>> good morning. this is bloomberg daybreak: europe. these are the stories that cite your agenda. a selloff in chinese equities deepens as the property sector crisis continues with country garden & ocean shares plunging. save the date. goldman sachs says the fed will start lowering rates by the end of next june with cuts being gradual and quarterly. plus the yen weakens through a key level against the dollar, triggering speculation authorities may intervene to support the currency. good morning. happy monday.

welcome to a new week. the last week ended with stocks scrambling for something to cling onto. the s&p 500 closed a month low. the nasdaq notched its longest weekly losing streak this year and the latest mixed economic data did not do much to help. if you are a stock or treasury bull, bill gross has a message for you. he says the fair value of the 10 year up and is about 4.5%. but look at where we are this morning. 4.17%, up two basis points. a way off to go. in asia, the selloff in china equities continues. you are looking at the csi 300, currently down one point 5%. the hang seng is down to front 5% -- 2.5% and is dragged down by country garden. that has knocked down 17.4%. but it is red across the board for chinese developers this

morning. country garden by no means alone. you have seen the yen breaching the key level against the dollar, still flirting with that level now. the question is will the government intervene as it did last year? we will get more on that with mark cranfield later this hour. but first, time for our morning roundtable with bloomberg's valerie and she is joined by jill in hong kong. let's start off in china because we get a raft of data and it is expected to show little sign of a rebound in growth. the economic recovery of course being weighed down by the worsening property slump which is exemplified by that slump. talk us through those country garden loose to start off with. jill: ultimately, there's two things we are looking at here when it comes to country garden today. first being that there's some units that have halted local bond trading so just another indication of some of the

companies incredible financial difficulties here and we have also heard from morgan in which cut their price target on country garden. it's very underweight. i believe there are top economists looking at this, saying there's some major problems of exposure to lower tier cities. at one time, this was china's largest developer. the sixth largest developer by sales. they've got tons of projects. at the end of last year, 70,000 people were employed at country garden so this is ultimately just again like this massive symbol of how this ongoing property crisis in china that we have been talking about for years at this point is continuing to hit a lot of developers and this is not just smalltime developers that are incredibly distressed here. this is a massive developer. about contagion we have been talking about and ultimately, going forward, country garden this week and said they were going to talk about bond repayment issues. but ultimately, it is still a pretty massive issue not just

for this developer but as a worrying sign for the rest of the property market. lizzy: meanwhile, china hedge funds have taken a kicking. valerie: we are getting some information on the amount of foreign investment leaving china, focus on the hedge fund industry. seeing a lot of withdrawals and it's going to be the first time the hedge fund industry in china is seeing a decline. this is notable because not only is it the industry seeing these foreign investment withdrawals but on a country basis, there is a lot of foreign direct investment that is seen leaving china. there's just a lot of bad news on the table. the crackdowns on private companies and the growing political tensions really are not helping. what's interesting about china hedge funds is a lot of them are equity long short so maybe that is showing foreigners are very much less bullish on the chinese economic growth picture and it

is just painting a bleak picture overall for those foreigners. lizzy: how much could this big data dump weigh on policymakers when it comes to deciding how much more economic stimulus they will announce question are what are the key numbers they are going to be watching? jill: at this point, we are expecting improvements year on year in retail sales, industrial output, those types of things, although there might be some softness as compared to what we saw in june. ultimately, we are looking at some of these property investment figures that were -- we were are -- we are looking to get tomorrow. it contracted through the first six months of the year. we are expecting a further deceleration in that statistic. that is going to indicate potentially even more problems within the property market and i am also looking at the youth unemployment figure for july. this is measuring a lot of university or college graduates coming out into the job market

and at this point, we have been seeing that number hit record highs for the past several months. all of this is going to weigh into the calculus for policymakers in china but ultimately, they have been talking for many weeks about the fact that they want to keep stimulus very targeted, very limited. there's a lot of issues including the weakening currency. you have a lot of debt woes within china so not a ton of room for this government. that policy is going to be sort of piecemeal as they roll things out but ultimately, the weakness within this data that we are expecting ultimately does suggest that maybe there could be something coming. lizzy: speaking of economic data, we had a mixed batch in the u.s. last week so let's talk about the fed. they reckon the fed will start cutting interest rates by the end of next june and the pace of reductions is going to be gradual and quarterly from that

point, they say. quite a long way for normalization. it does not seem it is a priority for the fed in goldman sachs. >> this change of call comes after that good news on inflation last week and it does not come along any bearishness on the u.s. economy. their call is squarely focused on the desire of the fed to normalize that fed funds rate as inflation gets closer to target and they also say that the risk is cuts could come more quickly if it is confident that the inflation problem is unlikely to return. the interest during thing i found in this note is they expect the fed funds rate to eventually stabilize around 3% to 3.25% and that is a call on where goldman sees this mutual rate for the u.s. economy. it is a lot lower than where the market is currently pricing, where the fed will cut two. i'm interested to see whether other banks on the street also

do a similar call with it being a lot lower than what the market is expecting. >> meanwhile, you have a growing number of economists saying the u.s. will get its soft landing. >> yes, and that includes them. that is the growing expectation although several economists have warned it may be well into 20 24 before we actually see that realized and it does not automatically mean the that is off the hook. they still have to figure out how to appropriately chart this balance between, you know, keeping these interest rates higher for however long, making sure they are continuing inflation because the risk is that if they continue to be too aggressive, you know, that could continue to spell problems. if they don't act aggressively enough against price pressures, may inflation ends up rebounding in 2024 so you still have, even if the u.s. is able to chart that soft landing, it is not an easy task. the fed has made clear over and

over again that they are looking at all these data indicators, with the labor market is doing, keeping an eye on the cpi numbers month after month after month but ultimately, this outlook does look optimistic. it does not mean we are completely out of the woods just yet. lizzy: i want to talk a little mna briefly. u.s. steel, which is one of the most iconic american steelmakers , has rejected a takeover offer from cleveland cliffs that would have created one of the world's biggest steelmakers. instead, it is starting a formal review of its strategic options. it says it is remaining prepared to engage in discussions so that was one to watch and we also just have a breaking line that john elkin xor has bought a stake in philips. he is becoming a long-term investor. he is the holding company that

has stakes in for ari and we will keep you posted on that as we get more details. but speaking of things to watch out for, let's take a look at what we have got coming up this week. tomorrow overnight as we were talking about, 3:00 a.m. u.k. time, we get china activity data early wednesday morning and it is expected to show the economy weakening further and you might also see extreme weather crimping investment as the recent trip feet of policy announcements has been coming in but that support will not be apparent in these figures. 7:00 a.m. london time on wednesday, we get the latest u.k. inflation reading and that's going to tell us just how far inflation fell in july and the bank of england across the road from us here is especially going to be watching weather core inflation stays elevated and that could prompt further hikes in september and november. later on wednesday at 7:00 p.m., we will get the minutes of the fomc's july meeting. since july, we have seen that

core u.s. inflation has fallen close to the 2% target. surely the fomc is going to be more dovish now? >> that is a good point. we are still waiting to hear a dovish shift from fomc members. we did not necessarily get that last week after that inflation report where maybe a lot of market participants expected to hear directly from fed members calling for a pause in september. we did not get that from mary daly. she said the fed has work to do. even from the other doves, bostick being another one who did not explicitly say he is in the camp in september but perhaps this week, we hear more fed chat and a bit more direction on where they are going in september. as you know, the market is very much thinking the fed is on pause from here. there's only two basis points priced into that late september fed hike. lizzy: thanks for joining me for

that morning round table. you can get a roundup of the stories you need to know to get your day going in today's edition of the daybreak newsletter. the lead on the ecb's latest survey results. they have china's property rose as well but that -- rows as well. economists reckon it will deliver one last hike next month despite signs of inflation pressures abating. they also have the surprise victory of argentina's congressman in a crucial primary vote that is set to upend the race. we will have more on that later. terminal subscribers can find all those stories and more by going to dayb . the crisis in china that is weighing on the nations economy with our markets live team and we will talk yen weakening and the state of the u.s. economy. that is next. this is bloomberg. ♪

lizzy: welcome back to "bloomberg daybreak: europe." i'm joined by bloomberg mliv strategist mark cranfield to continue our markets conversation. we have got a selloff in chinese equities going on this morning. how are wealth management concerns affecting these markets? mark: this is a really immediate

problem. so far, in absolute terms, the numbers are not enormous but the risk to retail investors is very shocking because this is the kind of thing where they panic first and ask questions later because this really goes to the heart of basic investing so when you threaten the livelihood of your retail investor base, that is really about the worst thing you can do to any financial market and they are not going to stick around and ask lots of questions about whether their money is really safe or not. it is almost like having a run on the banks so that is what you are seeing in the reaction in the equity market. retail investors want to get out at any cost and this could go on for a couple of days unless the authorities are very quick to give some clarity as to the health and structure of the wealth management system that they have. people are going to be very skittish and nervous about where this is headed. we have seen it before in china. this can lead to long selloffs

in the markets. the market is very canny way. we have had a lot of bad data recently. there was more at the end of last week with the low numbers very low and that gave people reason for concern but the wealth industry is a much more immediate concern. that is when people pick up their phone and sell everything they can to their stock volker because it is damaging their private running so really, the authorities need to get on top of this very quickly. lizzy: i want to talk to you about the yen because earlier, it reached the 145 level against the dollar. the big question is how likely is government intervention now? mark: we are probably going to hear some verbal intervention from japanese authorities if we head towards the 146 area. you can probably expect to hear some pushback from ministry of finance officials. they have used that before. last year, they were very ready to come in. more than once per day sometimes to tell the market that it will

see a slowing down in the yen weakness. in terms of hard market intervention, direct selling of u.s. dollars to by the end, they will probably wait until closer to 150. that is when they hit the markets last year and when people will be expecting something in that area and the japanese authorities have shown they can be pretty aggressive when they intervened to defend their currency. they can use very large amounts of money but they will probably save that for further down the road because at the moment, nothing much is working in their favor. u.s. interest rates are high and rising. japanese yields are very low, not doing a great deal at the short end of the curve which is the main thing that drives the foreign exchange market. the difference between short-term rates in the u.s. and japan has widened again over the past couple of weeks and that is partly causing the weakness in the end but certainly, verbal intervention is very likely and it could come any day this week if the yen stays weak. lizzy: speaking of saving things, goldman is seeing fed cuts but not until june 2024.

are they right, in your view? mark: that is a natural response. rates have been going up for some time. i think the fed will counter that narrative. he will have a jackson hole speech from jerome powell before the end of this month and i suspect that the message he will be trying to give to people is to be patient. we have got rates up to a high level and we have not yet dt in the inflation curse yet. the employment situation is very strong and the message he will give is wants to hold rates at a high level for a very long time. i suspect at the moment that the fed do not even know when they are going to be lowering interest rates. they would not want to put a date on it. they will not be so confident as goldman sachs. they would really want to see inflation cooling and maybe some weakness in the jobs market. neither of those are happening very much at the moment so the message will be that we are going to stay the course, keep rates up, and the market will have to wait. we are not going to give you any messages for the time being but

there is time to lower rates. lizzy: thanks to mark cranfield for that update. coming up, gas supply risks are mounting as europe heads towards autumn. we will discuss the outlook, next. this is bloomberg. ♪

>> if you are caught watering your lawn on a hot day, you can get a fine of 50,000 euros. germany is adjusting to levels of heat it is simply unprepared for. only one in 10 germans has an air conditioner verses nine out of 10 households in the u.s. last year, more than 8000 people died in germany due to excess heat, the third highest in all of europe. the health minister you rolled out its first-ever heat protection program, hoping to save thousands of lives every year. it is vague and execution is a complex issue in germany. according to early research, the

heatwave this year may have shaved 0.6% off of global gdp simply because people work slowly, work less, and make more mistakes when it is hotter out. if winter was about rationing gas, summer is about rationing water. lizzy: all of her cropped looking at the impacts of extreme heat in germany. from heat to heating, gas supply for the winter months in the northern hemisphere is at risk with a potential strike by workers in australia putting lng shipments at risk. let's go to david stringer. he oversees bloomberg's asia energy team in melbourne. great to have you with me. what are the current prospects of industrial action at australian facilities and how disruptive could that be? david: good morning. we have seen the natural gas market worry a lot about the

prospect of industrial action at three facilities in australia which together account for about 10% of global seaborne supply. talks are ongoing at these facilities. some of them run by a company, woodside, a major australian producer. others run by chevron, so there are two separate processes ongoing here. talks between labor union officials, between company officials, continuing. there will be a new round of negotiations taking place between woodside and officials on tuesday here. but at this point, we simply do not know yet whether there will be action. if we do see action, it kind of depends how long and prolonged the action is paid last year, we saw an industrial dispute that lingered for more than 70 days. anything like that is going to cause quite significant disruption. by one assessment, even a month long outage at those three australian plants would impact about 44 cargoes of lng and that

will be a significant impact. lizzy: what other factors are worrying the lng market? david: it's not just strikes. there is a whole raft of things just creeping up, particularly as you said, as we get into the northern hemisphere, as we get into autumn and winter. there are outages in places, you know, like nigeria, egypt pulling back some of its exports. trinidad and told a ghost, maintenance of projects there. the key when people are looking at is the atlantic hurricane season. the u.s. has a lot of export facilities on the atlantic coast and with hotter sea temperatures, we are expecting kind of an above-average hurricane season. any disruptions will add to this problem and really store up some supply issues as we are into that crucial winter period. lizzy: really significant for the markets. how much do you expect all of this to show up in bills for

energy consumers? david: let's be clear, we are not in a situation like we were last year. prices are down a long way from the sort of hikes that they hit during the real crisis sparked by russia's invasion of ukraine. that said, higher prices will translate through into higher costs so if we arrive into the peak demand, peak winter season with a shortage of supply, what we are going to see his europe and asia compete for those scarce cargoes. in the ultimate pair of those costs will be the consumer, whether that is households or industrial consumers so it certainly is a risk for these months ahead. lizzy: thanks to bloomberg's david stringer there. i just want to check in on the oil markets now. oil has dipped after climbing for a seventh straight week last week, the longest winning streak since june last year. as you can see here. this was thanks to robust

consumption in china and elsewhere but of course at the same time, you had saudi and its allies. russia, for example, constricting supplies. take a look. this morning, crude down 1% at $82 a barrel. brent crude futures down 1% as well at $86 a barrel so that is where we are at on these oil markets this morning. we will keep an eye on the you throughout the morning. coming up country garden woes deepen. thinking the developer stock and bonds in hong kong. could we see another default after the evergrande crisis? we will be talking china property, next. this is bloomberg. ♪

it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything.

lizzy: good morning. this is "bloomberg daybreak: europe." i am lizzy burden in london and these are the stories you are waking up to. a selloff in chinese equities deepens as the property sector prices continues -- crisis continues with shares plunging as some bond trading is suspended. save the date. goldman sachs says the fed will start lowering rates by the end of next june with cuts being gradual and quarterly. plus the yen weakens through a key level against the dollar, triggering speculation that authorities may intervene to support the currency. good morning. happy monday. welcome to a new week.

the last one ended with stocks scrambling for something to cling onto. you have the s&p 500 closing at a month low. the nasdaq matching its longest weekly losing streak this year and the latest mixed economic data not doing much to help. goldman economists penciling the first fed rate cut for june 2024 and futures pointing to a lower opening this morning. if you are a stock or treasury bull, bill gross has got a message for you. he says the fair value of the 10-year treasury yield is about .5% but we are way off that this morning. it is up two basis points at 4.17%. meanwhile in asia, the south in china equities continues. if you are looking at the csi 300, that is down 1.2%. the hang seng index is down 2.3% and it is dragged down by country garden, down 17.4 percent this morning but it's red across the board for chinese

developers this morning. country garden, by no means alone. you have seen the end breaching the key one for five level against the dollar, still flirting with that level now. the question really is, will the government intervene as it did last year? i want to bring you more on the country garden story this morning. shares have continued to selloff in hong kong after the chinese property developer halted trading in some of its bonds. we are going to get more with bloomberg loans and bonds reporter the writer chen -- the reddish and -- loretta, now. >> in the bond market today, we have seen traders siding and the entire market dropping because of that contagion fear from country garden. even dropping without specific news because of that contagion fear here. country garden was one of the biggest developers in the

country. and it has 3:04's more projects than evergrande so the fallout of potential filler payment for country garden could be severe for the entire sector. that is the question people are asking and also earlier today, we also had the news about a trust company in the country potentially failing to pay some of its investors, flagging risk that the property sector woes could spread from the bond market further to the trust industry which is a $3 trillion industry. lizzy: it sounds like a minefield. how do investors get their head around which companies are safe and which might be the next? lorretta: that is the million-dollar question right now for the investors. the thing to look out for is really who has got the next maturity because we know these private developers have not been able to get extra financing so really, i think the indicator for which one will be in the next to fall -- will be the next default will be which has the

most charity. another indicator is how much state support these developers are getting. country garden was once flanked by the government as one of the key developers because it is systemically important for the country but we also have seen that after receiving some guaranteed bond issuance quota from last year, country garden has not been getting extra state support so i think that is the key question. you know, what level of support is sufficient for these developers to survive? lizzy: thanks to the writer chen -- lorretta for that update. the military leadership is ready to reopen talks with the regional. this comes after they defied a one-week deadline to reinstate the ousted president or face military intervention. joining us now from johannesburg is our africa correspondent. jennifer, tell us what they are saying and why.

jennifer: this is significant because at the end of last week, it really appeared to be an escalation of sorts because we did see the west african block putting a military intervention potentially on the table, having troops on standby so over the weekend, there was a lot of concern about what this could mean and what we could see next but what we did see over the weekend were some mediation efforts by specifically nigerian islamic scholars and this is significant because the president of nigeria did grant scholars the permission to go into niger and start talking with the coup leaders. it appears that a lot of the sanctions they have been enduring have really been hurting them. in particular, what we heard from them is that they said these measures are inhumane, exceptional, and unacceptable. when they are saying now, as you mentioned, they are open to a dialogue about lifting of sanctions and open to potential

peaceful discussions and not specifically an escalation of conflict which was of course the concern but we are still paying attention to how this really unfolds. lizzy: open to dialogue but what can we expect to happen next? jennifer: at this point in time, there's a lot of concern about what it is that they are going to be asking for. of course, from the international community, there have not been any pivot in terms of what the international community and what they are asking for, which is the reinstatement of the president but it does appear that that is what the coup leaders are ready to do. it just appears that they are really enduring a lot of difficulty with electricity cut off at this point in time so we are going to have to pay attention to who is next in terms of mediation efforts. the islamic scholars came back saying that there are some positives potentially in dialogue but we are going to have to see whether that pans

out because there's still a lot of unknowns at this point in time. lizzy: our africa correspondent. thank you for being across every twist and turn in that story. we are going to be speaking to the chair of the bricks business council later this morning so stay tuned for that. argentinian congressman javier million is -- millier is holding a crucial vote. our reporter has the details. >> argentina witnessed an absolute upset on sunday nights primary presidential election. an outsider third party libertarian candidate took 30% of the votes, winning as the highest voted candidate in the race. he outpaced the opposition coalition who had, you know, two candidates competing for the nomination and the incumbent party as well. he outscored everything the

polls were expecting which were pegging him at around 20%, no more. it is an absolute surprise compared with as well as what markets were expecting. he is being compared with donald trump and bolsonaro. he represents his own libertarian party. within all the different market scenarios, an upset was the least desired by markets so this is likely to be received with fear. investors like his economic message of slashing public spending but he has an aggressive style and he lacks any sort of party structure. that would allow him to get the changes that he needs to make in congress over the finish line. he -- we were expecting a selloff in the parallel exchange rate. analysts say it could be around

15, 17%. we are also expecting bonds to drop lower on continued uncertainty and the expectation that this election could go to a second round. we have a general election in october and that could go off to november now that this race has been divided in three parts. bloomberg news. lizzy: let's bring you more of our top stories from around the world. the number of people killed in last week's wildfires in hawaii has risen to 93, making it the deadliest in the u.s. in more than 100 years. governor josh green says the toll is expected to climb further as authorities continue search efforts. officials are facing questions over what prevented alarm systems from alerting people in the hannah -- lahaina. it is still unclear when residents may return to the area.

now to russia. russia says it opened fire on a cargo vessel in the black sea to force it to stop for checks. the first such confirmed incidents since moscow withdrew from a key deal last month. the dry freight had been heading to a ukrainian port when unable patrol ship came across it early yesterday morning. the navy fired on after the vessel did not respond to a call to stop for inspection. here are some of the key things markets are watching out this week. tomorrow, we will get china activity data. u.k. employment numbers and u.s. retail sales. on wednesday, there is u.k. inflation data for july and we are also watching out for minutes from the fomc's meeting last month. on thursday, norway central bank will deliver its latest rate decision and to round out the week, we will be watching japan with the cpi reading due on friday. coming up, bill as stock and bond markets are overvalued and

bullish investors have got it wrong. we get the pimm cofounders outlook on rates and inflation, next. this is bloomberg. ♪

lizzy: welcome back to "bloomberg daybreak: europe." i mentioned that ecb survey. economists say the ecb will deliver one final increase in interest rates next month. this is according to bloomberg school and it says the deposit rate will be lifted to 4% in september. at the same time, respondents reckon officials will start cutting borrowing costs next march, a month earlier than they previously thought. now, pimco founder and former cio, bill gross, said stock and bond markets are both overvalued and bullish investors have got it wrong. he spoke to bloomberg about his

outlook for markets and inflation. bill: i think there is a case for 3% inflation going our plus or minus. i think if we got to that point, then the fed would again to consider stopping and maybe even lowering rates over the next year or so but i do think the 10 year, you know, it's probably overvalued and has been overvalued for a long time in terms of a lower yield and too high of a price. you know, if said funds actually came down to 2.543% the 10 year term premium that is the spread between 10 years and fed funds has been 135 basis waits over a long period of time so if you had 135 basis points to 2.5 or 3% on fed funds, you get to a point where we are now in that suggests that all of the bulls

on treasuries and the 10 year and on the long bond, you know, i think their arguments are little misplaced. it has been overvalued for a long time and we are going back to proper valuation on longer-term notes and bonds. >> you understand that relationship between what is going on with inflation and the fed and how that sort of factors into some of these bullish calls and those calls have started to increase not just because of the two reports we got this week. if they do have it wrong here, kind of give us a sense here of why, specifically. bill: i think they got it wrong. first of all because rates were so low because of quantitative easing in the fact that in some cases, the five-year real yield was -200 basis points which sounds incredible but it was 1.5 years ago and it is now a plus

200 basis points. so a switch in terms of real rates. i think investors simply got overwhelmed with the fact that the fed would stay low for a long time and that inflation would not pop its head out of the rabbit hole it has so now, we are moving back into an old age world where, you know, interest rates really are a sign of a healthy economy. the way we have it now, the negative yield curve, we have had that for 12 to 18 months, i suppose. a thriving economy, a thriving finance based economy cannot do well. it doesn't mean it goes down in the gusts but it cannot do well if low risk investments yield more than high risk investments and as you march out from, you know, the 30 day old to the 30

year bond, you can see that you are better off yield wise in terms of the 30 year bill, 30 day bill. that is an inverted yield curve and it will not do well for the economy going forward. lizzy: that was the pimco co-founder, growth scare coming up, one generative ai model says nine plus 10 equals 21. we will talk ai and all the tech stories you need to know, next. this is bloomberg. ♪

lizzy: welcome back to "bloomberg daybreak: europe." our 20 one-year-old student from georgia has managed to convince

nai algorithm to say that nine plus 10 -- an ai algorithm to say that nine plus 10 equals 21. thousands of hackers are trying to expose flaws and biases in general ai and it is happening at the hacking conference in las vegas for it i want to dig deeper into that story and all the other top tech stories this week with bloomberg's aggie now. let's start with you. one of the hackers said her biggest concerns here is inherent bias, especially racism. what do we know about the biases in ai more broadly? >> two things that we know as that there is a concern that ai has essentially an ability to not only replicate but also amplify specific biases in our society. we have seen it in ai image generators creating racist or sexist images and as well there

is the possibility that those pieces that are produced, like the mask you just showed there, that -- there is a potential that they are producing incorrect results as well so it's both the issue of inherent bias and also incorrect results in the difference is what we need to remember is all of this is originally input by humans in one way or another and the difference is that humans can unlearn bias or try and train themselves away from thinking in a biased way and also, they can relearn incorrect facts are the difference is that in order to weed this out of a database of a large language model, you essentially need to be focusing not only on what is in the existing data set but also what the ai is then producing and relearning so there is this issue of sort of a snake eating its own tail where you need to make sure that the ai itself is not actually learning incorrect

things that nai has already produced. lizzy: why do companies like having their stuff packed? surely, you are very much at the where of the brilliance or not of the hackers. >> absolutely. historically, companies like having their stuff packed in a controlled environment in order to figure out what loopholes their own engineers have potentially less honorable. and having a contest where people are rewarded and not penalized in any legal capacity for trying to find a loophole, find an error in that code and then exploit it or show how it could be exploited, it allows that company to say that is a great spot, thank you and they will patch that and make sure it cannot be exploited in the real world and companies have local bounty programs in order to reward people. what is interesting about what is happening with dexcom --

defcon is people are trying to exploit the large language models. this is difficult and that is why you get the bad mass coming out of the results. rather than trying to exploit the underlying code and a flaw that exists from an engineering level, they are trying to say, what can we tell these large language models to remember or say to us and then down the line, after seven or 8, 10, 12 more questions, ask him something that they know it will draw on a previous conversation point in order to answer and that allows it to start giving quite strange answers which then allows the large language developers to say we should not be allowing the and it falls into this category of prompt hacking that we are starting to hear an awful lot more about. >> i want to ask you about apple because it is planning this revamped apple watch for the

10th anniversary but also the new iphone might bring back the usb seaport. i wonder what is the strategy here. a money play to get people to buy compatible accessories? >> everything for apple is a money play, obviously, but in the sense of u.s. bc in particular -- usb-c in particular, apple does not charge or connect to another device using usb-c, the connection you will see on most modern android phones, most laptops, and i have even got a food processor that charges off u.s. bc. it has become this standard port and the iphone does not have one. it has the proprietary lightning port that apple has had for so long so big part of what they want to do is we expect them to move away gradually. it will probably be the pro models to begin with, move away from lightning and move the phone to use the same connection as every other apple product out

there pretty much in the same as the other products on the market but in doing so, it does mean that compatibility with speakers that may be have a built in connection, may be a car, it's difficult to grade the hardware in cars a lot of the time so it causes consternation that people have. do i want to buy the new iphone? apple did it a while ago, over a decade ago when it moved away from the wider connector you might remember only ipods france ends and it seems like it's going to start doing that again. lizzy: speaking of incompatibility, mark zuckerberg has thrown cold water on his cage fight with elon musk. is this really where we are at that ceo's have to do this sort of thing retention schumer -- things for attention? >> the latest is elon musk trying to pick a fight on twitter or the x app with mark

zuckerberg and he even managed to rope in the italian government, talking about how he had managed to find a location and people were speculating whether this would happen in the coliseum in rome. there was a whole twitter conversation about it and it is relating a lot of discussion for the last several weeks but now, it seems like, as you say, mark zuckerberg poured cold water on it, saying he will only be engaging with people who take this sport seriously. it's also interesting to see this now. mark zuckerberg has seen this as quite a good pr play for him because he has stayed resolutely silent. lizzy: thank you for that updates on text. up next, markets today. this is bloomberg. ♪

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dani: