Nvidia CEO admits to affair after allegations of relationship with Chinese spy

0:00This episode is brought to you by Hard Lessons, a Morgan Stanley podcast. Iconic investors like Stan Druckenmiller, John Gray, and Rick Reeder break down calls that worked. I knew that this stock would go up for at least two or three years and go up a lot. Ones that didn't. I quite frankly thought the company could have reversed course. They didn't. And what they learned in between. When you buy everything and it goes up, it doesn't train you to be a great investor. It's these hard lessons that make all the difference. Listen to Hard Lessons wherever you get your podcasts.

0:33Good morning from the Financial Times. Today is Monday, November 9th, and this is your FT News Briefing. NVIDIA's Jensen Wang has admitted to having an affair after allegations of a relationship with a Chinese spy. And the clock is ticking for Israel's opposition leader to form a government. The way things look at the moment, someone is going to have to break one of their promises in order for Eisenkot to be able to form a government. Plus, what's behind the Great British Corporate Sell-Off? The UK is not getting the investment return from the entrepreneurial effort that it's putting in. I'm Josh Gabor-Dwyan, and here's the news you need to start your day.

1:26NVIDIA's chief executive has admitted to having an affair in a message to employees seen by the FT. Jensen Wang's admission comes just days after the FT reported his alleged romantic relationship with a woman that the U.S. intelligence community believes was working as a Chinese spy. Sources told the FT that the U.S. government believes Alice Wang, an executive at the tech company Megaspeed, had been recruited by China's main intelligence agency. Megaspeed is a Singapore-based customer of NVIDIA. The company has also come under scrutiny for allegedly smuggling advanced NVIDIA chips into China.

2:03In his memo to NVIDIA employees, Wang apologized to staff and his family. NVIDIA said its board will investigate whether Wang was the, quote, target of a foreign intelligence effort.

2:19The countdown for a new government started in Israel. Centrist Gadi Eisenkot has about a month to pull together a coalition. Yesterday, Israeli President Isaac Herzog formally selected Eisenkot instead of Benjamin Netanyahu. James Schotter is on Coalition Watch for the FT. Hi, James. Hi, how are you? Good, good. So just explain, why did the Israeli president choose Eisenkot? So basically, the president has to choose the person who he thinks has the best chance of forming a government. And he held consultations last week with all the parties that will be represented in the next parliament. And the result of those consultations was that parties with 67 MPs said that they would recommend Eisencott to form the next government and parties with 46 MPs said that they would recommend Netanyahu.

3:13So on that basis, Netanyahu concluded that Eisenhower had the best chance. And that is despite the fact that actually in the election, Netanyahu's coalition won more seats than Eisenhower's sort of opposition bloc of Jewish parties. And obviously for a majority in the Israeli parliament, which has 120 seats, you would need 61. Okay, well, let's talk about the potential pathways Eisenhower has here. What are his options, basically, for forming a government? I think he probably has three broad options. One would be to rely on the support of Israel's two Arab parties, which won 19 seats between them in the election, which was an unprecedentedly high result for them.

3:55The problem with that, though, is that various members of his own bloc have said that they wouldn't be prepared to do that. The second would be to rely on the support of one or two of Israel's ultra-Orthodox parties who have traditionally been close allies of Netanyahu, but are increasingly frustrated with him because of his failure to pass a law enshrining the exemption from Israel's military service for Haredi religious students. However, that would also be tricky because there were also members of the opposition who have made clear that conscripting everyone, including the ultra-Orthodox, is a key part of their political platform.

4:32And then the final possibility would be some sort of national unity government, which would bring together Eisenkot's Yasha Party, Netanyahu's Likud, and then presumably some of the other Jewish parties. But that would also be tricky because members of the opposition have refused to countenance working with Netanyahu. Netanyahu would probably demand to be prime minister, which is something that Eisenhower has ruled out. So basically, the way things look at the moment, someone is going to have to break one of their promises in order for Eisenhower to be able to form a government. Can we just go back to that first option there?

5:06Why does much of the opposition see working with Arab parties as out of the question? Well, I think there's a variety of reasons for different political players. I mean, for some politicians, the concern is that a government, depending on the support of the Arab parties, would be unstable. For example, if Israel decided to authorize big strikes in Gaza, that might be a point where the government fell apart if the Arab parties didn't agree with that. There's also a lot of public hostility to the idea of a government, depending on the support of the Arab parties, particularly in the wake of October the 7th.

5:44I think there are others where it probably shades over into racism, as President Herzog implied during his consultation with one of Israel's far right parties that Blanket refused to consider that Arab parties being part of a government would be appropriate at all. And then from the side of the Arab parties themselves, there's historically been a refusal to join Israeli governments, although that is now beginning to change. Rahm, which is the smaller of the two, has made clear that it would be prepared to be part of a coalition again. The joint list does not want to join an Israeli coalition, but it has said it would be prepared to support it from outside.

6:20All right, so all of Isakot's options here sound kind of complicated and quite difficult. Herzog, at the same time, did select him to lead this coalition. Does that mean the clock is ticking on Netanyahu's rule? No, I think it's too early to say that. I mean, the first obstacle for Eisenhower will be to form a government. And obviously, as we've discussed, that looks very difficult at the moment. But even if he does manage to form a new government, I mean, all the options that are open to him look relatively unstable. And so there's no guarantee that, you know, government formed by Isencote would last.

6:58So even if Netanyahu has to go into opposition and watch Isencote form a government, he'll be working very hard to undermine it. And it's quite possible that, you know, just as in 2021, when he returned, you know, quickly having been ousted, that he could do so again. That's EFT's Jerusalem correspondent, James Schotter. Thank you, James. Thank you very much.

7:23Who is going to be the next president of the European Central Bank? That's the question that people are asking after Christine Lagarde announced she'd be stepping down in February, nine months earlier than she had initially planned. The succession race has kicked into high gear, and there are two big names kicking around to replace her. The FT's Chris Giles spoke to one of them. Hi, Chris. Hi there. So, Chris, who are the frontrunners? There's only been two people nominated for the job and nominations closed on Friday. The first is the former head of the Dutch Central Bank, and that's Klaus Knot.

8:00And the other one is the former Spanish Central Bank head, and that's Pablo Hernandez de Coz. And you spoke to Klaus Knot. Who is he? Why does he think he'll be a good candidate to replace Lagarde? Knott directly told us he said he was the continuity candidate. So one of his key things is he's got enormous experience. He's been through many crises, both in the Dutch government and at the Central Bank. He also thinks that he's best placed to deal with any future crises that might arise in the Eurozone. And let's face it, we know there's a potential chance that countries such as France in particular might have some sort of troubles with their debt in the years ahead.

8:45Does he feel the need to raise rates further? Interestingly, he doesn't like the idea that he's billed as a real hawk, although he was quite hawkish when he was the Dutch Central Bank governor. And at the moment, what he said to us was really quite dovish. He said, if energy prices don't rise any further from here, he saw pretty much no need to raise interest rates further. So he's really trying to play down the need for lots of interest rate hikes. And in that sense, I think he's trying to appeal to the Southern Europeans to show that he's not the sort of hawk of his caricature. How is he seen as different from the other main contender here, from Pablo Hernandez to Cos?

9:27Well, I think this is going to be a little bit of a North versus South fight in some ways. And this is often the case in European big jobs. it's going to be which countries support them. They need 65 % of the population of Europe to get the nomination. So there's not a lot of difference in terms of experience. And also there's going to be a big horse trade because a lot of jobs on the ECB's executive board up for grabs. So it'll be if you have a Dutch-centric president, then you'll need to have a Southern European chief economist. And all of this sort of thing will come into play. They're both very experienced candidates.

10:05And in the interview, it's very interesting how much Knot has come out trying to appeal to Southern Europe as well as Northern Europe. That's Chris Giles, the FT's economics commentator. Thank you very much, Chris. Thank you.

10:25Big British companies keep getting bought out by even bigger foreign ones. and it's become something of a perennial concern for the UK's business community. This year, there's been another wave of outside buyers acquiring homegrown UK companies. So what does it mean for the British economy as a whole? Here to talk about the deal spree is FT columnist John Gapper. Hi, John. Hi there. John, there's been a lot of these big ticket acquisitions this year of British companies, but it hasn't really come out of the blue, has it? No, there's been a long tradition, actually. UK has always been a pretty open capital market, but we've seen quite a few really recently, quite a few big deals.

11:06EasyJet was taken over by Apollo. EQT, the private equity company, led a£10.7 billion buyout of Intertech. There's just been a wave of these things recently. And there's been some themes emerging, particularly US companies buying UK companies and also private equity. And it started to make people think, well, you know, it's just something new going on here. And is the UK losing many of its most valuable corporate assets? When did this start? How far back does it go? Oh, you can go back decades. The FT has done an analysis going back three decades. We go back to Morgan Grenfell, the rather distinguished UK merchant bank being taken over by Deutsche Bank in the late 1980s, and then through to another wave of takeovers, companies like O2, the mobile telephony operator around 2005, and through to another wave.

12:07One of the most interesting ones was the takeover of Arm Holdings, the chip design technology company by SoftBank of Japan around 2015, which was a deal that raised a lot of questions about whether or not the UK was losing some of its prime technology assets. But this has gone along for quite a bit of time in different waves. What's different this time, I think, is that there's really very little outbound M &A and quite a lot of inbound. Is it actually a problem or is it just a sign that British businesses are doing very well and people like them, so they're buying them? Yeah, I think there's a problem for the country as a whole, which is it's great that it keeps producing very good companies.

12:50That's terrific. But if in the end they become foreign acquired, then the flow of dividends, the profits are flowing elsewhere. And so even though often the companies will remain here in terms of operations and will continue to employ people, the UK is not getting the investment return from the entrepreneurial effort that it's putting in. Is there any sign that this trend is going to let up? or is this just what the British economy looks like now? I think it could turn a bit if there's higher levels of domestic equity investment. UK domestic investors are not investing in companies in the way that they used to.

13:33And I mean, as one person said to me when I was talking about this, well, you get an approach from a foreign company. The investors have no real stake in saying, well, hold on a minute, let's give the company more time. There was one well-known example when AstraZeneca, one of Britain's most valuable companies, had a takeover bid from Pfizer and actually resisted, its investors said, yeah, we believe it, we will give the company time to grow. And it has very successfully grown. So it can be done. But I think a combination is needed, a bit more confidence from companies themselves and the boards of companies to say, no, actually, we can grow this company ourselves.

14:13We don't need to be taken over at this relatively low price. and more domestic investment. That's EFT's John Gapper. Thanks, John. Thank you.

14:27Before you go, it's a Dutch company, but the name comes from the Elvish language. It's another startup founded by former Palantir staff with a name derived from the Lord of the Rings. Onodrim, a defense startup, takes its name from a made-up language in the fantasy novel series. The company thinks it has a solution to Europe's defense industry woes. Most companies are struggling to expand their production capacity after European governments sharply increased military spending in response to Russia's full-scale invasion of Ukraine. Onodrim wants to boost that production capacity by buying smaller critical suppliers and scaling them up.

15:08The year-old startup has raised$300 million at a$1.3 billion valuation. You can read more on all of these stories for free when you click the links in our show notes. This has been your daily FT News briefing. Check back tomorrow for the latest news from the Financial Times.

15:44VantageScore. VantageScore uses 400 % more credit report and alternative data than legacy models, bringing more people into the credit economy, like 5 million more mortgage-eligible people. Banks win and francs win. Lenders win and so do Lindas. When you build credit scores the right way, everybody wins. Get started at VantageScore.com. Hey, we're Nick and Jack, hosts of The Best One Yet. Behind every episode, there's research, email, spreadsheets, and our shared Google Doc, the headline hammer. With Google Workspace with Gemini, Google's AI is built right into the premium versions of tools we already use, like Gmail, Docs, and Sheets.

16:20No new tools or extra logins, just personalized AI for the way we work. That means less time on the work around the work and more time finding the stories worth talking about. Get AI tools for work. Upgrade to Google Workspace with Gemini at goo.gle slash workspace with Gemini. That's goo.gle slash workspace with Gemini.