you think of what Jensen Huang has had to say?

11:14 Well, Jensen, ever the Uber bull on AI. I think any support in terms of rhetorical support and, of course, financial investment from Jensen Huang, from Nvidia, the most valuable company in the world, of course, that's really the beating heart of this so-called AI revolution is, of course, going to be welcomed. I think when he says this is the start of AI, some people in the European tech scene may kind of roll their eyes because they've been building AI solutions and products and services for for a number of years now. And there are some companies that have raised significant amounts of capital. But I think what he's trying to get to is that we are seeing momentum in Europe, unlike we've seen in a very long time. Now,

11:59 whether or not the companies in Europe that are building these products largely on top of AI and these AI solutions and services, whether or not they can be globally scaled companies to really compete with the likes of Meta and Amazon and Google. Well, that remains a really significant question. I think the other lesson to draw from this is that this is an NVIDIA and this is a Jensen Huang really, as he said, trying to invest across the stack, which means he's spreading his bets effectively. It's hard when you go to events like the one I'm at here in Dublin. Not to find and not to bump into CEOs and founders who have not received some investment from NVIDIA.

12:37 There seems to be a growing list of these companies. One company, for example, invested in France, Pigment, which provides software services for businesses. He's backed for a number of years now. But there are growing lists now of European startups that have that NVIDIA backing. And that's important.

12:52 Yeah, fascinating. Look, there is really, can I say it, only one superstar tech company in Europe. That's ASML. We've had their results out. They're saying that they can't fully meet demand for the next two years. How much of a concern is that? What do we make of the results?

13:11 In some ways, that's not surprising. These companies, and we heard this from Applied Materials overnight, are struggling with the ability to actually execute on the orders that they're seeing. This is not a question of demand slowing for companies like ASML and Applied Materials. It's whether or not they can actually execute on that demand, given the supply chain constraints, given the access to materials, and given higher costs. It does seem on the top line, though, that the lithography machines, an area of the tech stack, of course, in which ASML essentially has a complete monopoly, that that demand continues and continues to look pretty strong. So I'm just going through the numbers right now in terms of the non-EUV business.

13:57 So that's the less important part of the business. They do seem to be seeing a 20% growth versus last year. Now, ASML is seeing the EUV business, that's the extreme ultraviolet lithography machines, these huge bus-sized pieces of equipment that go into essentially the factories that produce the chips. They do see that business growing over 45% this year. So, that's incredible growth. Whether or not it's going to satisfy investors is another question. And executing on that growth, again, is going to be the challenge for Christophe Fouquet and the team there at the head of ASML based, of course, over in the Netherlands.

14:33 Bigger picture, how can AI transform Europe? I'm sure that's the big question that all of the leaders that you're going to be speaking to in Dublin are asking. I mean, the sums are so vast. Meta debuting their new AI model on Monday. I mean, Facebook's Mark Zuckerberg has talked about just writing a check for $ 100, $ 200 billion to keep up with Anthropic or an open AI, try to beat them is what he would want to do, but huge money.

15:04 Yes, whilst grappling with a pint of Guinness. And talking Guinness, I am here in Dublin at the Royal Dublin Society for this AI, International AI Summit. This is Ireland has the presidency, and they really want to put their stamp now on this AI story and Europe's place in it. They want to, number one, elevate and remind the world that Ireland has a vibrant and strong tech ecosystem. Of course, some would say it's slightly over-reliant on the tax revenue that gets from the tech ecosystem. Nonetheless, they want to put and remind the world and put Ireland back on the map when it comes to the AI story. But it is also broadly... and bigger picture about the EU, with Ireland, of course, being that member, trying to shape

15:43 the narrative around the AI story. And I think there's also deep concern that the public backlash is something that could derail this innovation. And that's why there's an emphasis here in Ireland on the pharmaceutical industry and how AI can help with things like drug discovery and how it can help with things like coming up with potentially cures and treatments for cancer. And of course, there's a big pharmaceutical industry in Ireland. There's the agricultural industry, how you can improve yields in food. So, that's going to be a focus. There's the fintech industry as well. We're talking to Stripe, which is, of course, a powerhouse tech company that splits itself between Ireland and the US and San Francisco. So,

16:21 This is an attempt, number one, for Ireland to put itself back on the map or at least reinforce the idea that it is a vibrant tech ecosystem and it has a skin in the game. But number two, at a European level, to show that there are really constructive potential outcomes. If the safety and the regulation can be aligned, then industries can really produce real benefits for people. And that question still needs to be answered. But certainly there's a lot of optimism on the ground that we're getting closer to that point.

16:49 Yeah, absolutely. I know you've been rubbing shoulders with all of these tech leaders and you're going to be speaking to Guillaume Prinson, who's the Anthropic Head of International, Sarah Fryer, OpenAI's Chief Financial Officer in Dublin. Have you been splitting the G? Can you split the G? Is there a lot of Guinness about then as people try to mix a bit of social with all of this business?

17:12 Well, I was at an event in downtown Dublin last night, and I can speak for others in the room. There were certainly a few pints of Guinness going down as executives mingled here in Dublin. And there really is concern that they need to improve the narrative around AIQ. given all the reporting that we've had on what's been happening with OpenAI's agents and Anthropix agents and the risks and the risks to humanity and the risks to the workforce, as you mentioned before, and what that means for jobs.

17:46 So they're grappling with this, but they're hoping that they can make some progress on that front and try to tell a more positive narrative whilst not shying away from the very real risks and the real questions around how to regulate this technology.

18:01 Yeah, fascinating. Thank you so much, Tom, for being with us. You'll hear some of those key interviews from Tom McKenzie throughout the day across Bloomberg platforms. Tom, thank you for being with us from Dublin. That is Bloomberg's Tom McKenzie. Thank you. Stay with us. More from Bloomberg Daybreak Europe coming up after this. Now, despite the war in the Persian Gulf, Qatar has been finding new ways of getting its gas exports out, using old tankers without transponders or lights and difficult transfers at sea. Joining us now is Bloomberg's Stephen Stapchinsky, who leads our team covering Asia energy. Stephen, this is long, sort of in-depth reporting about how Qatar has managed to do it. Just explain what have their

18:48 tactics been to try to get LNG out?

18:51 You know, they've done a number of things. So I think there are basically four big strategies that they've had. Let me break it down. One, to get the LNG out, they're not even using necessarily the LNG that's stuck within the Gulf. They've been upping, accelerating the business. for Qatar Energy Trading, which is their trading arm. They source and buy LNG from places like the United States and then sell it at a profit to willing buyers in Europe and in Asia. So they've really accelerated that piece of it so they can keep their relevance in the market, keep the profits going. The second thing that they've done is brought back a lot of these older LNG tankers.

19:38 So I'm talking ships that are sometimes more than 20, almost 30 years old. These ships don't have the same insurance premiums they have to pay when you go through the Strait of Hormuz. So they're bringing back those older ships to pick up the LNG at their Ras Laffan facility. Now, Ras Laffan, it was hit. It's the world's biggest LNG export plant. It was hit in March by Iranian missiles, damaged and shut down. But they've been keeping the parts of it that are undamaged, 83% of the facility, at basically a low capacity rate so that they can increase output quickly. If they're able to get through more moves or if there's a sudden peace deal. And then really, lastly, the bit as well that kind of fits into it

20:23 is just using their global reach. They're talking to customers. They're trying to... essentially build out a use their relationships that they built over the last three decades, keep this conversation going and assuring customers that they're there to to to still remain relevant. One thing in particular, they came to Bangladesh saying, hey, we can sign a new long term deal that's not linked to Ras Laffan, but maybe linked to our international portfolio, maybe some supply from the U.S.

20:54 Or other places.

20:55 So Qatar is essentially moving their base of operation ever so slightly. away from the Gulf, which has been the main place that they've been exporting the fuel from.

21:05 Yeah, trying to maintain their global position. The pressure on the economy to maintain exports is obviously huge. And Qatar does have these kind of ambitious goals for the future. What are they trying to do amidst all of this uncertainty?

21:21 You know, I think they still want to be one of the most reliable LNG suppliers. They want to keep that message. They also want to make sure that they are seen as the place that buyers can go to. to get their supplies over a long term. I'm talking decades. And so, to do that, they are, one, you know, pushing forward with this strategy to expand the trading so that they have the ability to be more nimble. But also, they're also pushing forward with their LNG export expansion plans.

21:53 They've got a facility called NFE. It's one of their expansion plans to essentially double exports from Ras Laffan in Qatar by the early 2030s. And they're continuing to push forward with that as well. So they're actually doubling down on LNG despite this continued disruption to Hormuz.

22:15 Short term, the number of LNG ships exiting Hormuz did jump in September. You've got a nice chart of it in the story. But, you know, compared to pre-war, it's still nothing like what it was. Can that continue? Can we continue to see shipments out even with these fresh attacks that we continue to report on?

22:39 You know, that's the big question, right? So they've put forward this big effort to get the LNG through, you know, the Strait of Hormuz. They've got, you know, crews that are willing to go through. They've hired them from places like Indonesia. They're paying them double, triple salary, big bonuses to go through the Strait every time. But the issue is there has been an increase in attacks. And in fact, a Qatar-linked ship was attacked last week, and you did see a little dip. in exports since then. But there has still been some ships that have gone through. In September, there were 20 Qatar-linked LNG shipments or shipments that were carrying Qatari LNG through the Strait of Hormuz. That's the

23:19 most since the war began. But before then, there were essentially three shipments a day. So we're still just a third of capacity of the pre-war level. So- To continue this going, there does have to be an easing to a degree of hostilities. But at least in the near term, Qatar does appear to continue to be pushing these LNG shipments through, trying to find workarounds and trying to find ways to get the gas, at least some of the gas, to their customers so that they can keep that relationship going.

23:50 Immensely important ahead of winter in Europe, but also to customers in Asia. Stephen, thank you for being with us. We're going to beg Stephen Stapczynski, who leads our team, covering Asia energy on that story around Qatar and its LNG exports. Well, now to another really lovely conversation. Rory McIlroy, the six-time major golf champion, has cast out on the Saudi Bank Live Golf Tour, even surviving bankruptcy and continuing to compete with the PGA Tour. He says that Live Golf had a promising concept, but it was executed poorly, arguing that its capital could have been used much more strategically to benefit the game rather than just to enrich certain players. Now, he was speaking to our editor at large,

24:37 Michelle Hussain, at the Bloomberg New Economy Forum in New Delhi. It's day two of that event. First, Michel, though, asked Rory about the pressures of elite sport. What comes next after he became the first European to win the career Grand Slam at the Masters last year? Have a listen.

24:55 I struggled last year to reset my goals. It was like, OK, well, what's next? This is everything I've ever wanted in the game to win the Grand Slam. And actually, I had dinner with Roger Federer at the start of this year. And I talked to him about that. I talked to him about, you know, when you really did everything that you wanted to do in tennis, like what was it that drove you forward? And his thing was always to get past Sampras. Sampras won 14 majors. And once Roger got to 15, He said to me, he said, well, like once I got to 15, 20 didn't seem too far away, you know? So I think it's always just, you know, you win something, you're satisfied for a little bit, but then, you know, the goalposts just keep moving a

25:43 little bit further and further away. And I think that's true with all, not just sports people, but anyone that wants to be successful in business or in life. every time you choose something there, it seems like there's always something else that you want.

25:55 Do you have a new set of goalposts or is that.

25:58 I do, I do have a, you know, after that conversation with Roger, I was like, Oh yeah, that makes sense. Um, I'm never going to put a number on it because I don't want to, you know, jinx it. I don't want to jinx it. And I don't want to, you know, I look at like Tiger Woods and, and he always had the goal of surpassing Jack's team. And he got to 15, which is an amazing career, but you know, does that, you know, that failure to reach that goal?

26:23 Does that.

26:23 It's not really a failure.

26:25 It's not a failure, but it's, I don't know if I, you know, I have a goal in my head, but I don't want to put that out into the world. It can be my little secret.

26:35 I think that's totally fair.

26:37 So let's talk then about the state of the global game and particularly what you've called this fractured period in men's golf since the creation of Liv.

26:46 Yeah.

26:46 And, you know, it's been a really difficult few years.

26:49 And we're at this moment now when there has been a filing for bankruptcy in the U.S. Liv may get a new lease of life through some more financing. What do you make of it?

27:00 Yeah, it's hard.

27:03 Yeah, look, BC partners have come in and they've seen an opportunity. It looks like every day that goes by, there's another player that was on Live that says that they're not going to rejoin for Live 2.0. So I think it is going to be very difficult for them to get out of this Chapter 11 bankruptcy and go forward.

27:26 But if they do, it's certainly not going to be a threat to the traditional order of the game as it maybe once was.

27:35 Should there be a 2.0?

27:37 In my opinion, I don't think so. I don't think they're going to be, you know, they're talking about 10 events. You know, John Rams now said he's going to commit to the DP World Tour and whatever path that he needs to take to get back to the PGA Tour. Look, the thing is, we were talking backstage, Liv had probably like half of a good idea that was executed pretty poorly.

28:02 They had a lot of capital, but I think a lot of that capital was wasted in some ways and i think they could have used that money a lot more strategically and they could have partnered with some of the governing bodies of the game and they certainly could have done better things with it instead of just you know enriching tour pros that were already making a lot of money so.

28:25 You could say at this point i told you so because you were never... I mean, you were not only never a fan, you were probably the highest profile, if not one of the highest profile opponents.

28:36 Tiger and I, at the very start, back in 2022, when this thing kicked off, we were certainly the two that were maybe the most vocal against it. But we were probably the two that had the most to lose as well in terms of our stature within the PGA Tour and... Yes, I think we both felt that this wasn't good for the game and this was going to fracture the game. But also, you know... everyone around the game has interests and we were about to launch TGL and we thought live could have taken something away from TGL, which it did because some players went to live and they, as a, you had to be a PGA tour member to play in TGL. So, you know, everyone has different interests in the game and we're, you know, you're trying

29:21 to protect your interests, but you're also trying to protect the interests of the game as a whole.

29:26 And I do want to talk about TGL came out of tomorrow's sports. It's tomorrow's tomorrow golf league. But I just before I do that, I mean, did you lose friends over live fellow golfers?

29:38 Yeah, I did.

29:40 Yes certainly people that I played with on European Ryder Cup teams that I am not as close with anymore but I would say it wasn't yes did we have a difference of opinion on the future of golf but I don't think that's something to lose friends over But we also just didn't see each other anymore. You know, they didn't play the same tournaments. They weren't eligible for the Ryder Cup. They weren't qualifying for the major championships. So, you know, and you don't live in the same places as these people. So you just you lose touch.

30:11 But that's why I wonder what it would take to to heal the fracture. Should those players be allowed back? to the PGA tour or does there need to be some kind of drawing of a line in the sand, whatever happens to them?

30:25 I think the thing that people have to realize is both the PGA tour and the DP World Tour are membership organizations and the leadership of both of those organizations need to go to the members and say to them, okay, what would you like to see? Because on one hand, I'm sure some members that stayed loyal would feel hard done by if these guys can just walk straight back in.

30:49 But then on the other side, having these players back on your tour is very good for business and that can drive revenues up and then everyone can benefit from that. So there certainly is a balance there. And I think even you see Guy Kinnings coming out this week and saying that if Liv does go ahead in this 2.0 version, players that are thinking of going that direction they're going to have to make a choice it's either you you play live 2.0 and you can't play the dp world tour or you play the dp world tour and you can't play live 2.0 but i think this this period of of trying to double dip and do both is is over.

31:27 Okay so would you vote to have them back if you you know you had a personal vote would you vote to have them back in the tours you're part of or not.

31:34 Yes, I would. I think, you know, a rising tide lifts all lifts all boats. And I think having some of these players back is is beneficial for the for the business of the tours.

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