Moonshot

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1:04Wake Up To Money from BBC Five Live. Hello, welcome. It is Wake Up To Money, a SpaceX rocket expected to crash into the moon this morning. But Elon Musk is betting on another kind of moonshot as SpaceX continues to invest billions more into AI. It is still making a loss, though. Elsewhere, there are bumper profits at BP, the latest oil giant to reveal the rewards from higher oil prices. We're going to be hearing from one of the biggest fresh produce companies in the UK about how heat waves are hitting British growers, how supermarkets might need to adapt as well. And is this a familiar sound? EA Sport.

1:47To the game. The deal finally got done. The EA Sport business has officially gone private. It's been bought out by those investors, including Saudi Arabia's public investment fund. And we'll have a look at what that means for gamers. Wake Up To Money with Sean Farrington. Good morning. Wake Up To Money on BBC Five Live. Hope you're well on this Wednesday morning, the 5th of August. It's just after five o 'clock. It feels like 2026 has been a little bit of the year of space development, doesn't it? Whether it has been us being glued to a journey around the moon, as was made for those 10, 11 days a few months ago, or one of the biggest deals in history, one of the biggest innovative companies in history with SpaceX and all it wants to achieve, a much hyped launch onto stock markets where Elon Musk wanted so many people around the world to get involved in buying shares in his business and actually that share price a fair bit lower this morning than it was when it launched and certainly a lot, lot lower than it got to after those first few days of the launch when the hype continued as well.

2:59I don't know if you got involved in any of that at any point at all. Have a view on those longer-term investments if you make them into those worlds of AI and space where we're going to be talking about the first set of SpaceX results that we've got. So we start to get some detail on how the company is actually doing, where it's spending money, how much it's losing, what Elon Musk's ambitions are. Just sort of seeing the quotes from the response from the boss and the chief finance officer afterwards, you know, talks about SpaceX's ambition to build a city on the moon. It sounds like super sci-fi right now, Musk said, but it's going to happen.

3:38You know, that's the kind of plans he has in mind. So we're going to be talking plenty about that. It doesn't seem like that separate SpaceX rocket, a bit of debris from a previous launch, but it's a big old chunk of debris that's going to be crashing into the moon at some point later today. That's not going to be happening in wake up to money time, but it's just a reminder of the influence, how long that business has been growing for and where the world might be going next. Much closer to home, our own planet and the impact of whatever is happening with climate change at the moment around Europe when we see the pictures as are on the front page of the Guardian this morning of firefighters and wildfires again, alongside the headline of oil giants make$90 billion from price surge as climate crisis engulfs Europe.

4:32There are many aspects to these BP results that we got yesterday that will impact people around the UK, whether it is those profits surging, as the mail puts it, alongside people maybe seeing their higher energy bills, higher costs throughout this year. The North Sea, does BP want to be there or not? Seemingly it's going to sell. It wants to sell its North Sea business. Is that the way the North Sea is heading? Are those big companies heading away from it? Are we just going to hear a change in tone from those at the top of our government about developments in the North Sea and how much oil and gas we will be drilling for in the months to come?

5:12let us get the very latest on the US-Iran situation as well. Because chuck into the mix, talk about BP's profits as the oil price has been so much higher throughout this year. But in the last 24 hours, it took a bit of a tumble because there seemed to be some developments about a potential reopening of the Strait of Hormuz. How many times have we said that in the last few months? Could it be getting closer to reality, that crucial passageway through which around a fifth of the world's energy supplies flowed before the US and Israeli war in Iran started. Here's the US Secretary of State, Scott Besant, who hinted that it could come today when he spoke to CNBC yesterday.

5:55We are in talks with the Iranians and I think there is a chance we may have a deal today or tomorrow to open the strait and move towards a more normalized position in this conflict. So where are we at? Dina Arachji is a geopolitical analyst at Control Risks, a global risks consultancy. Dina, good morning. Good morning to you too. We have Dina. Dina, people are watching very closely what is going on right now. Could this be a moment? You know, we wake up this morning and a barrel of Brent crude is a little bit lower than when we went to bed last night,$78.3 a barrel this morning. So below that$80 mark, which it has been above for so much of this year, it's been above$100 a barrel for a lot of this year, but it's been bouncing around a lot on the various bits of news.

6:51You watch this stuff and react to the news, the comments of these politicians. Is the situation changing? Look, I think we will continue to see positive signals around the Oman-Iran talks, which are particularly being ongoing to reach an agreement that supports the reopening of the Strait of Hormuz. However, that said, there is no clear indication that Iran has fundamentally changed its position because Tehran will continue to seek a long-term authority and influence over the management of this strait. However, on the U.S.-Iran point, these Oman-Iran talks for the Strait of Hormuz will create a boost for the simultaneous diplomatic movements to revive the U.S.-Iran negotiations.

7:45And I think this is where we are at now when it comes to the strait. Yeah, so Donald Trump was on Fox News last night, it seems, and he said there was an all-day negotiation on Tuesday with Iran, and then at the same time threatening to hit Iran really hard if a deal was not reached. How do you go about trying to tell if something is closer to a peace deal or not? When there's so much volatility in the words that are leaving the mouths of politicians on both sides of the war. When you're talking to businesses around the world who are trying to make huge decisions for the months and years to come.

8:32No, absolutely. I think my job and people who are in my field also's jobs have been very difficult during this conflict due to what you just described, this volatile situation. However, how we assess at cultural risk is the intent of those actors. What is the goal that they want to achieve? What's the situation on the ground? And this is how we try to manage political signaling and on-ground movements. And for the time being, I think even regional countries have strong incentive to keep diplomatic track open. And across the Gulf Arab countries specifically, who have had involvement in trying to revive this U.S.-Iran negotiations after a cycle of military activity that we've seen now three weeks ago.

9:28Dina, can I ask you how you are seeing businesses react? Because this will apply to anybody working in or running a small business here in the UK to some of the biggest companies around the world. Are you getting to a point when we have the more positive headlines that lead to a fall in the oil price? Are you getting to a point? Do businesses say, oh, right, okay, hang on. I was maybe going to change tack, but there's been a bit more positive news. So I'll hold fire a little bit more from any decisions. or are you starting to see more businesses say, look, I'm not hanging around for any final decision here.

10:02I'm just going to change the way I work, rely less on the things that are being most impacted by this war. I think the latter. Although, to be clear, businesses have different risk appetite, so it depends on the business. But in general, we've seen businesses building resilient, resilience plans regardless of the situation which is likely to continue to be volatile for the coming months ahead. So I think businesses are being more practical from my experience and my interaction with businesses and clients at control risks are being more pragmatic and building resilience plan in order to cater to this volatile region.

10:48Dina, thank you for the update and your time this morning. Important to speak to people like and are watching this stuff so closely as the headlines seem pretty big, the moves in the oil price seem pretty big. Does it really make a difference? Is it the place where you're working if it's impacted by any of this? Have you seen any changes being made? Are you changing tack at all? 85058, do let me know your thinking there. Obi Educame is with me this morning. Global Equities Fund Manager for Carmignac. Obi, just before we get into a few companies like BP and how they've been doing, Good morning to you.

11:25Good morning, Sean. And how are you seeing that play out? You know, you're watching companies right around the world. What are the major changes you're seeing happen because of the sort of relentless uncertainty that Dina was talking about there? Yeah, I mean, I think the biggest impact has been more the way the market has responded to the shift higher and lower in oil prices. I mean, we've literally seen oil prices as low as$50,$55 in the last 12 months and also as high as$110. So, yeah, these are big, big swings. I mean, there's winners and losers. And I think we'll talk about some of the stocks or sectors that have been the winners.

12:06But certainly there have been the losers from anything from the retailers to the airlines and manufacturers that have all suffered through higher throughput costs. And so that's one of the areas that we watch out for. But we also watch out for what comes out of some of the spokespeople from the Bank of England, because obviously higher oil prices or higher energy prices have an effect on inflation, which sort of slows down their ability to cut interest rates. And so all these have an effect on equity valuations and stock markets. But more broadly, it just creates some uncertainty and forces us as investors to focus on companies and stocks that sort of can grow throughout all environments, whether there's geopolitical uncertainty or not.

12:46Well, let's look at BP because that is one of those companies whose profits very much move with the oil price. Plenty of other stuff going on as well. But when there's a bigger move, as you've described in oil and gas prices that we've seen, that clearly impacts, doesn't it, how BP have been doing. When you see the profits that BP announced yesterday, More than doubling the amount of money it made in the first six months of its financial year compared to last year, coming up to$9 billion worth of profit made in that period. What does that tell you about the business at the moment? Well, look, I think it's obviously a natural beneficiary.

13:31And it's not just BP, but the mail order majors are a natural beneficiary of the move higher in energy prices. But I think what's often missed is the BP for the UK equity market is one of our biggest stocks. And when it generates these type of profits, what it's also able to do is to pay sizable dividends back. And so for pension holders in the UK and investors, that's a sizable chunk of the return that comes from being an investor in BP. So whilst the headline news often is, you know, these companies are making great deals of money, what's actually happening is that they're also returning significant amounts of money to shareholders.

14:07So as a pension or as a longer term investor, which is what we tend to focus on, it's not a company that we invest in, but it's a focus of ours, you know, long term investing. I think that's where you're seeing the benefits. But clearly, this is just a pass through of high oil prices. And if we're now down to$78, down from$110 near the peak, then some of this will be taken away in the future quarters. And Obi, one of the things that's been talked about this last week, when BP said their North Sea business is up for sale, They want out of the North Sea. They've been producing, having production there for 60 odd years.

14:50And then the conversation goes, well, you know, what is the point of BP in the UK then if they're not going to be in the North Sea? They have a headquarters here, obviously. And, you know, that's very much when they talk about where they are based. it's the UK. But do you see a longer term issue that BP might not consider the UK's headquarters if it's not in the North Sea? And I just wonder what the consequences of that are. If you're saying, you know, one of the potential benefits of higher profits for BP is those that have shares in it see higher dividends. Is that something that is at risk?

15:28Well, you can never say never with these things and um you know i'm not i'm not as close to uh certainly the management of bp to make a comment on where they may be planning what they may be planning but i think you know it does raise a question about um the environment for businesses in the uk more generally um you know we've seen outside of the energy space companies being acquired by by businesses outside of the uk so you know when you have businesses that are able to generate strong profits they are attractive entities for for companies outside or investments outside investors outside of the UK so you know it's one of those ones I think we need to keep an eye on but um you know we have to also remember more broadly that some of the biggest companies that we have in the in our in our stock markets are global players they generate their revenues and their profits around the world not just from domestic UK revenues so the more that we can keep them here the better.

16:20Well yes quite and the vast majority of that BP business that is creating those profits is not from the North Sea. Joe Corson with us this morning, Chief Executive of the Institute of Customer Service. Joe very good morning to you. Good morning to you Sean. When you you know you will liaise with businesses small and large right across the UK and and we'll will be very reliant on those customers, those households that have had their budget squeezed in recent years. What do you make of the level of profits that some of these oil giants have been making? The Guardian obviously has got its big front page there and on the inside has these charts that show the large amount of profits in recent times as the oil price has been higher.

17:07But just in the second quarter of this year, when we had that period of extremely high oil prices, the profits really jumped again. And so by the time they tot up what the likes of Shell, BP, ExxonMobil, Sadia Ramco, we had that in the last 24 hours as well, have made, it's not far off$100 billion of profits. Yeah, absolutely. And I think it goes to both Ovi's comments that if you're a consumer or a customer, that feels pretty tough at the moment, doesn't it, when you see that kind of headline. But, of course, it's much more complex than that. And you and I, pensions rely on the performance of these organizations.

17:46I also think, you know, we're in a very different financial playing field than we were five or 10 years ago. And more broadly, when I think across the range of different businesses and industries we spend time with at the Institute, I can see that organizations are having to try and get on with stuff. You know, back to this volatility, we've lived with volatility now for some time. I mean, if we think about the wider implications from tariffs or Trump's impact or even the impact of the other top story this morning of Musk and where we're going. So I think the reality is, is as organizations, we're having to lean into a really challenging financial landscape.

18:28But you can't just sit on your hands. You've got to find a way of being able to navigate that and to almost deal with what are new normals. from a consumer point of view that you know these headlines are an issue when there are numbers of customers and we see this in our data and our latest data shows us this too that are feeling less well off and interestingly those that were more comfortable are starting to feel less well off and it will be the impact that we see as we come through in autumn in terms of inflation and where that goes so complex landscape for both consumer and business at the moment really sure well thank you for the teeing up of the conversation around spacex as well because while we talk about huge numbers associated with bp's profits there are huge numbers associated with what has occurred in the last few months and elon musk's launch onto the stock markets of spacex so that company has just released its first set of results since that launch on the stock markets back in June when the share price shot up in the days afterwards and since has fallen quite a bit.

19:46Now, these results, let's get into them. We've got Wendy Savannarath with us, who's the chief executive of the French private equity company Carre Partners, which holds shares in companies like SpaceX, Revolut, Databricks as well. Wendy, thank you for your time this morning. Good morning. Good morning to you. Thanks for having me. I mean, this will be one of the companies, won't it, SpaceX, when it has its financial results out, that perhaps will capture the thoughts of more people than many other companies in recent times, given how vocal Elon Musk was about wanting to get people around the world invested in the business.

20:28do you think that that makes a little bit of a difference to this first set of results we've got where we're starting to get a bit more of a spotlight on what is really going on behind the scenes here what do you what do you make of how SpaceX are doing oh yeah oh yeah for sure it's actually giving a big high view I mean to me these are exceptional results actually SpaceX just proved that Elon Musk's dream has become a real business. If you look at the results, every single line is beating expectations. And the thing is, people hear SpaceX and they think rockets. But SpaceX today is really three companies in one.

21:07And I guess for the first time, we can see that three engines of growth running at the same time, which makes a huge difference. And that's the reason why these are exceptional. We are not only talking about Starlink, even if this is the hard bidding of the company, but we're talking about a big engine, and this is going to make a lot of difference in the year to come. So let's just remind ourselves of those three parts of the business you talk about. So the Starlink, that's effectively the communications. Many will see it as almost like a broadband business, but the communication business, satellites providing that sort of internet cloud access right around the world.

21:45What else is there? So starting, what I was saying is that this is the beating heart of the company. Basically, it's the internet delivered from space by satellites everywhere on the planet. So basically, what it drives growth is starting is becoming the largest telecommunication infrastructure in the world, but built in space, covering the whole planet from orbit instead of laying cables country by country. So basically, we're talking about, you know, part of the company that is already profitable, 1.7 billion dollars of profit every quarter and 12 million customers after doubling in a year. So basically, what we are expecting and what we need to have in mind is that we're seeing a world with no interruption of connectivity, you know, plane, boat, desert, war zone.

22:32I mean, this is a market of over a billion users and they are only getting started. So for sure, this is the bidding card. And I think this will stay the bidding card of SpaceX. That's the first part of it. And that is clearly your view at Carrier Partners. You know, you have an investment in SpaceX. So I guess listeners might be thinking it is unlikely that just within a few months, you might have come on our show and said, oh, this is a disaster for SpaceX. And this is massively, you know, not what we thought just a few months ago. But it does seem, investors around the world, that share price has been falling over recent weeks.

23:12And after these results came out, and we'll see how it plays out in the coming days, it looks like we get a bit of a hint from the markets around the world that the share price might well fall again. There is a certain lack of convincing with this. Yes. Well, actually, talking of carry partners, you mentioned it. We are long-term investors. So basically, I'd say we think like Warren Buffett, you know, by a company, not a share price that basically moves every day. So what we can see right now, to me, is an emotional vote from the market. You know, sometimes in the short term, the market is a voting machine, but driven by emotion.

23:51And what we can see now is fear. But in the long term, this is a waiting machine that measures true value. So what we want to see now is not only this short term reaction, but it's stabilization over the coming months. So for now, subscribers are still growing, AI losses still shrinking and cash is staying strong. So if that trajectory holds, well, the value will follow and the rest, you mean, obviously it's short-term reaction, but we need to see in the long run. And what we can see right now is that once again, the results are exceptional and beating all expectations, so very positive in the end.

24:28And when you say the results are exceptional, can we talk about the size of spending that SpaceX has? Because that seems to be the thing. You know, if there are people listening who are maybe interested a bit more in recent times about, you know, maybe they put their own money into this world of AI and tech and space in recent times, given a lot of the hype around it. One of the things that seems to unnerve investors, and that's to use the Financial Times headline this morning, has been, as they say, the lavish AI spending plans. So the spending plans, it could be almost 16 billion pounds, 16 billion dollars on artificial intelligence within one quarter, well above what many expected.

25:20Yeah, absolutely. Well, that's a good thing to mention, actually. I mean, AI is a bet on the future. If you look at the giants right now, let's talk about Anthropik, OpenAI, or even the public companies like, you know, Meta or Apple or even Google. They are all investing massively in AI right now. And I think this is the race of the decade, actually. And no one wants to miss it. So yes, from an investor perspective, they can be free as well. But I think that is really positive, actually, to invest in the future. You're right, we are talking about 16 billion. So that's a huge number. But still, my reaction is, yes, it still loses money.

25:59But the loss was cut in half in three months as well, while revenue tripled. So I still think this is the trajectory that we want to see, you know. Joe, what do you make of all this? You know, Elon Musk talking to investors about, you know, building a city on the moon in the future and saying that many of his team are working on some of the toughest engineering problems that the planet has ever seen. You know, that is effectively the name of his game. When you hear the numbers involved and what he's setting out to achieve here, Joe? It's eye-watering, isn't it? I mean, I think there's no doubt about that.

26:39And for me, when you look about the last quarter, it's less about that particular quarter, but whether investors and also us as consumers and customers support the long-term vision and leadership behind that. And, you know, we've already talked this morning about the fact it's a very complex world, lots of things have been moving, and particularly in the last five years, and the whole kind of development around AI and where we are seeing that. I think that, you know, what we are looking for is greater innovation. And I know it might sound sci-fi and really out there, you know, lots of new and innovative things come from this level of creativity and different thinking.

27:21And they are very valuable in leadership. I guess the challenge is, you know, the balance about the individual leader versus, you know, the long term view, but we've got to make a few bets, I guess, to see where they land. But as I said, originally, Sean, I think there are a number of key issues for many of my organisations at home, which are about the productivity, volatility more broadly, and the supply chain. But just a word on AI, certainly, every CEO that I'm talking to at the moment, that is the key aspect for them. You know, how are we deploying AI well in our organisations? And what does that mean for you and I as the customer and the consumer?

28:04And there's plenty of discussion on that at the moment. And I guess, Joe, that is where, you know, people might be thinking, you know, what is space exploration? And we're reading another line, what Elon Musk has said here about how the company's doing. He said SpaceX has made progress on its first generation of orbital data centers, the StarMind AI1 it's called. So make a note of that. And he says this is not some sort of far future distant thing. We expect to start launching these next year. Joe, are businesses going, even though they might feel like, blimey, there's been an AI revolution already, how do I need to use these tools to bring my business into the 2026 world?

28:47Is there a sense that there's even more to come in the years to come? Oh, absolutely. I mean, I think, you know, what has been, I guess, the big thing when we look at even AI development is just how fast that is. So even, you know, about how we're deploying it, I don't know, in our contact centres or how we're deploying it to help with better performance of our organisation in terms of stock control. This is just the beginning of where this can come. And clearly, you know, we often, if you think about where some of the greatest innovations have come in terms of our time, that has been due to some of the work that has been done in space.