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00:00ANNA: GOOD MORNING FROM LONDON. AN HOUR AWAY FROM THE OPENING TRADE. HERE'S WHAT YOU NEED TO KNOW. NVIDIA SHARES THIS IN LATE TRADE AFTER THE WORLD'S BIGGEST COMPANY GIVES A REVENUE FORECAST FOLLOWING TWO YEARS OF BOOMING AI SPENDING. BLOOMBERG LEARNS MEXICO PLANS TO RAISE TARIFFS ON CHINESE IMPORTS AFTER PRESSURE FROM PRESIDENT TRUMP AS THE U.S. ADMINISTRATION'S INFLUENCE ON THE GLOBAL TRADE POLICY GROWS. PLUS, FRANCE PRIME MINISTER WARNS AGAINST NEW ELECTION SAYING HE PLANS TO NEGOTIATE DIRECTLY WITH LAWMAKERS OVER NEXT MONTH'S CONFIDENCE VOTE. KRITI: EURO STOXX 50 FUTURES VIRTUALLY UNCHANGED, WHICH BRINGS MY FOCUS DOWN TO THE BOND MARKET ON BOTH SIDES OF THE ATLANTIC. I WILL START OFF IN THE STATES WHERE WE SEE FLATTENING OF THE CURVE WHEN IT COMES TO TWOS 30'S. WHEN I ON HOW LEGISLATION PLAYS OUT. THAT WILL SHIFT THE LONG END OF THE CURVE. ONE EYE ON THE FUTURES CONTRACTS. ALREADY SEEING EARLY BID INTO THOSE. KEEP AN EYE ON THAT. NO READTHROUGH INTO EURO-DOLLAR 116 ON THE CURRENCY PAIR. THE COUNTDOWN TO THE OPENING TRADE STARTS RIGHT NOW. GUY: GOOD MORNING. I WAS EXPECTING MORE. TO BE HONEST, I WAS EXPECTING A BIG REACTION AROUND NVIDIA. I'M STRUGGLING WITH WHAT WE'VE GOT. I WOKE UP FIRST THING DISAPPOINTED. I THOUGHT WE'D BE A BIG MARKET REACTION COMING OFF THAT, NOTHING. BARELY A RIPPLE CAUSED BY NVIDIA OVERNIGHT, YES, THE STOCK IS DOWN BY 3%. YES, THERE'S A FEW WRINKLES IN THE NUMBERS, THINGS ARE SLOWING. YOU LOOK AT THE STOCK OVER THE LAST 10 DAYS, PRETTY MUCH UNCHANGED. SO HERE WE ARE. DATA NVIDIA REPORT NUMBERS LAST NIGHT, I'M IN THE FOREST, I'M LISTING FOR THE TREES TO FALL, NOTHING. ANNA: THIS IS SUPPOSED TO BE THE BIG MARKET EVENT OF THE WEEK. IT'S SUPPOSED TO BE A BIG MACRO PIECE OF INFORMATION IN IT HASN'T FELT THAT WAY. THE STOCK DOWN AFTER HOURS THREE .5%. NASDAQ FEATURES ARE WEAKER DOWN BY .3 PERCENT. AS WE LOOK AHEAD TO THE U.S. OPEN AND THE IMPACT AND GO THROUGH SOME OF THE NEGATIVES. IS IT NEGATIVE THAT FAIR QUARTER GUIDANCE WAS IN LINE. SOME PEOPLE HAVE TOPPING NUMBERS BUT THE RANGE OF NUMBERS WAS ENORMOUS. THE SMALLEST INCREASE IN TWO YEARS. MAYBE YOU CAN SUGGEST THAT'S A NEGATIVE. BUT IT WAS HARD TO PREDICT WHAT WOULD HAPPEN IN CHINA. THAT ACTUALLY TAKES YOU INTO SOMETHING OF A MORE POSITIVE INTERPRETATION FOR BLOOMBERG INTELLIGENCE. THEY ARE FOCUSING ON THE FACT THAT THE SALES IN THE ESTIMATE GUIDANCE ALL EXCLUDE THE H20 MARKET IN CHINA. PERHAPS YOU CAN SEE THIS IS QUITE CONSERVATIVE GUIDANCE FROM NVIDIA, AND IT STILL ONLY -- THE STOCK HAS DROPPED 3.5%. KRITI: THE GROWTH RATE IS ENORMOUS. IT'S 50%. IT'S ENORMOUS. THE WHOLE POINT OF NVIDIA IS NOT EVEN -- THE TRANSFORMATION ISN'T JUST THE EARNINGS OF THE LAST QUARTER IT'S WHAT HAPPENS IN 10 YEARS TIME AND GETTING IN ON A TREND THAT WILL LAST 10 YEARS. THE PART THAT STOOD OUT TO ME WAS THE 15% WITH DONALD TRUMP WERE DUE TO THE U.S. GOVERNMENT. THE CFO KIND OF SAYING THAT'S NOT A THING. ANNA: THERE'S NO PAPERWORK ON THAT. GUY: CAN'T DO THAT. IT DOES MEAN THAT IN SOME WAYS THERE IS THAT MARKET OUT THERE THAT THEY CAN'T ACCESS BECAUSE THERE'S SO MUCH UNCERTAINTY AROUND WHAT'S HAPPENING THERE. THE MARKET RALLY RECENTLY IS A LOT OF MOMENTUM THERE. SO THIS IS THE DARK CLOUD FOR ME. THE MOMENTUM IN THE MARKET AT THE MOMENT, TREND FOLLOWING HAS BEEN BIG TRADE. THAT'S A NARRATIVE THAT HAS BEEN PERSISTENT. NVIDIA HAS BEEN AT THE FRONT END OF THAT. IF THAT STARTS TO SLOW, IS THERE A WIDER EFFECT? DO OTHER THINGS START TO HAPPEN? IF THE MARKET DOESN'T KEEP GOING UP, DOES IT GO DOWN? CAN THIS MARKETER OF SIDEWAYS. NVIDIA HAS DONE NOTHING AND YOU LOOK AT THIS ON YOUR BLOOMBERG, NOTHING TO SEE HERE, CAN THE MARKET, IS THIS A MARKET CAPABLE OF JUST GOING NOWHERE FOR A LONG TIME. ANNA: THROUGH THE PCE NUMBER ON FRIDAY AND INTO A GREAT DECISION BY THE FEDERAL RESERVE. GUY: DO THE NEGATIVE START TO WEIGH MORE? I'M JUST WONDERING IF THAT THE MENTALITY YOU MIGHT FIND OURSELVES IN AS WE COME OUT OF ALL THIS INTO SEPTEMBER WHEN YOU HAVE A RECALIBRATION YOU NORMALLY GET BACK TO SCHOOL RECALIBRATION, IT FEELS LIKE IT'S COMING TOWARDS US. KRITI: THE REALITY CHECK AT THE END OF SUMMER SOME WOULD SAY. WE ARE TALKING ABOUT WITH THAT EXPOSURE AND RIPPLE EFFECT AND SENSITIVITY TO LONG END OF THE CURVE ARE. WE KNOW TECH, NVIDIA, APPLE, MICROSOFT ARE SENSITIVE TO THAT. A LOT OF WHICH WILL BE MOVED BY THE FEDERAL RESERVE, BUT STILL A TRADE CONVERSATION THAT'S HAPPENING. THIS TIME NOT FROM WASHINGTON BUT FROM OTHER PLAYERS USING THE TRUMP PLAYBOOK TO MOVE FORWARD. TWO STORIES CATCHING OUR EYE THIS MORNING, ONE COMING OUT OF MEXICO, TALKING ABOUT USING TARIFFS AGAINST CHINA. THEIR SECOND-LARGEST TRADING PARTNER AFTER THE UNITED STATES, THEN THE EU, WHEN THEY TALK ABOUT THEIR APPROACH TO RUSSIA, EXPLORING THE USE OF SECONDARY SANCTIONS. THAT SOMETHING THE TRUMP ADMINISTRATION HAS USED WHEN IT COMES TO INDIA. A 50% TARIFF RATE. THE TAKE AWAY FROM THESE TWO STORIES FROM A BROAD PERSPECTIVE IS THAT THE TRUMP PLAYBOOK IS BEING USED BY OTHER COUNTRIES AS WELL. ANNA: THIS ENTHUSIASM FOR THE TRUMP PLAYBOOK, OR IS THIS JUST TRYING TO GET PRESIDENT TRUMP ON BOARD, USING TOOLS THAT WILL APPEAL TO HIM? ONE OF THE DETAILS IN THE EU STORY WAS ABOUT FOCUSING THE EU'S INTENTION ON WHAT RUSSIA WAS DOING FROM OBJECTING CHILDREN FROM UKRAINE, WHICH IS SOMETHING PRESIDENT TRUMP HAS TALKED ABOUT. YOU WONDER HOW LONG-LASTING THIS INFLUENCE WILL BE ON THE TARIFFS AND TRADE CONVERSATION BUT RIGHT HERE AND NOW IT IS HUGE. GUY: EUROPE HAS A DIFFERENT TRADING RELATIONSHIP WITH INDIA AND CHINA. IT IS CERTAINLY SOMETHING THAT IS MORE DIFFICULT TO ENACT FROM A EUROPEAN POINT OF VIEW BUT TO YOUR POINT, HOW SUSTAINABLE THIS WILL BE REMAINS UNCERTAIN AT THIS POINT. THE WALK BACK IS THAT THE EU STILL DOESN'T HAVE ITS DEAL WITH THE ADMINISTRATION. THIS ISN'T A DONE DEAL. SO IT'S STILL NEGOTIATING. THIS IS ALL STILL PART OF THE NEGOTIATION. ANNA: AND EUROPE IS STILL MOVING TOWARDS TAKING THOSE TARIFFS OFF INDUSTRIAL PRODUCTS AND THAT IS SEEN AS ONE WAY TO UNLOCK PROGRESS TO OTHER THINGS CONTAINED WITHIN THE TRANSATLANTIC DEAL. KRITI: I WONDER WHAT MATTERS MORE, THE TRADE WITH THE STATES, WERE WITH UKRAINE NOR POLITICS? GUY: FAYE RUIZ TV, HE'S OUT THERE TALKING ABOUT THE IDEA, THIS IS THE FRENCH PRIME MINISTER WHOSE CALLED THE NO-CONFIDENCE VOTE FOR THE EIGHTH. WE'VE GOT A LITTLE WAY TO GO BEFORE WE GET TO THAT AND HE'S TALKING ABOUT TALKS. THERE SEEMS TO BE THREE SCENARIOS THAT ARE EMERGING AND IT DOES SEEM AS IF HE IS BEEN CALLED BY SURPRISED BY THE REACTION TO HIS CALL FOR THAT NO-CONFIDENCE VOTE. I THINK HE WAS EXPECTING PARTICULARLY THE FAR RIGHT TO BACK HIM, BUT THEY HAVEN'T. SO THREE SCENARIOS NOW SEEM TO BE EMERGING. ONE OF WHICH IS WHAT WE FIND SOME ALTERNATIVE TO HIM, WHO THAT IS, NO IDEA. THERE ARE LOTS OF DIFFERENT NAMES OUT THERE. THE NAME THAT IS SELECTED WILL PROBABLY COME FROM THAT PACK BUT WHETHER OR NOT THEY HAVE MORE SUCCESSES YET TO BE SEEN. THIS IS ABOUT PASSING A SLIMMED-DOWN 2020 SIX BUDGET. SO THAT'S THE MOST LIKELY SCENARIO IT LOOKS LIKE. THE NEXT ONE WHICH WAS ARGUED AGAINST YESTERDAY, SNAP ELECTIONS. THIS OPENS UP A CAN OF WORMS AND IT GETS DIFFICULT. IT LOOKS THAT WE WILL NOT CHANGE THE MAKEUP OF THE HOUSE WHERE WE THOUGHT TO HAVE THAT AND WE WOULD END UP WITH STALEMATES AGAIN. BUT IT IS POSSIBLE THAT WE WILL DO BETTER AND END UP WITH THE MAJORITY. THAT WILL BE INTERESTING IN TERMS OF THE SCENARIO. THAT OPENS UP A FURTHER SCENARIO WHERE OF BASICALLY THE WIND CHANGES MACRON IS FORCED TO POSITION WHERE HE HAS TO STEP DOWN. WE END UP WITH PRESIDENTIAL ELECTION, HE CAN'T STAND AGAIN. SO THAT THE TEARING OF THE SCENARIO WE ARE WORKING ON AT THE MOMENT. WE HAVE ANOTHER PRIME MINISTER, BUT ONCE YOU START DOWN THE ROAD OF EARLY ELECTIONS, THAT GETS VERY INTERESTING VERY QUICKLY. ANNA: THIERS LONGER-TERM SCENARIOS THAT COULD PLAY OR MEDIUM-TERM SCENARIOS THAT COULD PLAY OUT. HE STILL THINKS HE COULD WIN THIS. HE THINKS HE COULD TALK TO THE PARTIES INVOLVED. HE SAYS THEY WILL REALIZE THEY HAVE GONE TOO FAR AND CHANGE THEIR MIND. WE WILL SEE. GUY: HE SUGGESTS HIS GOVERNMENT WILL FALL 90% AT THE MOMENT. ANNA: SO HE'S TRYING TO TAKE THAT ON BY CRAFTING A TWO-STAGE VOTE. SO FIRST YOU VOTE WHETHER YOU THINK SAVINGS ARE NECESSARY AND THEN YOU VOTE ON HOW THEY WILL BE ACHIEVED, SO HE'S TRYING TO DIVIDE THE PARTIES TO TRY TO GET SOME SORT OF SUPPORT. BUT MAYBE IT'S ALL POINTLESS, MAYBE WE END UP IN A SITUATION YOU DESCRIBED IN THE SPREAD HAS WIDENED IN TWO WEEKS FROM 65 TO 82. KRITI: RELATIVE TO ITALY BY COMPARISON IS 87. WE ARE AT SOME SCARE LEVELS. GUY: THE OVERWHELMING EXPECTATION IS THAT HE LOSES THAT VOTE. BUT THE POTENTIAL FOR A MUCH MORE DRAMATIC SCENARIO IS NOW EMERGING BECAUSE I THINK HE'S MISCALCULATED. I THINK HE HAS MISCALCULATED IN TERMS OF THE ESCALATION THAT THE OTHER PARTIES WOULD WANT HIM TO DO THE OTHER WORK AND DEAL WITH THE BUDGET AND THEY ARE SAYING, NO, WE ARE NOT GOING TO DO THAT. I THINK THIS MISCALCULATION WILL GET INTERESTING OVER THE NEXT FEW DAYS IN TERMS OF WHAT WILL COME OUT OF THAT. ANNA: WE WILL SEE WHAT HAPPENS WITH EUROPEAN BOND MARKETS. GUIDE: BARRINGER WILL BE JOINING US, GLOBAL HEAD OF TECHNOLOGY RESEARCH TALKING ABOUT WHAT IS HAPPENING WITH THE NVIDIA STORY. FIXED INCOME MANAGER WILL BE JOINING US. THEY HAVE A CALL OF 100 BASIS POINTS BETWEEN GERMANY AND FRANCE. UBS WEALTH MANAGEMENT CIO FRIENDS JOINING US LATER TO TALK ABOUT WHAT IS HAPPENING IN PARIS. THEY WILL BE JOINING US IN BLOOMBERG ASSET MANAGEMENT FIXED INCOME CIO HAS SOME INTERESTING CALLS OUT OF THE U.K. KRITI: I'M SURE WE WILL HIT ALL THE BOND MARKETS OVER THE WORLD. IN THE MEANTIME, PLENTY OF DATA POINTS. 12:30 U.K. TIME IT WILL BE HITTING THE WIRE AND THEN FOR THE AFTERNOON, A FOCUS FROM SHIPS ON THE U.S. DATA. U.S. GDP NUMBERS, PLUS JOBLESS CLAIMS COME OUT AT 1:30 PM U.K. TIME. THEY ARE ALSO SPEAKING AT 11:30 U.K. TIME. IT FEELS LIKE WE MIGHT GET ANOTHER SIGNAL OF WHEN IT COMES TO THE JOB STORY. THAT WILL BE CRUCIAL BECAUSE WHAT MATTERS RIGHT NOW FOR THE FEDERAL RESERVE? THERE'S POLITICS, THE PRESSURE, ULTIMATELY WHEN IT COMES TO THE DATA, DOES THE JOBS DATA MATTER OR IS IT ALL ABOUT PCE? ANNA: IT WILL BE THE DAY AFTER, THURSDAY. SO WE GET BACK TO THE INFLATION STORY. WE WILL BE DATA-DEPENDENT FOR THE REST OF THE WEEK. GUY: THE FED FEELS LIKE IT'S GOING TOWARDS A LABOR MARKET DATA. ANNA: EVERYBODY ELSE PUT EMPHASIS ON INFLATION. GUY: WHAT ELSE YOU NEED TO KNOW THIS THURSDAY MORNING, THE DUTCH PRIME MINISTER AND HIS CABINET HAVE SURVIVED A NO-CONFIDENCE VOTE WITH THE COMPLETE COLLAPSE OF THE GOVERNMENT. THE ATTENTION NOW SHIFT TO CAMPAIGN FOR THE SNAP ELECTIONS THAT WILL TAKE PLACE ON OCTOBER 29. IT IS HOPED THAT THOSE ELECTIONS WILL PRODUCE A MORE PERMANENT RESOLUTION TO THE PRICES. NEW CAR SALES DATA FOR EUROPE HAS JUMPED IN OVER A YEAR, 15 MONTHS TO BE PRECISE ACCORDING TO THE EUROPEAN AUTOMOBILE MANUFACTURERS ASSOCIATION. REGISTRATION CRIMES 5.9% FOR THE YEAR EARLIER. DRIVEN BY A SALES, ELECTRIC AND HYBRID. NATO ESTIMATES ITS MEMBERS ON TRACK TO SPEND MORE THAN 1.5 TRILLION DOLLARS ON DEFENSE. THE ALLIANCE HAS AGREED TO A NEW GOAL OF 5% OF GDP TO BE SPENT ON ARMED FORCES BY 2035. THIS INCLUDES THREE POINT 5% ON THE FED'S NOT .5% ON RELATED MATTERS SUCH AS INFRASTRUCTURE. ANNA: WE GET BACK TO SOME OF THE CORPORATE EARNINGS STORIES THAT ARE STILL TRICKLING THROUGH THIS MORNING. LATEST SALES COME IN BETTER THAN EXPECTED. THE COMPANY WARNS OF WEAKER SALES DUE TO THE CHINA-U.S. TRADE FRICTION. WE WILL PUT THAT FRONT AND CENTER AS THE MARKETS OPEN UP AND AROUND 45 MINUTES TIME. WE WILL BE HEARING FROM REINERS CEO SPEAKING TO GUY JUST THIS WEEK. WE WILL GET HIS TAKE ON THE BOEING 737 DELIVERY PLANS. TODAY'S TOP STORY, NVIDIA EARNINGS, THE COMPANY'S GROWTH SLOWS AND MARKETS HAVE BEEN REACTING. WE WILL GET SOME ANALYSIS. IF YOU WANT TO GET INVOLVED IN THESE CONVERSATIONS, IB+BB TV < GO > IS WHAT PUTS YOU IN TOUCH WITH THE TEAM THAT WORKS ON THIS PROGRAM. THIS IS BLOOMBERG. ♪ > > THE OPPORTUNITY FOR US TO BRING BLACKWELL TO THE CHINA MARKET IT IS A REAL POSSIBILITY. SO WE JUST HAVE TO KEEP ADVOCATING ON THE SENSIBILITY OF , AND THE IMPORTANCE OF AMERICAN TECH COMPANIES TO BE ABLE TO LEAD AND WIN THE ARA'S. ANNA: -- CREATE A -- KRITI: NVIDIA CIO SPEAKING ON THE EARNINGS CALL LAST NIGHT. NVIDIA REPORTING A 56% JUMP IN QUARTERLY SALES BUT SHARES FALLING ON THE BACK OF A TEPID REVENUE FORECAST. TOM MACKENZIE IS ALL OVER A. OF 56% GROWTH RATE IS SHABBY, I GUESS FOR THIS MARKET. GUY: -- TOM COLE AND JENSEN HUANG HAS BEEN DRIVING A MCLAREN. WE'VE GONE FROM GROWTH OF 400% TO GROWTH OF 50% IN TERMS OF THE QUARTER, A LITTLE OVER 50%. DOLLARS, FOR THE MOST RECENT QUARTER AND THEN PROJECTING SALES OF OVER 50 BILLION AND IN THE CURRENT QUARTER 54 BILLION. THE MARGINS WERE BEAT, THE EARNINGS PER SHARE WERE ABOVE THE ESTIMATES AND YET THE ERRORS AND EXPECTATION STORY ONCE AGAIN THAT THIS COMPANY HAS CLEARLY GROWN EXPONENTIALLY OVER THE LAST TWO YEARS. THAT GROWTH IS SLOWING FROM A VERY HIGH PACE. QUESTIONS AROUND WHAT HAPPENS IN CHINA. THAT WAS THE KEY SOUNDBITE FROM JENSEN HUANG BECAUSE IF THEY GET THE BLACKWELL APPROVAL FROM THE U.S. GOVERNMENT AND THAT COULD COME OUT OF NEGOTIATIONS BETWEEN CHINA AND THE U.S. THAT COULD OPEN UP A MARKET WHERE THEY COULD BE WORTH 50 BILLION U.S. DOLLARS, SOMETHING ANNA MENTIONED WAS THE SOVEREIGN PART OF THIS, HE SEES THE SOVEREIGN DEMAND DOUBLING, SO THEY ARE TRYING TO EXPAND THEIR TOTAL ADDRESSABLE MARKET BEYOND THOSE 405 T HYPERSCALERS, SOVEREIGN IS A PIECE THEY ARE GETTING MORE CLARITY, CHINA REMAINS A KEY AREA OF UNCERTAINTY TO THEM. BLOOMBERG INTELLIGENCE HAVE SAID THAT ESSENTIALLY FOR THEM THE H20 IS DEAD IN THE WATER AND THE FOCUS SHOULD BE ON WHAT HAPPENS WITH THE BLACKWELL CHIP FOR THE CHINESE MARKET. ANNA: WE JUST SHOW THAT ON THE SCREEN. IF YOU THINK ABOUT ASIA AND THE MARKET REACTION. IS WHAT IS GOOD FOR NVIDIA GOOD FOR U.S. TECH GOOD FOR MACRO SENTIMENT IN ASIA, I'VE BEEN WONDERING THIS BECAUSE THERE'S COMPETITORS, THERE ARE COMPETITORS IN CHINA AND MANY ARE ENCOURAGED BY THE CHINESE GOVERNMENT TO STEP UP. TOM: IN THE MARKET REACTION HAS BEEN MORE REACTIVE IN CHINA THAN GLOBAL EQUITIES. LESS OF A MOVE IN TERMS OF A CATALYST WE MAY HAVE EXPECTED FROM NVIDIA BECAUSE PROBABLY THEY LANDED ON LINE WITH THE ESTIMATES AND YES IT'S FROM LITTLE BIT UP A VERY HIGH LEVELS. YOU HAVE SEEN THEM PERFORMING WELL. IT CAME THROUGH WITH RECORD FIRST HALF EARNINGS. THIS IS A SET UP IN 2019, THEY ARE TRYING TO BUILD OUT CHIPS THAT SPECIFICALLY TARGET INFERENCE, SO WHEN YOU USED THE MODELS TO ASK QUESTIONS AND DO TASK, THAT'S WHERE THE CHIPS COME INTO PLAY, THEY DO NOT YET MEET THE CAPABILITIES OF NVIDIA CHIPS. THE STOCK IS UP 123% YEAR TO DATE. AT ONE POINT IT WAS THE MOST VALUABLE DOMESTICALLY LISTED COMPANY IN CHINA. SO DOMESTIC PLAYERS ARE BENEFITING AS THE CHINESE GOVERNMENT SAYS, STEER AWAY FROM NVIDIA FOR NOW AND FOCUS ON THE IN-HOUSE CAPABILITY. ANNA: THE MACRO SIGNAL IN ASIA MIGHT NOT BE IN THE REST OF THE WORLD AND NASDAQ FUTURES COME BY .3%. GUY: HARDLY A BIG MOVE. THIS IS ONE OF THE MOMENTS IN THE REPORTING SEASON. THANK YOU VERY MUCH. TOM MACKENZIE ABOUT WHAT WE SAW A LOT OF NVIDIA NUMBERS YESTERDAY. GLOBAL HEAD OF TECHNOLOGY RESEARCH AND INVESTMENT STRATEGIST JOINING US NOW. JUST TALK US THROUGH YOUR REACTION. I'VE SEEN THE WORD DISAPPOINTING, UNINSPIRING, WHAT WORD WOULD YOU DESCRIBE THESE NUMBERS AS? > > I THINK THEY ARE STRAIGHT DOWN THE MIDDLE BUT IT'S NOT WHAT WE WERE USED TO. PEOPLE NORMALLY EXPECT ONE TO 2 BILLION A BEAT FROM NVIDIA, THIS IS MORE LIKE A BILLION. SO BEATING CELL SITE CONSENSUS BUT IT'S IN LINE WITH THESE CONSENSUS. GROWTH MARGINS TAKING UP A LITTLE BIT. REMEMBER SEMICONDUCTOR STOCKS ALWAYS TRADE ON BETTER GROSS MARGINS, SO THAT'S A POSITIVE, AND THEN THE GUIDANCE IS INTERESTING BECAUSE THEY'VE GUIDED AT 54 AT THE MIDPOINT BUT THAT DOESN'T INCLUDE ANY CHINA SALES. AND THEN THEY TALKED ABOUT ON THE CALL BETWEEN TWO AND 5 BILLION POTENTIALLY OF CHINA SALES. SO IF YOU WANT TO PLAY X CHINA, IT'S A MISS, IF YOU WANT TO INCLUDE CHINA AND POTENTIAL CHINA SALES, IT'S PROBABLY ONLINE. I THINK THAT'S A NUANCE THAT PEOPLE ARE GOING FOR. 3% AFTER HOURS FEELS ABOUT RIGHT. THE STOCK HASN'T RUN HARD INTO THE NUMBERS BUT COMPARED TO LAST QUARTER IT'S UP QUITE SIGNIFICANTLY. GUY: SHOULD I AS AN INVESTOR IN NVIDIA PARK CHINA. THE ADDRESSABLE MARKET, THE OPPORTUNITY ELSEWHERE IS ABSOLUTELY ENORMOUS. CLEARLY THE CHINESE HAVE A DIFFERENT VIEW, THEY WANT TO GO A DIFFERENT WAY, DOES IT MATTER? LIGHTS IN 2024 CHINA WAS 13% OF REVENUES, MOST PEOPLE HAVE TAKEN IT COMPLETELY OUT OF THEIR NUMBERS, SO AT MAXIMUM IT'S PROBABLY GOING TO BE 15%, MAYBE 20%, IT'S NOT IMMATERIAL, BUT I THINK THERE ARE A LOT OF OTHER FIXED DRIVERS FOR NVIDIA GOING FORWARD, ATTEMPTING AI, SOVEREIGN AI, PHYSICAL AI, SO THAT'S ROBOTIC AND AUTONOMOUS DRIVING AS WELL, SO THERE'S A LOT TO DRIVING SO IT WILL LIKELY FOCUS ON CHINA BECAUSE OF THE COMMENTS AFTER CHINA AROUND NOT ENCOURAGING ADOPTION OF NVIDIA. ALSO THE 15% LICENSE FEE THAT TRUMP WANTS TO CHARGE NVIDIA AND AMD. SO IT'S A GOOD FOCAL POINT IN ITS ONE OF THE DELTAS AROUND THE NEWS, BUT I TEND TO AGREE WITH YOU. WHAT WE ARE REALLY FOCUSED ON IS THE GLOBAL DEMAND FOR AI. CHINA IS A BIG MARKET. THERE IS A LOT OF AI SCIENTIST THERE, SO IT IS ONE WE WANT TO GET RIGHT. BUT IT'S NOT THE WHOLE STORY. ANNA: IT'S NOT THE WHOLE STORY AND THEN THINKING ABOUT THE REST OF THE STORY. WE ARE WITNESSING ENTERPRISES SPENDING MONEY ON THIS STUFF. WE ALSO SEE SOVEREIGN. AND AS YOU MENTION, PHYSICAL IS ANOTHER WAY, THE ACTUAL PHYSICAL MANIFESTATION OF AI WITH ROBOTS AND THE LIKE. SO WHAT DO YOU THINK IS GOING TO BE THE BIG DRIVER? ARE WE STILL IN A TIME WHERE ENTERPRISE AND HYPERSCALERS DRIVE THINGS OR DO WE STEP INTO A NEW PHASE WERE SOVEREIGN STARTS TO DRIVE? WHAT WILL BE IN THE DRIVING SEAT? > > THE ONE THING I FOCUS ON IS THE CAPEX FROM THE BIG HYPERSCALERS. THAT IS THAT IT WILL NOW GROW BY ABOUT 50%, AND NEXT YEAR, THAT'S THE REAL NUMBER, 2020 SIX CAPEX SHOULD BE ABOUT 15%. IN THOSE NUMBERS HAVE COME UP FROM 33 THIS YEAR AND NINE NEXT YEAR. SO FOR ME, THAT HAS BEEN THE REAL DRIVER OF THIS AI TRADE. OBVIOUSLY, THE SIGNALS FROM JENSEN ARE THAT HE WANTS TO BROADEN HIS DEMAND PICTURE. HE JUST CAN'T FOCUS ON THE OTHER FOR SCALARS. SO SOVEREIGN IS INCREASINGLY GOING TO COME THROUGH THE NUMBERS. HE TALKED ABOUT THAT BEING 20 BILLION OF REVENUES THIS YEAR. SO THAT'S GOING TO BE A BIG DRIVER. ROBOTICS, FURTHER DOWN THE LINE, ALSO, ENTERPRISES IS VERY INTERESTING. SOME OF THE SOFTWARE COMPANIES HAVEN'T SEEN GREAT ADOPTION OF THEIR AI, BUT YOU ARE SEEING IT IN RESULTS OF COMPANIES LIKE PAL AND TEAR THAT THERE IS DEMAND FOR ENTERPRISES FOR AI SERVICES. SO I THINK THAT BROADENING IS THE WAY TO THINK ABOUT IT. GOT HYPER-AND CAPEX IS STILL THE ONE DATA POINT THAT WE FOCUS ON. KRITI: THAT THE NVIDIA SPECIFIC STORY. WE KNOW IT WAS 95% OF THE MARKET. THE OTHER 5% COMES FROM AMD AND A HANDFUL OF OTHERS. TALK ABOUT THE RIPPLE EFFECT. IF YOU SEE DECELERATING GROWTH FROM NVIDIA, DOES THAT SET THE TONE FOR ITS OTHER SMALLER COMPETITORS? QUAKES AMD HAS ITS CPU BUSINESS WHERE IT'S TAKING A LOT OF SHARE FROM INTEL, AND IT ALSO HAS A GAMING BUSINESS AND IT ALSO HAS THE FPGA BUSINESS, WHICH IS MORE NETWORKING. BUT, MOST PEOPLE INVESTING IN A AND D ARE INFESTING FOR THEM TO BECOME A GOOD SECOND SOURCE TO NVIDIA. THAT'S REALLY GOING TO HAPPEN WITH EMI FOR HUNTER, MI 450, WHICH WE WERE EXPECTING IN THE NEXT 12 MONTHS. OTHERS, WE GOT BROUGHT, A WEEK OR SO. WE GOT MARVELL TOMORROW AS WELL. THOSE ARE ALL TIED UP IN THE TRADE. ON THE CUSTOM-MADE SIX-STORY WITH BROAD CALM AND MORE FELL, IT JENSEN MADE SOME COMMENTS ABOUT THIS LAST NIGHT, THE WAY I THINK ABOUT GP USE VERSUS A SIX IS, AS LONG AS MODELS KEEP DEVOLVING ON THERE'S MORE INNOVATION AND FLEXIBILITY THAT'S REQUIRED IN MODEL INNOVATION, GP USE WILL STILL REMAIN THE DOMINANT INFRASTRUCTURE. AS PEOPLE START TO DO MORE APPLICATION SPECIFIC THINGS THEY WILL USE MORE OF THIS BUT IT'S DIFFICULT TO GET RIGHT. KRITI: GLOBAL HEAD OF TECHNOLOGY RESEARCH AND INVESTMENT STRATEGIST, WE THANK YOU FOR YOUR TIME THIS MORNING. THE ANNOUNCEMENT HERE IS INTERESTING BECAUSE THESE NUMBERS ARE STILL STRONG. IN THE RIPPLE EFFECT IS KIND OF THERE. HE TALKED ABOUT THE MARKET SHARE WITH INTEL, HE TALKED ABOUT THE READTHROUGH INTO THE LIKES OF AMD. ARE WE JUST WAITING FOR ANOTHER DATA POINT? GUY: THAT'S WHAT WE DO, ISN'T IT? KRITI: TO CALL THE END OF THIS NVIDIA MOMENT. I'M POSING THE QUESTION. ANNA: A 3% DROP DOESN'T FEEL LIKE THE END OF MUCH, DOES IT ON AUGUST 28? GUY: IT WOULD'VE SOLD OFF REGARDLESS. THERE'S BEEN A VERY STRONG RALLY TO THESE NUMBERS. NOW OVER THE LAST FEW DAYS, BUT PUTTING CHINESE STORIES TO ONE SIDE, EVERYTHING ELSE LOOKS LIKE IT STILL PROGRESSING, WE WERE TRUCKING -- TALKING ABOUT THE FACT THAT THE HYPERSCALERS WILL CONTINUE THE MARGINS THAT THEY ARE OPERATING WITH CURRENTLY AND IF THAT'S THE CASE, CAN THEY CARRY ON? KRITI: LET'S TALK ABOUT A SOURCE OF POTENTIAL VOLATILITY. IF IT'S NOT COMING OUT OF THE STATES, MIGHT BE COMING OUT OF FRANCE. WE'LL TALK ABOUT THOSE DYNAMICS NEXT. THIS IS BLOOMBERG. KRITI: 30 MINUTES AWAY FROM THE START OF THE OPENING TRADE ON THE SURFACE, THINGS SEEM KIND OF FIGHT. CAC 40 IS HIGHER BY .2%. EURO STOXX 50 FUTURES HIRED BY THE SAME MARGIN. THERE'S JUST A SMALL DEAD COW -- CAP BOUNCE FROM YESTERDAY'S SESSION. THAT'S WERE TO BE DETERMINED. GUY: A VERY SMALL CAT IT APPEARS PEERLESS TALK ABOUT WHAT'S HAPPENING IN THE BOND MARKETS AND FIGURE OUT WHAT'S GOING ON THERE AND WHERE WE GO WITH THE FRENCH. AS YOU CAN SEE, WE ARE A LITTLE BIT BIT IN TERMS OF THE BOND MARKET. WE ARE AWAITING WHAT HAPPENS IN FRANCE TO DECIDE WHAT DIRECTION EQUITIES AND BONDS GO IN NEXT. WE WILL SEE WITH THE POLITICS LOOKS LIKE IN TERMS OF THE WAY WE WILL DEVELOP. HE WAS ON TV YESTERDAY. I'M NOT SURE WE MADE MUCH PROGRESS, EXPECTATIONS RISE THAT WE WILL HAVE A NEW FRENCH MINISTER. ANNA: THE FRENCH MARKET WAS ALERT TO THIS POSSIBILITY YESTERDAY AND WE SAW THE WIDENING OF THE SPREAD A 80 BASIS POINTS BETWEEN THE FRENCH AND GERMAN 10 YEAR BONDS. IT'S GOT ABOVE 80 AT ONE POINT AS THE FRENCH PRIME MINISTER CALLS FOR TALKS WITH LAWMAKERS AND ONCE AGAIN SNAP ELECTIONS. JOINING US FOR SOME ANALYSIS IS MIXED -- FIXED INCOME MANAGER. GOOD TO SPEAK WITH YOU, WE ARE JUST SHOWING THE SPREAD BETWEEN O.A.T.'S FRENCH DEBT AND GERMAN BONDS. IT GOT TO OVER 80 BASIS POINTS. IS THIS SOMETHING YOU WOULD DESCRIBE AS A QUIET WIDENING OR HAS THIS THREATENED TO BECOME SOMETHING A LITTLE NOISIER? QUAKES WE HAD DURING THE JUNE, JULY, QUITE A HUGE TIGHTENING OF SPREAD AS YOU CAN SHOW ON THE GRAPH. SO PART OF THAT IS JUST THE PLAYBACK OF THE CARRY SUMMER AS WE LIKE TO SAY IN THE BOND FIXED INCOME MARKET. SO, FOR THE MOMENT, THERE IS NOTHING VERY WORRYING ABOUT EVERY SPREAD THAT'S TIGHT BECAUSE WE ARE TALKING ABOUT SPREAD, BUT WHICH IS MORE IMPORTANT FOR THE COUNTRY IS -- AND THAT FOR THE MOMENT WE ARE NOT AT THE LEVEL THAT IS ESPECIALLY WORRYING FOR US. ANNA: SO 3.49% ON THE FRENCH 10-YEAR AND OF COURSE ON THE CORPORATE SIDE OF THINGS WE HAVE BEEN TALKING ABOUT TIGHT SPREADS FOR MUCH OF EUROPE IN RECENT WEEKS. WHAT IS YOUR BASECASE ASSUMPTION AND DO WE SEE THIS, CONTINUE OR THIS QUIET WIDENING CONTINUE IF WE DO SEE THE PRIME MINISTER LOSE THAT NO-CONFIDENCE VOTE? QUAKES I THINK EVERYBODY IS QUITE CONVINCED THAT YOU WILL LOSE THE CONFIDENCE VOTE. SO THE MARKET HAS ALREADY PREPARED TO A NEW GOVERNMENT, EVEN A NEW SNAP ELECTION. IT'S SOMETHING THAT THE MARKET HAS ALREADY PRICED FOR. SO I DON'T THINK THAT -- I DON'T SEE THE TRIGGER TO PUSH THE SPREAD 2025 BASIS POINTS WHITER IN THE NEXT WEEKS OR SOMETHING LIKE THAT UNLESS WE HAVE AN UNEXPECTED EVENT. BUT I THINK EVEN THE DOWNGRADE, EVEN A NEW PRIME MINISTER IS SOMETHING THAT HAS ALREADY BEEN INCORPORATED IN THE PRICE. SO WE WILL HAVE THIS WIDENING BECAUSE WE WILL HAVE MORE SUPPLY AND SO ON, BUT I STRUGGLE TO SEE WHAT WOULD BE THE TRIGGER TO PUSH THE SPREAD ABOVE THIS LEVEL IN THE NEXT WEEKS, LET'S SAY, LIKE THIS. KRITI: IT'S KRITI IN LONDON, PLAY DOOMSDAY WITH ME FOR A MOMENT. IN TERMS OF WHAT A LOT OF MARKETS ARE CALLING THE WORST CASE SCENARIO, WHICH IS PULLING FORWARD A PRESIDENTIAL ELECTION THAT'S EXPECTED TO HAPPEN IN 2027, WHAT IS THE MARKET REACTION, EVEN IF THE ODDS ARE SMALL, WHAT MIGHT THAT LOOK LIKE? QUAKES FOR THE MOMENT, THE COUNTRY IS VERY DIVIDED AND IT'S VERY HARD TO SEE A MAJORITY EMERGING FROM ANY ELECTION. WILL IT BE A PRESIDENTIAL ELECTION OR A PARLIAMENT ELECTION? WHAT WE ARE EXPECTING AND WHAT WE ARE SEEING IS THAT WE WILL CONTINUE THE DETERIORATION OF FISCAL POLICY, BUT WE ARE NOT AT A POINT WHERE I THINK THE SYSTEM WILL CRACK, NOT YET, IN THE MARKET, AGAIN, LOOK AT WHAT THE PEOPLE WHO WERE SHORTING ITALY WHEN ITALY WAS THE HOT SPOT ON THE COUNTRY OR EVEN GREECE, PORTUGAL. YOU KNOW THAT AT THE END OF THE DAY, IF THE EURO IN THE ECB IS STILL IN PLACE, IT WOULD BE DIFFICULT TO MAKE THE SYSTEM CRACK. SO YES, YOU CAN BET AGAIN, BUT AT ONE POINT HE WILL SAY IT'S THE MINERS OF SINGULARLY PLUS COUNTRIES, WHAT IS THE RISK. KRITI: WHEN WE SAW THE NO-CONFIDENCE VOTE FOR HIM IN DECEMBER OF LAST YEAR, THE SPREAD HIT ALMOST 90. AT ONE POINT THE YIELD HAD OVERTAKEN -- I BELIEVE IT STILL TRADING HIGHER. WE ARE NOW LOOKING AT FRENCH YELLED THAT IS LOOKING LIKELY TO OVERTAKE THAT OF ITALY. WALK US THROUGH WHETHER PERIPHERAL CREDIT IS STILL THE ALTERNATIVE IN THIS ENVIRONMENT. > > I THINK THAT CORPORATE CREDIT IS STILL THE ALTERNATIVE. WHEN WE LOOK AT THIS SPREAD, SINCE DECEMBER OF LAST YEAR WE HAD THE PLAN ALSO SAYING THAT GERMANY WOULD -- MAYBE IF YOU LOOK AT THE SPREAD OF VOTE ET, ESPECIALLY VERSUS THIS, WE ARE ALREADY AT THE WAY THIS LEVEL THAT WE WERE LAST YEAR. SO COMPARED TO GERMANY, WITH SEEMS TO BE A BIG PILLOW IN THE SPREAD OF 2024, BUT COMPARED TO THEM WE ARE ABOVE THIS LEVEL. THERE IS ALREADY A LOT INCORPORATING THE SPREAD OF FRANCE. I THINK THE OTHER CREDIT OR CORPORATE CREDIT ITALY, SPAIN OUR ALTERNATE LIVE, BUT THEY ARE TRIPLE B RATING COUNTRIES. NOT SINGULAR, NOT YET. GUY: WHAT WOULD IT TAKE -- WHAT WOULD POLITICS NEED TO LOOK LIKE FOR O.A.T.'S TO BECOME A BIG BITE? PRECISELY, WHAT COULD HAPPEN HERE? QUAKES IT'S A GOOD QUESTION, AND I HAVE ABSOLUTELY NO ANSWER TO GIVE YOU, I'M SORRY. I DON'T SEE -- WHAT WE NEED IS A MAJORITY. TO HAVE A CLEAR WAY OF WHAT WILL BE THE NEXT POLICY IN TERMS OF FISCAL, IN TERMS OF REDUCTION OF DEFICIT OR INCREASING DEFICIT, I DON'T KNOW. AT LEAST THE COUNTRIES IN THE GOOD OR AT THE BACK. FOR THE MOMENT WHAT WE HAVE IS BAD LUCK. IT'S UNABLE TO PRESENT A PLAN AND TO BE ABLE TO -- SO, I'M SORRY, I HAVE NO ANSWER. TO BE A BIG BY, I THINK WE NEED A PROVIDENTIAL PEOPLE AND WE DON'T HAVE IT FOR THE MOMENT. GUY: I'M STARTING TO HEAR TALK ABOUT CHANGING THE ELECTORAL SYSTEM TO ALLOW CLEARER MATURITIES TO EMERGE. HOW WOULD THE MARKET REACT TO THAT? THE IDEA THAT ACTUALLY MAYBE YOU NEED SOME SORT OF REFERENDUM OF PROPORTIONAL REPRESENTATION? YOU NEED TO CHANGE THE WAY THAT FRANCE ELECTS. ARE YOU HEARING ANYTHING ABOUT THAT, COULD THAT BE SOMETHING THAT WOULD BE SEEN AS POSITIVE, BECAUSE IT COULD GIVE MAYBE WHOEVER IS IN CHARGE A FREE HAND TO ACT. QUAKES WHAT IS STRANGE IS THAT OURS SYSTEM, WHICH IS A MAJORITY , A CLEAR MAJORITY IS BRING CLEAR MAJORITY IN PARLIAMENT AS OPPOSED TO COUNTRIES WHERE YOU ARE PROPORTIONAL LIKE ITALY AND GERMANY WHERE YOU HAVE ALREADY A COALITION AND IF I REMEMBER WELL , THE PROJECTIONS THAT HAVE BEEN MADE FOR THE LAST ELECTION ON THE PROPORTIONAL, THE RESULTS WOULD HAVE BEEN VERY DIFFERENT FROM WHAT WE HAVE, SO I'M NOT VERY SURE THAT WITH THE PROPORTIONAL WE WOULD HAVE A CLEAR MAJORITY, WHAT WE LACK IN FRANCE IS THE COALITION ENVIRONMENT WHERE THE PARTY IS ABLE TO FIND COMPROMISE. WE DON'T HAVE THIS FUTURE IN FRANCE, IT'S THE GERMAN AND THE ITALIAN CULTURE, IT'S NOT THE FRENCH ONE. SO MAYBE WHAT WE NEED IS SMARTER POLITICS OF THE COUNTRY. GUY: THAT'S A CHALLENGE. THANK YOU VERY MUCH. FIXED INCOME MANAGER JOINING US, COMING UP, WE ARE GOING TO BE TRACKING SHARES. THE MAKER WARNING OF WEAK SALES. WE WILL TALK ABOUT THAT AND WHAT ELSE IS HAPPENING OUT THERE. STOCKS TO FOCUS ON ON THE BACK END OF AUGUST. THIS IS BLOOMBERG. ♪ GUY: 40 THREE MINUTES OFF THE HOUR. 16 MINUTES UNTIL THE SESSION STARTS IN EUROPE. ONE THING WE HAVE TO PRICE IN IS A BIG DROP IN RYANAIR STOCK. IT DROPPED SHARPLY LATE TRADE YESTERDAY AFTER THE CEO GAVE AN UPDATE ON SUMMER DEMAND. INVESTORS CLEARLY HAVE BEEN HOPING FOR MORE THAN THE 5%-SIX PERCENT RECOVERY. THIS SUMMER HE TALKED ABOUT IN A PRESS CONFERENCE IN LONDON YESTERDAY JUST AROUND THE CORNER FROM HERE. I CAUGHT UP WITH HIM AFTER THE PRESSER. TO BE HONEST, HE SOUNDED PRETTY OPTIMISTIC THAT THE AIRLINE COULD STILL DO BETTER IN THE FULL YEAR WITH MARKET EXPECTATIONS. QUAKES I THINK WE ARE REASONABLY OPTIMISTIC. I'M NOT SURE THE MARKET IS RIGHT BUT WE'VE HAD CONSTRAINT CAPACITY GROWTH. CERTAINLY THIS SUMMER OF TRADING HAS BEEN STRONG. FORWARD-LOOKING IS ABOUT 1% OVER THIS TIME LAST YEAR. LAST YEAR FARES WERE DOWN ABOUT 7%. IT LOOKS LIKE WE GET BACK MOST OF THAT 7% FAIR DECLINE THIS YEAR. I WOULD BE REASONABLY HOPEFUL TO GET MOST OF IT BACK. I THINK THERE'S MORE GROWTH AVAILABLE IN THE MARKETPLACE. QUAKES FAIRLESS -- FARES ARE RECOVERING BECAUSE CAPACITY IS CONSTRAINED. PEOPLE WITH STRONG DEMAND FOR AIR TRAVEL AND UK2 EUROPE. AND WITH MORE AIRCRAFT I COULD DELIVER MORE GROWTH. GUY: YOU WOULD GET MORE AIRCRAFT FROM BOEING, YOU ARE GETTING 737'S EARLIER THAN ANTICIPATED FROM THE BEGINNING OF OCTOBER. DOES THAT MEAN YOU INCREASE YOUR PASSENGER TARGETS? QUAKES NOT IN THE U.K. BECAUSE OF IT. WE ARE GROWING VERY STRONG LEVELS. GUY: YOU RAISE PASSENGER LEVELS? QUAKES WEEK ROAD 250 MILLION PASSENGERS IN THE YEAR FROM MARCH 20 SIX. NEXT YEAR FROM SUMMER 26 WITH 250 MILLION PASSENGERS. GUY: IS THAT HOPEFUL THAT YOU ARE GETTING THE AIRCRAFT? QUAKES WE GET THE AIR GRAPH EARLY TO SECURE THAT GROWTH FOR NEXT SUMMER. THE ONLY YEAR WE CAN DEPLOY THOSE 25 EXTRA WOULD BE THIS CHRISTMAS. THERE WOULD BE A LOT OF ADDITIONAL SITES INTO EVEN THE U.K. AT CHRISTMAS. BUT OTHER THAN THAT WE PUT THEM ON THE GROUND TRADE. GUY: YOU BRING THEM IN EARLY? QUAKES WE BRING THEM IN EARLY BECAUSE WE ARE WORRIED ABOUT TARIFFS BUT WE ARE WORRIED SOMETHING ELSE MIGHT GO WRONG WITH BOEING SO GET THEM IN EARLY. IT'S A GOOD SIGN BOEING WILL DELIVER THESE AIRCRAFT EARLY. GUY: ARE YOU STILL WORRIED THINGS WOULD GO WRONG? QUAKES THE EXPERIENCE WITH BOEING, THE VERY FACT THAT THEY DO HAVE FOUR OR FIVE MONTHS EARLY IS A MANUFACTURING IS GOING WELL, IT'S DEFINITELY BETWEEN TWO GOOD JOB IN SEATTLE AND THE AIRCRAFT WE ARE GETTING, THE FEW LINES THAT THE AIRCRAFT HAVE BEEN IMPROVED IN THE LAST 12-18 MONTHS. GUY: SCOTT BESSENT HAS JUST BEEN ON TELEVISION AND HE HAS CRITICIZED BOEING FOR DELIVERING A MASSIVE FIGHT BACK RATHER THAN INVESTING IN R & D. YOU HAVE SYMPATHY FOR THAT? QUAKES I DON'T REALLY. IF SCOTT BESSENT -- WHAT HE SHOULD BE DOING IS SUPPORTING BOEING. ONE OF THE REASONS BOEING CAN'T MAKE MORE AIRCRAFT AS THE FAA WON'T IMPROVE THE RATE. WE NEED TO GET THE MAG 7, MAX 10 CERTIFIED. SO SCOTT BESSENT, TRANSPORT SECRETARY DUFFY SHOULD GET THE INCREASE IN PRODUCTION RATE UP AND CERTIFY THE MAX 10. GUY: HE'S FAIRLY CONFIDENT THAT THAT RATE INCREASE IS COMING UP AND PROBABLY WILL COME LATER ON THIS YEAR. HE WOULDN'T BE CONCERNED, HE TOLD ME YESTERDAY, IF THE U.S. GOVERNMENT WERE TO TAKE A STAKE IN BOEING. BOEING IS A DEFENSE COMPANY, THERE'S SOME TALK THAT THAT COULD HAPPEN. MICHAEL O'LEARY TOLD ME YESTERDAY THAT THE MOVE THAT WE SAW YESTERDAY IN RYANAIR DRIVING THE ENTIRE SECTOR DOWN HIS IHT, LUFTHANSA ALL DOWN ON THE MOVE YESTERDAY BACK END OF THE SESSION ON THE BACK OF THOSE COMMENTS THAT WE HAD COMING THROUGH. ANNA: AND CLEARLY THE SUBJECT OF TARIFFS ON AIRCRAFT IS PART OF THE THINKING. SOMETHING THAT IS ON THE RADAR FOR THOSE IN THE AVIATION SECTOR IN CRETE HE HAS BEEN THINKING ABOUT THE WIDER NEWS FLOW SURROUNDING TARIFFS THIS MORNING. KRITI: I HAVE. THIS IS FASCINATING. WE ARE HEARING SO MUCH OF THE TARIFF AND TRADE CONVERSATION FROM THE UNITED STATES. YOU HEARD IT ON THAT RYANAIR CONVERSATION. IT LOOKS LIKE OTHER COUNTRIES ARE USING THE SAME PLAYBOOK. THE MOTIVATION IS A DIFFERENT CONVERSATION. I WANT TO WALK YOU THROUGH THE NUMBERS BETWEEN NOW MEXICO AND CHINA. THIS IS CRUCIAL BECAUSE CHINA IS MEXICO'S NUMBER TWO TRADING PARTNER COMPETING WITH THE STATES IN TERMS OF A LOT OF DIFFERENT PRODUCTS. IN FACT, THIS CHART TELLS YOU EVERYTHING, THE FACT THAT MEXICO IS EVEN CONSIDERING THE IDEA OF PUTTING TARIFFS ON IMPORTS COMING IN FROM CHINA, LOOK AT THE SECOND-LARGEST TRADING PARTNER. THAT WILL HAVE A MASSIVE IMPACT IN TERMS OF THEIR TRADE FLOWS BECAUSE THE NEXT ONE IS SOUTH KOREA. AND BY A MASSIVE MARGIN. LET'S DIVE INTO A LITTLE BIT MORE WITH THOSE IMPORTS ACTUALLY ENTAIL AND WHY THIS IS SO IMPORTANT AS OF RIGHT NOW. I WANT TO BRING YOU A CHART THAT SHOWS THE EXPORTS COMING FROM CHINA INTO MEXICO AND WHY THIS HAS BECOME A BIGGER TALKING POINT WHEN IT COMES TO MEXICAN PARLIAMENT. IT HAS TO DO WITH A SIMILAR THEME WE SEE IN EUROPE, WHICH IS OVERCAPACITY. YOU COULD SEE IT GOING ALL THE WAY BACK TO THE EARLY 2000'S. IT HAS BEEN A STEADY INCREASE IN TRADE IN LINE WITH GLOBAL GROWTH. BUT, SINCE THE ONSET OF COVID AND SINCE THAT MASSIVE REBOUND, THAT EXPORT STORY HAS STEEPENED AND STEEPENED IN A REALLY BIG WAY TO CERTAIN KEY SECTORS. AT THE SAME SECTORS OF THE UNITED STATES AND EUROPE ARE WORRIED ABOUT. THIS IS THE PART I WILL SHOW YOU IN TERMS OF WHAT ACTUALLY MAKES UP THE TRADE RELATIONSHIP, CARS, SMART PHONES AND COMPUTERS ARE A BIG PART OF THAT, ESPECIALLY WHEN IT COMES TO THE MANUFACTURING STORY. BECAUSE AT THE MOMENT AMERICAN -- EVEN SOME EUROPEAN COMPANIES, CAR COMPANY HAVE MANUFACTURING PLANS IN EUROPE WITH THE ASSEMBLY IN THE STATES THAT HAPPEN ACROSS THE BORDER. CHINA IS DIFFERENT. CHINA DOES NOT HAVE THAT SAME ASSEMBLY PLANT STRUCTURE FROM CHINA INTO MEXICO. THEY MANUFACTURE THEM AND CHINA AND IMPORT THEM IN MEXICO AND THE ARGUMENT TO IMPOSE THESE TARIFFS TO THE TUNE OF 20%, ESPECIALLY ON THE EV SECTOR, IS TO FIGHT THAT KIND OF OVERBOOKED -- OVERCAPACITY, A THEME WE ARE FAMILIAR WITH RIGHT HERE IN EUROPE. ANNA: THAT'S A TRADE STORY. THERE ARE PLENTY OF THINGS TO THE TRADE STORY. THIS THINK ABOUT WHERE WE HAD AS WE GET CLOSER TO THE EUROPEAN MARKET OPEN. BLOOMBERG'S EXECUTIVE EDITOR FOR ASIAN MARKETS JOINS US. THE THING WE CAN'T IGNORE IS THE NVIDIA EARNINGS. I SAY THAT, BUT THE AFTER HOURS MOVE IS HUGE. NASDAQ PAIRING EARLIER LOSSES AS WE GET CLOSER TO THE EUROPEAN OPEN HERE. SO HOW DO YOU PUT THE NVIDIA STORY IN CONTEXT FOR US? QUAKES CAN MORNING, ANNA. I THINK THERE IS A REALLY INTERESTING QUESTION IN A WAY TO LOOK AT IT IS AN IDEA THAT ASIA DIDN'T RESPOND THAT MUCH AT ALL TO WHAT WE SAW WITH NVIDIA. WE BUILT THIS AS A REALLY BIG RISK EVENT IN VOLATILITY SUGGESTING THERE COULD BE REALLY MAJOR SWINGS EITHER WAY BASED ON WHAT THE EARNINGS SHOWED AND IT DID DROP QUITE A LONG WAY AROUND 3% IN THE AFTER HOURS TRADING IN THE U.S., BUT THE KNOCK ON IMPACTS FOR BROADER MARKETS SEEMS TO HAVE BEEN NOT THAT GREAT. THERE'S A COUPLE OF THINGS TO THINK ABOUT. THE EARNINGS WEREN'T THAT BAD. THERE'S SOME UNCERTAINTIES IN THERE AND THAT'S PART OF WHAT WOULD MAKE THEM LOOK A LITTLE BIT WEAKER, THE FACT THAT THEY HAD CHINA FROM THERE ALTOGETHER. SUE, EVEN THEN, THE SIZE OF THE EARNINGS IS STILL PRETTY PHENOMENAL, ALL ELSE BEING CONSIDERED. I THINK ASIAN MARKETS HAS SOME. BUT NVIDIA MARKETS ARE WORRIED ABOUT WHAT'S FITTING SPACE FOR THE CHINESE COMPANIES. SO THEY HAD ANOTHER GOOD DAY. ALL IN ALL THE MARKET WAS HAPPY ENOUGH WITH THAT AND FOCUSING ON OTHER THINGS. GUY: WHAT'S HAPPENING IN JAPANESE BONDS? PAUL: SO WE KNOW THAT JAPANESE BONDS HAVE BEEN UNDER PRESSURE, THE LONG ENDS OF THE YIELDS HAVE FOR SOME TIME. PEOPLE WORRIED ABOUT INFLATION RISK TODAY. IT WAS THE FRONT END OF THE YIELD CURVE. IT DIDN'T REALLY GO VERY WELL. WEAKEST DEMAND IN 16 YEARS. YOU'RE LOOKING AT THE BIG COVER RATIO. IT TELLS YOU A COUPLE OF THINGS, WHEN IN GENERAL, APPETITIVE JGB IS SUBDUED AT THE MOMENT AND PEOPLE ARE GETTING READY FOR THE CENTRAL BANK'S INTEREST RATES. ONE MEMBER WAS TALKING TODAY AND SOUNDED MORE HAWKISH THAN THE MARKETS MIGHT'VE EXPECTED, SO WE ARE GETTING READY FOR THE BOJ TO HIKE. THE REST OF THE WORLD GOING IN A DIFFERENT DIRECTION AT THE MOMENT BUT IF THAT'S GOING TO HAPPEN YOU WILL WANT HIGHER YIELDS AND ORDERED TO OWN THOSE BONDS. THE RISK NOW IS THAT THAT RICOCHETS AGAIN INTO THE FAR END OF THE YIELD CURVE. WE'VE BEEN TALKING TO INTERNATIONAL INVESTORS WHO THOUGHT THAT WOULD BE WITH THE EXTRA PICKUP THEY COULD GET WITH CURRENCY HEDGES, BUT THEY KEEP GETTING THWARTED IN ALL OF THE PROFITS FROM THAT TRADE IS GETTING WAY DOWN BECAUSE THE YIELDS KEEP GOING HIGHER. TROUBLING TIMES FOR THE JGB MARKET. KRITI: LET'S CONTINUE THIS STORY IN ASIA SPECIFICALLY. WALK US THROUGH THE INDIAN MARKET. 50% TARIFFS ON INDIA. WE HAVE CONCERNS AND THREATS ABOUT SECONDARY SANCTIONS NOT JUST ON THE STATES BUT FROM EUROPE NOW AS WELL. WHAT IS THE THINKING? PAUL: WE DON'T TALK A LOT ABOUT INDIA. BUT I THINK A GOOD MOMENT TO DO IT GIVEN THAT THE FED IS GETTING HIT BY EXTRA TARIFFS ON INDIA. BUT WHAT WE HAVE BEEN WORRIED ABOUT IS BEEN THE WITNESS IN THE BOND MARKET. WE HAVE STATES LOOKING TO FIND THE GOVERNMENT AS WELL, PUTTING A LOT OF STRESS ON DEMAND. SO TODAY THE CENTRAL BANK WAS PAYING ATTENTION TO AND AT SEEMS TO HAVE STOPPED THE SELLOFF JUST FOR NOW. KRITI: PAUL DOBSON'S BLOOMBERG'S EXECUTIVE EDITOR FOR ASIAN MARKETS. WE GET MORE ANALYSIS FROM THE TEAM. MLIV < GO > IS THE FUNCTION ON YOUR TERMINAL. LET'S GO FROM THE MACRO TO THE MICRO AND GET OUR STOCKS TO WATCH. QUAKES GOOD MORNING, WE ARE BACK TO TALKING ABOUT CHIP STOCKS. NVIDIA EARNINGS OVERNIGHT. CAME IN LARGELY UNDERWHELMING. THAT SEEMS TO HAVE BEEN BRUSHED ASIDE AND ASIAN MARKETS. WE SEE HOW THIS PLAYS OUT IN EUROPEAN MARKETS. THE MAIN ONES WOULD BE CHIP STOCKS IN EUROPE, INFINEON, ST MICRO, WE'VE HAD A BIT OF A MIXED MONTH SO FAR. ASM UNDERPERFORMING, SO WE HAD TO SEE HOW THAT OPENS THIS MORNING. THEN ON THE OTHER SIDE WE'VE ALSO GOT SOME NVIDIA SUPPLIERS WE WILL BE WATCHING AS WELL. SO THAT'S THE LIKES OF PE SEMICONDUCTOR INDUSTRIES, BOTH DOWN QUITE HEAVILY YEAR TO DATE. SO WE HAVE TO SEE HOW THAT IMPACTS FOLLOWING NVIDIA'S EARNINGS OVERNIGHT. WE ARE MOVING ON TO ALCOHOL, PINOT RICARD HAD THEIR EARNINGS THIS MORNING, IF WE FLIP THE NEXT LIGHT, THEY HAD THEIR FOURTH QUARTER EARNINGS WHICH LACKED, BUT THIS IS RELATIVELY EXPECTED BUT THEY ARE WARNING OF U.S. AND CHINA SALES TO REALLY WEIGH ON THINGS GOING IN, IF YOU LOOK AT THE FOURTH QUARTER, THAT'S WEIGHING ON THE STOCKS, THEY ARE DOWN A MOST 23%. BUT ANALYSTS ARE SAYING THAT THIS IS BEEN PRICED IN ALREADY SO IT COULD OPEN SLIGHTLY HIGHER THIS MORNING. THEY MET ESTIMATES, BUT ANALYSTS ARE STILL QUITE STRONG ON THAT DESPITE SOME CUTS. SO WE WILL SEE HOW THAT OPENS. ANNA: EQUITIES REPORTER, LOUISE MOON. BIG PICTURE, NVIDIA REPORTED NASDAQ FUTURES ARE DOWN .1%. WE WILL BACK -- BE BACK WITH EUROPEAN OPEN NEXT. GUY: THURSDAY MORNING. WE’RE PRICING NVIDIA BUT NOT MUCH. NOT SEEING MUCH OF A REACTION IN GLOBAL MARKETS IN THE NVIDIA STORY. YESTERDAY WAS IN ANTICIPATION OF THE STORY THAT WE GOT. THERE WASN’T MUCH THERE EITHER. EUROPE BASICALLY DRIFTED SIDEWAYS. A FEW POLITICAL STORIES. ON THIS SIDE OF THE ATLANTIC, A FEW CORPORATE STORIES. OVERNIGHT, WE FADED OUT A LIQUIDITY. THAT IS WHERE WE WENT OUT. THAT’S WHERE WE CLOSED IN THE STATES. A LITTLE BIT OF PRICING ON THE UPSIDE. KRITI: A LITTLE BIT OF A CATCH UP TRADE. MAYBE, MAYBE THE FACT THIS WAS THRS, THE LAST DAY OR LAST FEW DAYS OF AUGUST. YOU’RE GOING TO BE SEEING A REBALANCING TRADE. OF COURSE CATCHING UP TO -- BOUNCING BACK FROM YESTERDAY’S RED ON THE SCREEN. WE GET A COUPLE OF FRENCH STOCKS IN THE MIX. ANNA: THAT WILL BE INTERESTING. WE SEE A LITTLE BIT MORE POSITIVITY AROUND FRANCE. ESPECIALLY AS WE HAVE SEEN RECENTLY BOND YIELDS THAT SPREAD A LITTLE BIT. CHIP STOCKS IN FOCUS. NOT SURE EXACTLY HOW BUT IN FOCUS AFTER THE NVIDIA NUMBERS. THAT STOCK WAS DOWN 3% AFTER THE MORNING HOURS. ASIA SEEMED TO TRY TO LOOK THROUGH THESE NVIDIA NUMBERS. WE’LL SEE HOW THAT PLAYS OUT FOR CHIPS. PERNOD RIKARD AND DELIVERY HERO. INVESTORS TRYING TO BALANCE RESULTS. THERE WAS A CUT TO THE OUTLOOK BECAUSE OF FX HEADWINDS. GUY: SEEMS LIKE A SINGLE STOCK MORNING. NVIDIA, I CONSIDER A MACRO MOMENT ARE GOING TO BE THE BIG DRIVERS HERE. FTSE 100 OUT OF THE GATE, NOTHING TO SEE HERE. BARELY BUDGING. WE WAIT FOR THE CAC. THERE ARE STOCKS YOU WANT TO WATCH OUT FOR AND SEE HOW IT DOES. THE IBEX IS UP ..2%. WE’LL WATCH AND SEE HOW THE CAC REACTS. IS THAT THE CORPORATE STORY IN WHAT IS WHAT’S HAPPENING PERNOD. THE FRENCH MARKET IN REALITY MUCH FARTHER FORWARD. WE HAVE TO WAIT UNTIL THE EIGHTH OF SEPTEMBER. WE’LL WAIT AND SEE WHAT THE DAX DOES. POSITIVE DATA ON AUTOS TODAY WHICH MAY BE FACTORED INTO ITS NUMBERS THIS MORNING. WHAT IS THE STORY? KRITI: FEELS LIKE A REGIONAL STORY. THE RETURN, THE BOUNCEBACK YOU’RE SEEING THIS MORNING EVEN ON THE STOXX 600 LEVEL IS LARGELY DRIVEN BY FRENCH STOCKS. HIT THE LAST COUPLE OF DAYS AFTER POLITICAL TURMOIL. THEY ARE THE ONES DRIVING THE TRADE. SCHNEIDER ELECTRIC, AIRBUS. STARTING TO SEE A LITTLE BIT OF PAIN ARE THE ONES MOVING TO THE UPSIDE. FROM A SECTOR BASIS, IT IS A BROAD RALLY. HEALTHCARE IS YOUR ONLY DOWNSIDE SECTOR. ANNA: NOT HUGE MOVES TO THE OVERALL MARKET. WE SEE THE SAME. HELT CARE THE ONLY SECTOR THAT IS NEGATIVE AND NOT BY MUCH. NOW AUTOS AND AUTO PARTS. WE HAVE BEEN COVERING THE STORY AROUND A BOUNCE BACK. PLUG-IN E.V.’S. SALES COMING IN PRETTY STRONG. CAR REGISTRATION NUMBERS LOOKING DECENT. THE SUPPLIERS TO THAT SECTOR ARE DOING BETTER THIS MORNING. CONTINENTAL AND STELLANTIS. GUY: WHEN YOU TAKE A LOOK AT THE CAC THIS WEEK, YOU GET THE BIG GAP LOWER COMING INTO THE 26TH. THAT MORNING. WE ARE STILL DOWN HEAVILY. ON THE LAST THREE DAYS, FOUR DAYS, LET’S CALL IT. WE HAVE A VERY SMALL RECOVERY OFF THE LOWS THAT WE HIT AT THE BEGINNING OF THE S SESSION ON THE 26TH. THE 26TH IT WAS A TINY GAP HIGHER. FIRST THING THIS MORNING WE ARE STILL DOWN. KRITI: WHAT IS FRENCH FOR DEAD CAT BOUNCE? I’LL LOOK THAT UP. GUY: ONE OF THOSE THINGS YOU SHOULDN’T TRANSLATE DIRECTLY, I SUSPECT. KRITI: A LITTLE BIT LOWER. DOWN BY .2%. ONE TO NOTE. PERHAPS A LITTLE BIT OF AN NVIDIA READ THROUGH. IT FEELS LIKE FRANCE IS THE FOCUS FOR THE NEXT FEW WEEKS. THE CIO OF FRANCE UBS WEALTH MANAGEMENT JOINS THE PROGRAM THIS MORNING. IT FEELS LIKE THIS WEEK THE TRADE IN TERMS OF THE UPSIDE AND THE DOWNSIDE WHEN IT COMES TO THE BROADER SECTOR HAS BEEN DRIVEN BY THE POLITICAL SITUATION IN FRANCE. TALK TO US ABOUT HOW MUCH WE CAN EXPECT THAT TO BE DRIVER IN THE NEXT COUPLE OF WEEKS. > > GOOD MORNING. THANK YOU FOR HAVING ME BACK. I THINK WE STILL HAVE SOME DOWNSIDE BUT THE MARKETS ARE ALREADY PRICED AT QUITE A LOT ESPECIALLY THE BOND MARKET. I HAVE TO ADMIT THERE ARE FEW LIMITS IMPACTING THE FRENCH SITUATION. THE SITUATION IS KEY. S THERE COMPANIES HAVE BEEN IMPACTED BY TARIFF AND STRONG EURO. THE SECTOR PUSHING FRENCH STOCK. WHEN I THINK ABOUT THE FRENCH SITUATION, VOLATILITY UNTIL SEPTEMBER 8 AND THEN DEPENDING ON THE REPORT, THE SITUATION MAY CHANGE. IF WE FIND BY SURPRISE THAT WE HAVE A CONFIDENT -- WE MAY HAVE A PUSHBACK, A GOOD MOMENT ON THE COMPANIES BUT PROBABLY STILL SOME EASING ON THIS BRIGHT SIDE. THE PUBLIC SITUATION IS NOT AN EASY ONE. DEFICIT REMAINS VERY HIGH. WE NEED TO FIND NEGOTIATION ACROSS DIFFERENT PARTIES. 40 BILLION IS AT RISK. WE PROBABLY HAVE 25 BILLION WHICH IS GOOD ENOUGH. I THINK GOOD ENOUGH FOR THE EUROPEAN COMMISSION AND AS YOU KNOW FRANCE IS PART OF THE -- KRITI: IN PREVIOUS ITERATIONS OF THIS POLITICAL CHAOS AND WE HAVE SEEN SEVERAL ITERATION OF IT DATING BACK TO THE SUMMER OF 2024. CERTAINLY EARLIER THIS YEAR AS WELL. WE HAVE SEEN A STRONG REACTION IN THE BOND MARKET. IT FEELS LIKE THE STOCK MARKET TAKES ITS CUE FROM. IT FEELS LIKE THESE MOVES ALTHOUGH NEGATIVE ARE NOT AS VOLATILE AS THEY HAVE BEEN IN PREVIOUS SITUATIONS. WALKS THROUGH MAYBE CORRELATION WE SHOULD BE SEEING FROM THE FRENCH BOND MARKET VS. THE FRENCH STOCK MARKET. > > I MEAN, IT IS -- WHEN YOU A ADVISING BOND SPREAD. THE HIGH KOR WHRAITION THE FINANCIAL SECTOR. -- CORRELATION WITH THE FINANCIAL SECTOR. WHEN YOU HAVE A HIGHER COST OF CREDIT, MORE FINANCING COSTS ON THE SOVEREIGN SIDE AND THE CREDIT SIDE. THAT SAID, THERE ARE PLENTY OF COMPANIES WHICH ARE NOT LINKED TO AN ECONOMIC GROWTH WITHIN FRANCE. IF WE THINK ABOUT EXPORT THERE TO U.S., EXPORTER TO CHINA AND NOT LINK TO THE DOMESTIC -- THIS AS CUSTOMERS MAY RESUME SOME -- FROM US WHERE WE SAY VISIBILITY WILL GET BETTER. THE MARKET REACTION HAS BEEN STRONG OTHER THE LAST THREE DAYS BUT ONCE AGAIN, I THINK WE DON’T NEED TO -- FOR THE TIME BEING, ITSELF A LET’S SAY 2027, 40 BILLION BUDGET CUT. THAT SITUATION REMAINS CRITICAL. WE HAVE A DEFICIT WHICH IS CLOSE TO 5%. THIS DEFICIT WILL NOT IMPROVE IF WE HAVE A HUGE FISCAL TIGHTENING. BUT FOR THE EUROPEAN COMMISSION, BETWEEN .6 AND .8 OF THE DEFICIT IMPROVEMENT IS GOOD ENOUGH AND THEN WE NEED A NEW P.M. FROM DIFFERENT PARTIES TO FIND THE POSSIBILITY TO HAVE THIS 22-25 BILLION BY THE END OF YEAR. THE TIME TO PUT THE BUDGET INTO THE PROCESS. I THINK THE MARKET WILL REACT IF WE ARE IN THIS SITUATION AND A NEW P.M. IS NAMED AND THIS P.M. WILL BE ABLE TO PRESENT THE BUDGET BY THE ON THE OTHER HAND OCTOBER. ANNA: WE’LL SEE IF ANY NEW PRIME MINISTER SHOULD THEY APPEAR WILL HAVE ANY BETTER LUCK GETTING THESE THINGS THROUGH. LET’S MOVE ON TO THE TECH STORY. WE HAVE NVIDIA NUMBERS OUT OVERNIGHT. I KNOW YOU ARE KEEN ON LARGE TECH, BIG TECH IN THE UNITED STATES. SOMEBODY WHO IS LEANING INTO THE TECH SCENE, STILL THINKS THERE IS SOMETHING TO PLAY FOR THERE. NASDAQ FUTURES NOW ARE ALMOST FLAT. > > IT IS QUITE INTERESTING BECAUSE WE ARE ALWAYS VERY EXCITED BY THE NVIDIA RESULTS. IT IS ONE OF THE BIGGEST STOCKS IN THE U.S. MARKET. IT IS SO CONCENTRATED. IT IS ONE OF THE MOST -- STOCK OVER THE LAST YEAR. EVERY TIME WE HAVE RESULTS WE HAVE A HUGE CHANGE IN THE STOCK PRICE. NOW THE AI STORY IS STILL -- THERE IS A LOT OF CAPEX WHICH IS -- WHICH HAS BEEN SPENDING. THERE ARE -- WE ARE CONCERNED AROUND MONETIZATION OF THE CAPEX SPENDING AND ALSO CONCERN ABOUT THE CAPITAL -- BUT THE TREND IS THERE. WHEN WE LOOK AT THE REVENUES, THEY ARE STILL UP VERY STRONGLY. THE GROWTH IS CHANGING BUT YOU CAN’T HAVE TWO YEARS IN A ROW WHERE THE NUMBER OF GROWTH ARE ABOVE 100%. IT IS ALWAYS THE QUESTION OF BASE EFFECT. GEO-POLITICAL AND THE TRADE, THAT CONCERN, I PUT THE VOLATILITY AS WELL IMPACTED RESULTS BUT OVERALL I THINK YESTERDAY’S RESULTS ARE GOOD ENOUGH TO KEEP THE TREND GOING. ANNA: GOOD ENOUGH TO KEEP THE TREND GOING. YESTERDAY WE HEARD A PRETTY NEGATIVE INTERPRETATION FROM ONE INVESTOR ABOUT THE THREAT THAT AI POSES TO SOFTWARE AS A SERVICE. DO YOU SHARE THAT NEGATIVITY? DO YOU FEAR THAT OTHER BIG PLAYERS IN THE U.S. TECH SPACE MIGHT COME UNDER PRESSURE FROM COMPETITION? THE SOFTWARE COMP TELEVISION AI? > > SO I THINK THE -- COMPETITION WITH AI? > > THE RACE IS INCREASING. ADOPTION WILL BE HIGHER. MORE ADOPTION AND MORE REVENUE. WE NEED TO BE SELECTIVE OF COURSE IF THE MARKET IS UP QUITE A LOT. APRIL 2. THE REASON OVER THE LAST THREE YEARS AND A HALF, FOUR MONTHS, AI STOCKS HAVE BEEN IMPRESSIVE. THERE IS MORE SELECTION TO DO. WOULD NOT BE TOO CONCERNED ABOUT THE FACT THAT EARNINGS ARE -- AND THERE WILL BE MORE POINTING OUT THE RATE RISING MEANS MORE VOLUME. EVEN IF YOU ARE LOSING A BIT OF PRICING POWER, THE VOLUME SHOULD UPSET THE PRICE PRESSURE. GUY: GOOD MORNING. IT IS GUY. I’M CURIOUS TO GET YOUR TAKE ON WHO WERE THE YOU BUY THE UNITED STATES OR YOU BUY EUROPE. ARE THE CATALYSTS FOR EUROPEAN OUTPERFORMERS FOR THE UNITED STATES OUT BEHIND US? WHAT ARE YOU ADVISING YOUR CLIENS CLIENTS? > > SO WE ARE NEUTRAL ON -- BUT I HAVE TO SAY WE ARE STILL VERY POSITIVE ABOUT U.S. WE HAVE SEEN AT THE BEGINNING OF THE YEAR ON THE PERFORMING CONCERN LINK, WE ARE NOW EXPECTING 100 BASIS POINTS OF RATE CUTS IN THE U.S. THE SECTOR WHICH IS SUPPORTED BY FALLING BOND -- WE EXPECT BONDING FALLING IN THE COMING FEW MONTHS. THE BIG DIFFERENCE I THINK IS THE DIFFERENTIATION IN MONETARY POLICY BETWEEN THE U.S. AND EUROPE. EUROPE IS CLOSE TO THE POLICY CYCLE. WE SEE THE 25 BASIS POINTS RATE CUT. CONTINUE TO SUPPORT THE MARKET. WE PROBABLY MORE SELECTIONS THAN BEFORE ON THE REGION. WE CONTINUE TO BE POSITIVE. FINANCIAL -- EIGHTH ABILITY FROM DEREGULATION AS WELL. GUY: ARE MULTIPLES ALREADY VERY, VERY HIGH IN AMERICA? > > MULTIPLES ARE HIGH BUT WE NEED TO THINK ABOUT CONCENTRATION. INDEX CONCENTRATION. THE LEVEL IS MOSTLY RUN BY A FEW STOCKS. WHEN YOU BREAK DOWN THE INDEX AND EVALUATION ACROSS SECTOR YOU STILE STILL FIND VALUE ACROSS PHARMA, FINANCIAL, INDUSTRIAL. WHEN YOU LOOK AT THE OVERALL INDEX, THE S & P, VALUATION ABOVE 22 TIMES. WHEN YOU BREAK DOWN AND INCLUDE TECH STOCKS, THE BIGGEST STOCKS WE SEE, THE VALUATION IS MORE REASONABLE. THE -- NEEDS TO BE DONE THINKING ABOUT EARNINGS GROWTH BUT ALSO TRYING TO PICK THOSE STOCKS ALCOHOL BE GROWING BENEFITING FROM RATE CUTS AND ALSO VALUATION -- AND MENTIONING A FEW SECTORS BEFORE. WE ARE POSITIVE. GUY: THANK YOU VERY MUCH FOR YOUR INSIGHTS. CIO OF FRANCE UBS WEALTH MANAGEMENT. THE FRENCH MARKET HAS BEEN -- AND SOME OF THE INDUSTRIALS THAT HAVE DRIVEN THE MARKETS SO FAR THIS YEAR. IT IS UP THIS MORNING AS YOU CAN SEE THE FRENCH MARKET COMES BACK THAT STOCK IS UP BY 1.5%. SCHNEIDERS UP BY .6%. CHIPS ARE A LITTLE SOFTER THIS MORNING BUT NOT BY MUCH. DEFENSE IS DOING NOT VERY MUCH. A LOT HAPPENING IN THE PHARMA SECTOR. WHAT ELSE SHOULD WE BE WATCHING? CAR SECTOR FIRMLY IN FOCUS THIS MORNING AFTER THE DATA WE SAW OVERNIGHT. > > WE’RE KEEPING AN EYE ON CARS AFTER SALES HIT A 15-MONTH HIGH IN EUROPE. ALONG WITH DEMAND FOR ELECTRIC VEHICLES THERE. THE KEY ONES WE’RE LOOKING AT VOLINGS WEIGHEN, MERCEDES, STELLANTIS ALL INTO THE GREEN. STELLANTIS UP 3.5 MANAGEMENT BOOSTING THE CAR MARKET THIS MORNING. WARNING ABOUT THE OUTLOOK MOSTLY DUE TO TARIFFS AND CHINA. STOCK UP ALMOST 5% INTO THE GREEN. LVMH COULD BE EXPOSED. NOT WEIGH INTO THE GREEN THIS MORNING DESPITE THAT NEWS. WE HAVE CLIF DELIVERY HERE. THEY HAVE RESULTS THIS MORNING. THEY TRIMMED THEIR FULL-YEAR GUIDANCE. UP ALMOST 4% INTO THE GREEN. THE ENERGY SECTOR, WE HAVE THE U.K. THE SCA IS INVESTIGATING DRAX. THAT IS INTO SOME OF THEIR REPORTING, SOME OF THEIR HISTORICAL STATEMENTS IN THE PAST FEW YEARS. THEY WERE DOWN ABOUT 12 SO THEY HAVE KIND OF MOVED HIGHER SLIGHTLY FROM THAT BUT STILL STRONGLY DOWN INTO THE RED AND THEN LASTLY STICKING WITH RENEWABLES, IT HAS BEEN A BIG WEEK FOR ORSTED. THEY HAVE BEEN RAISED TO A BUY. THERE IS SOME POSITIVE NEWS COMING INTO THE END OF THE WEEK FOR THEM. ANNA: THANK YOU VERY MUCH. LOUISE FROM OUR EQUITIES TEAM. FEELS LIKE THE MARKETS WANTS TO GO HIGHER THIS MORNING. THE CAC UP .7%. NOT SO NASDAQ FUTURES. PRETTY FLAT. WE’LL BRING YOU MARKET ANALYSIS TO THOSE NVIDIA EARNINGS. COMING UP NEXT. THIS IS BLOOMBERG. > > THE OPPORTUNITY AHEAD IS IMMENSE. BLACKWELL FACTORY PLATFORMS WILL BE SCALING INTO THE 3 TO 4 TRILLION GLOBAL AI FACTORY BUILDOUT THROUGH THE PPED OF DECADE. I THINK THE OPPORTUNITIES FOR US TO BRING BLACKWELL TO THE CHINA MARKET IS A REAL POSSIBILITY AND SO WE JUST HAVE TO KEEP ADVOCATING THE SENSIBILITY OF -- AND THE IMPORTANCE OF AMERICAN TECH COMPANIES TO BE ABLE TO LEAD AND WIN THE AI RACE. GUY: NVIDIA’S CEO SPEAKING ON THE EARNINGS CALL YESTERDAY. SHARES DOWN IN AFTER HOURS. IT HAS HAD A GREAT RUN RECENTLY. YOU NEED TO FACTOR THAT INTO YOUR THINKING. TEPID FORECAST? MAYBE. LET’S FIGURE OUT EXACTLY HOW WE SHOULD BE READING THESE NUMBERS. PETER JOINING US AROUND THE TAMPA BAY. I READ THINGS THETABLE. I READ THINGS ARE SLOWING. > > 66% GROWTH IS VERY, VERY ROCK THE WHEN YOU’RE BUILDING OFF THE BASIC. I WOULD SAY THE RULES ARE A LITTLE BIT DIFFERENT WHEN YOU’RE THE MOST VALUABLE COMPANY IN WO THE WORLD. NVIDIA 4.4 BILLION. STOCKS UP 1,000% OVER THE PAST THREE YEARS IN PARTICULAR. RULES ARE A LITTLE BIT DIFFERENT. THERE ARE A FEW AREAS OF CONCERN IN THE EARNINGS REPORT. FIRST OF ALL IN DATA CENTER, EXPECTATIONS WERE 41.3 BILLION. JUST A LITTLE BIT HIGHER. THEY DIDN’T QUITE GET THERE. ALSO THE FORECAST FOR THE NEXT QUARTER IS A LITTLE BIT LIGHTER THAN SOME PEOPLE HAD ANTICIPATED. $54 BILLION. SOME ANALYSTS HAD ESTIMATES AS HIGH AS $60 BILLION. CHINA IS A LITTLE BIT OF A MESS NOW. THEY ARE TRYING TO FIGURE OUT WHAT THEY CAN SELL INTO CHINA. THE U.S. GOVERNMENT HAS CHANGED THESE RULES. THEY FIRST HAD THAT H20 CHIPS BLOCKED. THEY WERE ALLOWED TO SELL THE CHIP INTO CHINA. BEIJING IS SAYING YOU SHOULDN’T BUY THESE CHIPS. ON THE EARNINGS CALL THEY STOPPED PRODUCING THE H20 CHIPS FOR THE CHINESE MARKET. LAST QUARTER THEY DIDN’T SELL ANYTHING AT ALL. THE FORECAST FOR THE NEXT QUARTER, THEY DON’T HAVE ANYTHING INCLUDED IN THERE. PERHAPS IF THE RULES CHANGE THEY CAN SELL. KRITI: IT IS STILL A KEY MARKET FOR THEM. WHY IS THERE NOT A BIGGER REACTION? > > CHINA IS VERY IMPORTANT TO THEM. THEY ARE GETTING TONSOR GROWTH OUT OF THE U.S. HYPER SCALERS OF COURSE. THOSE COMPANIES ARE STILL BUYING THE BULK OF THIS BUSINESS. THE CONFUSION AROUND CHINA IS SUBSTANTIAL AT THIS PONT. WITH H20 CHIPS THEY HAD THE BAN AND THEN WERE ALLOWED TO GO FORWARD. BEIJING TELLING COMPANIES NOT TO BUY THE CHIPS. THE TRUMP ADMINISTRATION SAID YOU CAN SELL IF YOU GIVE US 15% OF YOUR REVENUE. THE COMPANY ADMITTED YESTERDAY THEY DON’T KNOW EXACTLY WHAT THAT MEANS. THEY SAID THE TRUMP ADMINISTRATION HAS NOT COME FORWARD WITH A FORWARD PROPOSAL. THE CFO DETAILED THIS. NVIDIA CAN’T HAND OVER 15% OF THEIR REVENUE TO THE TRUMP ADMINISTRATION WITHOUT SOME FORMAL DOCUMENTS WHAT THAT MEANS. THEY SAY THEY ARE FACING THE DANGER OF LITIGATION IS THERE IS NOT A FORMALIZED AGREEMENT WORKED OUT HERE. ANNA: THEIR ACCOUNTING SYSTEM NEEDS TO KNOW. WHAT ABOUT THE COMPETITION THEY ARE GETTING FROM CHINA PETER? ARE THEY FACING SERIOUS COMPETITION? LEANING ON COMPANIES SAYING DON’T BY H20’S. BUY SOMETHING MORE DOMESTICALLY MADE. WHAT ARE THEY UP AGAINST? > > THIS IS A VERY GOOD QUESTION. I’M HAPPY THAT YOU RAISED THIS. CHINA DOES NOT HAVE ANY COMPANIES THAT CAN COMPETE WIN VIDEOIA IN TERMS OF THE I CHIPS NEEDED -- THE AI CHIPS. WHAT IS USED FOR TRAINING AND RUNNING THE ACTUAL MODELS. FOR TRAINING THERE IS NO COMP TELEVISION NVIDIA. CHINA IS DETERMINED TO DEVELOP ALTERNATIVES. HUAWEI IS ON THE TOP OF THAT LIST. THEY HAVE A CHIP WHICH IS QUITE GOOD. THERE WAS AN EARNINGS REPORT FROM ANOTHER COMPANY YESTERDAY DESIGNING CHIPS JUST LIKE NVIDIA TO BE USED IN THE AI MARKET. THEIR REVENUE WAS UP 44-FOLD IN THE LAST QUARTER. THEY ARE MUCH SMALLER THAN NVIDIA BUT IT IS A SIGN BEIJING IS TELLING CUSTOMERS TO BUY DOMESTIC WHEN THEY CAN DO THAT. THAT’S WHY THEY WANT TO BE ABLE TO SELL IN THE CHINA MARKET. JENSEN HUANG SAID THEY WOULD LEAK TO BE ABLE TO SELL THE HIGHEST CHIPS INTO CHINA. ANNA: A CONVERSATION THAT WILL CONTINUE THE WHITE HOUSE. THANK YOU VERY MUCH. PETER ON THE TECH BEAT. LET’S TALK ABOUT WHAT IS GOING ON ON CONSUMER-FACING PRODUCTS. AFTER THE COMPANY SAID IT EXPECTS SALES TO DECLINE IN THE NEXT FINANCIAL YEAR AS THE FRENCH SPIRITS MAKER CONTINUES TO GRAM BETWEEN CHINA AND THE UNITED STATES. WE’RE JOINED BY BLOOMBERG’S GLOBAL BUSINESS REPORTER. WHAT ARE THE KEY TAKEAWAYS FROM THE RESULTS HERE? > > SALES ARE BARE FAIRLY FLAT IN QUMP FOUR. THEY WERE EXPECTING 4.8%. FULL-YEAR PROFIT BEAT ESTIMATES SLIGHTLY. THE COMPANY IS DOING A BIT BETTER. A LOT OF THAT STRENGTH IS IN FRANCE AND PAIN. IF YOU LOOK AT SOME -- SPAIN. IF YOU LOOK AT SOME OF THE WEAKER REGION, THE SOFTER DEMAND WITH THE CONSUMER OVER THERE. THE LINGERING IMPACT OF TARIFFS AND ALSO THAT ANTI-DUMPING PROBE BY CHINA. ALSO WEAKNESS IN THE U.S. THEY WERE DOWN 6% THERE. THERE WAS A LINE ABOUT WHAT MANAGEMENT SAID, THE GRADUAL IMPROVEMENT IN THE OUTLOOK FOR RETAIL WITH THE RESUMPTION OF DUTY-FREE SPENDING. THAT IS GOING TO COME INTO EFFECT Q2. STILL SOME CHALLENGES AT THE MOMENT. GUY: THEY DON’T KNOW WHAT THEY ARE DOING WITH TARIFFS. THE DEAL WITH THE U.S. IS NOT DONE. WE DON’T KNOW WHAT THE DETAILS OF THAT ARE GOING TO LOOK LIKE. SPIRITS COULD STILL BE INCLUDED OR O NOT INCLUDED. WE DON’T HOME IN HOW ARE THEY DEALING WITH THIS UNCERTAINTY? > > THAT TARIFF IMPACT IS IMPACTING THE U.S. SALES, DOWN 6%. THAT IS REALLY IMPACTING THE DISTRIBUTOR. NO DISTRIBUTOR WANTS TO HAVE EXCESS INVENTORY. IT IS VERY HARD FOR THEM TO PLAN AHEAD. THEY ARE LOOKING AT MITIGATION MEASURES. TARGETED PRICE INCREASES. COST SAVINGS MORE EFFICIENT PROMOTIONS. ANALYST CALLINGS ONGOING AT THE MOMENT. INVESTORS WILL BE LISTENING IN FOR ANY ADDITIONAL CALLER ON TARIFF MEASURES. GUY: GLOBAL BUSINESS REPORTER, THANK YOU. WHAT ARE WE GOING TO DO NEXT? WE’RE GOING TO TALK ABOUT WHAT’S HAPPENING IN THE U.K. AND WE FOCUSED ON FRANCE AND WHAT’S HAPPENING IN LONDON. MARK WILL BE JOINING US ABOUT THE PROSPECTS OF THE POUND HAVING ANOTHER LIZ TRUSS STYLE TANTRUM. WE’LL GET HER TAKE ON ALL OF THIS AS WELL AS WE INTRODUCE MARK. HE IS A LITTLE CONCERNED AROUND WHAT’S HAPPENING WITH THE POUND NOW. WE’LL GET TO MARKET IN A MOMENT. THIS IS BLOOMBERG. KRITI: WELCOME BACK TO THE OPENING TRADE. 30 MINUTES INTO TODAY’S SESSION. GREEN ON THE SCREEN ACROSS EUROPE, NOTICEABLY IN FRANCE. THAT IS DRIVING THE MARKET HIGHER. UNDERPERFORMER IS THE FTSE 100. IT IS FLAT ON THE DAY. THE FTSE 100 KIND OF ABOVE THE FRAY. IS THIS JUST LAST COUPLE OF DAYS OF AUGUST? GUY? GUY: EXACTLY. THIS WAS SPH THIS WAS SEPTEMBER I WOULD TAKE THE CHART YOU HAVE IN FRONT OF YOU MORE SERIOUSLY. THE NUMBERS IN FRONT OF YOU MORE SERIOUSLY BUT IT IS NOT. WE’RE IN THE END OF AUGUST. VOLUME IS ESPECIALLYICALLY LIGHT OUT THERE TODAY. WAY DOWN ON WHERE WE WOULD NORMALLY BE. IN TERMS OF THE NUMBERS HIGHER, 448 UP. 130 DOWN. I WOULD NOT READ TOO MUCH INTO THAT. I WENT LOOKING FOR 52-WEEK HIGHS AND LOWS. COULDN’T FIND LOWS. FOUND A FEW HIGHS. THIS GOLD MINER IS ACTUALLY CONTINUES TO BE ON SOMETHING OF A TEAR. IT FEELS THIS IS A MACRO STORY AS MUCH AS ANYTHING ELSE. THIS IS A STOCK. IMPRESSIVE PERFORMANCE, THAT PRECIOUS METSAL STORY. ANNA: ABSOLUTELY. KEEP AN EYE ON NATURAL LETT GET AN UPDATE ON SOME OF THE BIG PICTURE STORIES WE’RE FOLLOWING THIS MORNING. WE’LL START WITH THE TECH SPACE OF COURSE. NVIDIA IS TEPID DESCRIBED BY SOME FORECASTS. SIGNALING GROWTH IS DECELERATING AFTER A STAGGERING TWO-YEAR BOOM IN AMP I SPENDING. SALES WILL BE ROUGHLY 54 BILLION IN THE THIRD QUARTER. SOME ANALYSTS PROJECTED MORE THAN 60 BILLION DOLLARS. BLOOMBERG HAS LEARNED THAT THE MEXICAN GOVERNMENT PLANS TO INCREASE TARIFFS ON CHINA AS PART OF ITS 2026 BUDGET PROPOSAL NEXT MONTH SATISFYING A DEMAND OF U.S. PRESIDENT TRUMP AS THE E.U. IS WORKING TO PASS LEGISLATION THIS WEEK TO REMOVE ALL TARIFFS ON U.S. INDUSTRIAL GOODS TO GET TRUMP TO LOWER ON THE BLOCK’S AUTOMOBILE EXPORTS. FRENCH PRIME MINISTER SAID HE WILL NEGOTIATE WITH LAWMAKERS NEXT WEEK. HE BATTLES TO STOP FRANCE’S PARLIAMENT FROM FORCING HIM TO RESIGN. FRANCE IS ON THE BRINK OF POLITICAL CRISIS. FRANCOIS, THE THINKING WE HAVE FROM A LOT O OUR GUESTS THIS MORNING IS HE WILL PROBABLY BE FORCED OUT BY THIS VOTE IN EARLY SEPTEMBER UNLESS THERE IS A -- FOR ANY OF THE RIVAL PARTIES YET WE SEE YIELDS IN EUROPE GO LOWER AS IF IF THE PARKING IF THE MARKET IS RELAXED BY WHAT’S HAPPENING HERE. KRITI: LOOKING AT A SPREAD SHY OF 80. LAST TIME WE WERE AT THESE LEVELS, THE ELECTIONS THREW MARKET INTO TURMOIL UNTIL 2024. WE HIT 82. IT WENT UP TO ALMOST 90 IN DECEMBER OF 2024. WE RETRACED. DO GET TO 100? GUY: WE MIGHT GET TO 100. IT DEPENDS ON WHAT THE STORY LOOKS LIKE OVER THE NEXT FEW DAYS. IF WE GET A NEW PRIME MINISTER, GET SNAP SNAP ELECTIONS WHICH DON’T RESOLVE SHERIFF. DO RESOLVE VERY MUCH.ANNA: THIS IS PROVING TO BE A CHALLENGE ACROSS VARIOUS PARTS OF EUROPE WHEN GOVERNMENTS GO TO THEIR PARLIAMENTS AND ASK THEM TO VOTE ON SPENDING CUTS AND IT PROVES DIFFICULT. WE HAVE SEEN THAT IN THE U.K. CONTEXT. THE FORMER U.K. PRIME AL-FAROUQ AMINUSTER LIZ TRUSS THEYS THE BANK OF ENGLAND NEEDS TO BE ACCOUNTABLE TO POLITICIAN. SHE WEIGHED IN ON THE STATE OF THE U.K. ECONOMY AND WHY SHE IS CONCERNED. > > LAST YEAR, I THOUGHT WE WERE HEADED FOR AN IMF BAILOUT AS BRITAIN EXPERIENCED IN THE 1970’S. I THINK THAT IS EVEN TRUER NOW THAN IT WAS A YEAR AGO. WE’RE IN AN ECONOMIC DOOM LOOP OF HIGHER TAXES, LOWER GROWTH, HIGHER DEBT AND IT IS VERY DIFFICULT NOW TO SEE THE POLITICAL WAY OUT OF THAT. ANNA: YOU CAN LISTEN TO THAT FULL INTERVIEW WITH THE FORMER U.K. PRIME MINISTER LIZ TRUSS ON BLOOMBERG’S PODCAST. OUR NEXT GUEST STAYS POUND IS VULNERABLE TO ANOTHER LIZ TRUSS-STYLE TANTRUM. MARK, VERY GOOD MORNING TO YOU. THANK YOU FOR JOINING US. WHAT IS THE EPICENTER OF YOUR CONCERN AROUND THE U.K.? WHAT IS THE BIG ISSUE? FISCAL HEAD WIND I SUPPOSE? > > VERY MUCH THE FISCAL SITUATION. WE’RE IN A MOMENT RIGHT NOW AS YIELDS MOVE HIGHER ON GILTS, THAT IS ADDING TO THE FISCAL BLACK HOLE THAT WE’RE SEEING IN U.K. MANY OF THE MEASURES TAKEN BY THE LABOUR HAVE MADE THE PROBLEM WORSE, NOT BETTER. IF YOU THINK ABOUT NI CHARGES, IT HAS DRIVEN UP INFLATION AND HURT GROWTH AND ENDED UP MAKING THE DEFICIT WORSE. GOING AFTER PRIVATE SCHOOLS. IT IS NOT REALLY HELPING THE SITUATION AND SO WITHOUT ANY CLEAR SENSE THAT WELFARE SPENDING IS GOING TO GET TACKLED, I HAVE A REAL CONCERN THAT AT SOME POINT MARKETS ARE GOING TO LOSE TRUST AND CONFIDENCE IN THE POLICIES OF THIS LABOUR GOVERNMENT. ANNA: OK. WE HEAR THAT KIND OF VIEW FAIRLY OFTEN ON THE PROGRAM. JUST TO GIVE A DIFFERENT PERSPECTIVE, TO TAKE A DIFFERENT SLANT OF THIS, I WAS LISTENING TO THE PODCAST FROM BLOOMBERG AND THEY WERE MAKING POINTS HOW THE U.K. ECONOMY HAS POSITIVELY SURPRISED. FIRST HALF GROWTH COMING IN BETTER THAN EXPECTED. THE P.M.I. NUMBERS LOOKING BETTER AND THE NARRATIVE HERE, MAYBE ON SOCIAL MEDIA AND ELSEWHERE, THE COST OF LIVING CRISIS OVERDONE. REAL WAGES OVER FIVE YEARS HAVE INCREASED WHICH IS STAGGERING GIVEN THE INFLATION THAT WE SAW. IS IT TRUE THINGS ARE NOT REALLY DETERIORATING? > > I THINK WE ARE IN A COUNTRY THAT IS EXPERIENCING VERY WEAK GROWTH. WE’RE STRUGGLING TO GROW THE ECONOMY. THERE IS NEXT TO NO PRODUCTIVITY GROWTH IN THE ECONOMY. THAT MEANS WHERE WAGES GROUP, GO UP, THAT ADDS TO INFLATION. YOU ADD ON TO THIS, THIS SORT OF CONCERN AROUND A BUILDING DEBT CRISIS. IT IS REALLY GOING TO TAKE SOME DEBT POLICY I THINK TO AVERTS SOME OF THESE SCENARIOS. GOOD OLD LIZ TRUSS WAS SPEAKING ABOUT A MOMENT AGO. SHE IS BEARISH. I WAS QUITE BEARISH ON THE U.K. ANNA: IT IS NOT THAT BIG OF A SURPRISE WHEN THE LABOUR PARTIES IS IN CONTROL. WE SHOULD MAKE THE OBVIOUS POINT. > > I’M SURE IT HAD NOTHING TO DO WITH HER. ONE OF THE CHALLENGES LABOUR FACES IS BECAUSE WE HAVE HAD THIS HISTORY UNDER LIZ TRUSS OF THIS GILT MARKET TANTRUM, THAT NATION U.K. A CANARY IN THE GOAL IN THE COALMINE. IT HAS HAPPENED BEFORE AND MORE LIKELY TO HAPPEN HERE AGAIN THAN IN OTHER COUNTRIES PERHAPS. GUY: WHAT HAPPENS TO THE BUDGET? > > SO IN THE BUDGET, IT SEEMS TO BE AT THE MOMENT ALL ABOUT ADDING TAX WISE. GUY: DOES THE MARKET REACT TO THAT? > > MY CONCERN IS THE MARKET ALSO LOOK AT PLANS TO RAISE TAXES AND SAY YOU’RE NOT ADDRESSING THE PROBLEM. THE PROBLEM IS WELFARE SPENDING. IF YOU KEEP INCREASING THE TAX BURDEN ON THE WORKING POPULATION, ULTIMATELY, THIS IS ONLY GOING TO -- SO THE DAMAGE GROWTH PROSPECTS, WEALTH CREATION, IT IS NOT GOING TO BE BENEFITING ECONOMIC GROWTH. IT IS ALMOST LIKE THE REVERSE OF THE LAFFER CURVE IN THE U.S. THEY SEEM TO BE GETTING AWAY WITH CUTTING TAXES. IN THE U.K. WE’RE RAISING TAXATION. IT HAS LITTLE BENEFIT. YOU HAVE TO TACKLE SPEPPING. GUY: POLITICALLY VERY DIFFICULT. HOW FAR DO GILT YIELDS NEED TO GET? THERE IS A CRISIS. WE NEED TO CUT SPENDING. DO YIELDS GO SIGNIFICANTLY HIGHER FROM HERE IN ORDER TO GENERATE THAT KIND OF POLITICAL RESPONSE? > > IT IS AN INTERESTING QUESTION. OVER THE COURSE OF THE SUMMER, WE HAVE SEEN THIS MOVE UP IN GILT YIELDS. IT IS LIKE WITNESSING A SLOW-MOVING CAR CRASH AT THE MOMENT. AT SOME POINT YOU’LL CROSS OVER WITHOUT MOVING IN YIELDS WILL BECOME SELF-ACCELERATING. IF YOU SEE 10-YEAR YIELDS MOVE THROUGH 5%, I THINK THAT WOULD BE A REAL TRIGGER. WHEN YOU START LOOKING AT DEBT SUSTAINABILITY AND YOU’RE LOOKING AT NUMBERS ABOVE FIVE THEN YOU HAVE REALLY GOT A LOT TO WORRY ABOUT. I THINK THAT CAN END NOT FORCING A CHANGE IN THE FAVORITE IN. I DON’T THINK POLITICIANS WANT TO CHANGE TACT. THEY MAY BE FORCED TO DO SO. KRITI: A SHORT POSITION ON THE POUND NOW. YOU MADE THE POINT EARLIER THAT THE U.K. IS THE CANARY IN THE COAL MINE FOR OTHER COUNTRIES WITH A DEBT CRISIS. WHY IS THE U.K. WORSE OFF THAN ITS KOUNTZ PARTS IN FRANCE, ITALY, SPAIN AND EVEN THE STATES. > > THAT IS A GOOD QUESTION YOU HIT ON. THE U.K. IN A SENSE IS BEING HELD TO TASK MORE BY MARKETS THAN SOME OF THOSE OTHER COUNTRIES. I THINK IT IS PARTLY BECAUSE WE HAVE THIS PRECEDENT OF WHAT HAS HAPPENED HERE BEFORE. IF IT HAPPENED BEFORE, IT CAN HAPPEN AGAIN. SECONDLY WHEN IT COMES TO THE UNITED STATES ALTHOUGH THEY HAVE RUNAWAY DEFICITS, THEY HAVE A RELATIVELY STRONG ECONOMY AT THE SAME TIME AND FOR THAT PERSPECTIVE BEING THE WORLD’S RESERVE CURRENCY THEY CAN GET AWAY WITH IT AT LEAST FOR TIME BEING. IN FRANCE YOU HAVE A BUILDING PROBLEM AND ACTUALLY OVER THE COURSE OF THE NEXT COUPLE OF MONTHS, I THINK WE’RE GOING TO GO TO NEW ELECTIONS IN FRANCE. I DON’T THINK MACRON CAN STICK IN ANOTHER TECHNOCRAT. I THINK THERE WILL BE A MOVEMENT IN FRANCE WHERE FRANCE NEEDS TO FACE UP TO THE FACT THAT THEY ARE TRYING TO MOVE BEYOND THEIR MEANS. THEY GET THE JOKE IN ITALY. WHICH IS WHY ITALY IS A BETTER CREDIT THAN FRANCE IS THESE DAYS. KRITI: THE EMTERM IMF BAILOUT HAS BEEN THROWN AROUND A LOT THIS WEEK. WE HEARD ASIA TALKING ABOUT IT IN FRANCE. IT IS A LITTLE BIT OF AN EXAGGERATION THAT THE U.K. OR FRANCE NEEDING AN IMF BAILOUT. TALK TO US ABOUT WHAT WE MITE MIGHT NEED. DO WE NEED TO START TALKING ABOUT EXCESS LIQUIDITY? > > I THINK WHAT YOU NEED TO SEE FOR EXAMPLE IN THE U.K., YOU NEED THE BANK OF ENGLAND TO STOP Q.T. NOW. YOU NEED THE DMO TO STOP ISSUING GOVERNMENT BONDS. STOP THE PRESSURE ON THE LONG END OF THE MARKET. THAT WOULD BE ONE THING I WOULD SAY HERE. THE OTHER THING YOU KOORCHED NEED TO SEE THOUGH IS -- KIND OF NEED TO SEE IS THAT THE SENSE THAT POLICY IS DOING RIGHT THING. YOU NEED TO GET THE MARKETS TRUSTING YOU IN TERMS OF YOUR FISCAL PLANS. AS WE SAW IN APRIL IF MARKETS START TO LOSE CONFIDENCE, THEY START TO LOSE CONFIDENCE IN PRODUCT CREDIBILITY AND THEN MARKET ALSO GO ON THE ATTACK. WHEN IT COMES TO SOMEWHERE LIKE EUROPE, LOOK AT A DIFFERENT SITUATION. YOU HAVE GOT PLENTY THAT YOU CAN DO AND THE ECB I’M SURE WILL BE READY TO SUPPORT FRANCE AND ULTIMATELY AT THE MOMENT, IT IS A BIT OF A SHORT STORY IN FRANCE BECAUSE A PARLIAMENTARY ELECTION I DON’T THINK CAN SEE THE SPREAD GO MUCH BEYOND THE 100 BASIS POINTS EVEN IN A BAD OUTCOME. THIS IS A PRELUDE TO THE PRESIDENTIAL CAMPAIGN. ANNA: YOU SAID YOU WOULD BE MORE RELAXED ABOUT THE BASIS POINTS. THAT WOULD BE FAIRLY MUTED? > > IT IS STILL RELATIVELY MUTED. BEAR IN MIND YIELDS ARE 2% BELOW WHERE U.K. YIELDS ARE. EVEN IF THERE IS A SPREAD OF 100 BASIS POINTS IN FRANCE, FRANCE IS LOOKING AT LOWER BORROWING COSTS THAN IN THE U.K. IN THE U.K. WE HAVE A SITUATION WHERE INFLATION IS TOO HIGH. IT IS GOING TO BE DIFFICULT FOR THE BANK OF ENGLAND TO CUT RATES FURTHER. INFLATION JUST IS NOT A PROBLEM IN THE SAME SORT OF WAY. I DON’T THINK MARKETS WOULD GET OVERLY STRESSED ABOUT FRANCE BEING 100 BASIS POINTS. WE HAVE SEEN THOSE SPREADS BEFORE. I THINK IT WOULD BE MORE IF WE CONTINUE TO MOVE BEYOND THAT POINT. I THINK THAT WILL BE MORE SOMETHING THAT WE COULD SEE IF WE STARTED FEARING LE PEN INELISE. GUY: THE GOVERNMENT DID CUT SPENDING, WHAT WOULD BE THE REACTION WITHIN THE PUBLIC SECTOR? WOULD WE SEE MASS STRIKES? ARE WE GETTING BACK TO A 79-TYPE SCENARIO? IS THAT POSSIBLE HERE? WE HAVE AUSTERITY IN U.K. WE SAW WHAT THAT DID TO THE GROWTH NUMBERS. I WONDER HOW THE BOND MARKET WILL REACT TO WEAKER GROWTH NUMBERS. WHAT ARE THE INDICATIONS OF DOING THESE THINGS? > > HERE, THE THING THAT I SUGGEST, GUY, IS THAT ACTUALLY, IF YOU’RE TACKLING WELFARE SPENDING AND TARGETING YOUR SPEND TOWARDS THOSE WHO NEED IT MOST IN SOCIETY, THAT IS KIND OF WHAT YOU NEED TO BE ADDRESSING AT THIS PARTICULAR POINT. WE CAN’T HAVE A SITUATION WHERE PEOPLE LEFT, RIGHT AND CENTER ARE SAYING I’M GOING TO DROP OUT OF THE WORKFORCE AND I TALKED TO A YOUNG LAD LAST WEEK WHO SAID I’M QUITTING MY JOB. I LOOKED ONLIKE AND CAN GET A CLAIM. I’LL BE BETTER OFF. YOU CAN SEE AN END TO THIS NARRATIVE. I DON’T THINK THE UNIONS WILL BE UP IN ARMS AND COMPLAINING ABOUT THE FACT THAT PEOPLE CAN ABUSE SCHEMES TO BUY THEIR LATEST MERCEDES-BENZ AND THE REST OF IT. OF COURSE WE WANT WELFARE SPENDING TARGETED TO THOSE WHO NEED IT BUT YOU CAN TACKLE SPENDING IN THIS WAY. WITHOUT THE UNIONS. I THINK YOU -- I WOULD LIKE TO SEE A REDETECTION OF 10 BILLION IN SPENDING COMING THROUGH THOSE SORTS OF PLANS. GUY: THAT WOULD WORK OUT IN THE BOND MARKET? > > YIELDS RALLY. AS YIELDS RALLY THAT HELPS CLOSE THE BLACK HOLE. I THINK THERE ARE OTHER THINGS YOU CAN DO AS WELL. GUY: THE WAY TO CLOSE THE BANK HOLE IS TO REDUCE INTEREST PAYMENTS? > > WHEN YOU HAVE A SITUATION WHERE YOU HAVE DEBT TO GDP 100% OR MORE AND YOU’RE FUND WITH A 4% INTEREST CHARGE OR 5% INTEREST CHARGE, OBVIOUSLY INTEREST RATE EXPENSE BECOMES EFFECTIVELY THE BIGGEST ITEM ON THE GOVERNMENT BUDGET. THIS IS SOMETHING THAT THE U.S. GETS. THE U.S. IS AVERTLY SAYING WE WANT TO BRING DOWN RATES IF WE CAN GET RATES DOWN, WE’LL GET OUR DEFICIT DOWN AND THIS IS HOW WE’LL BE SUSTAINABLE AGAIN AND THAT IS FUND MENTALLY WHAT WE NEED TO END UP SEEING. GUY: INTERESTING TIMES AHEAD. ANNA: TARIFF REVENUE MAKE IT TO THE U.K.? WHERE IS SCOTT BESSENT WHEN YOU NEED HIM? GUY: FIXED INCOME CIO OF WEALTH MANAGEMENT. TICE BETWEEN INDIA AND CHINA. BOTH NATIONS LOOKING TO BOOST TRADE. TALKING ABOUT TRUMP’S TARIFFS. THIS IS NEXT. THIS IS BLOOMBERG. ♪ > > EVERYBODY IN AMERICA LOSES BECAUSE OF WHAT INDIA IS DOING. CONSUMERS AND BUSINESSES AND I THINK LOSE AND WORKERS LOSE BECAUSE INDIA’S HIGH TARIFFS COSTS JOBS AND HIGHER WAGES. THE TAXPAYERS LOSE BECAUSE WE GOT TO FUND MODI’S WAR. KRITI: WHITE HOUSE TRADED A VIERS PETER NAVARRO. WASHINGTON IS NOT HAPPY WITH NEW DELHI. MAYBE THERE WILL BE AN OPENING FOR BEIJING. THEIR OUTREACH IS PAYING OFF. A LETTER FROM INDIA’S PRESIDENT MARKED THE START OF EFFORTS TO REPAIR RELATIONS IN YEARS. THIS HAS BEEN A TENUOUS RELATIONSHIP BETWEEN TWO OF THE LARGEST ECONOMIES. THE SECOND AND THE FIFTH. WALK US THROUGH WHAT WE KNOW ABOUT THIS RELATIONSHIP AND TWO, THIS DYNAMIC. > > AS YOU SAY, IT IS A RELATIONSHIP THAT HAS HAD MANY UPS AN MANY DOWNS AND HAS PERIOD WHERE IS THEY HAVE DRAWN CLOSER BUT MANY PERIODS WHERE THEY HAVE DRAWN FURTHER APART AND A LOT OF UNDERLYING TENSIONS THERE IN THE RELATIONSHIP OVER BORDER, TRADE, YOU NAME IT. IT SEEMS AS THOUGH THEY NOW HAVE A COMMON MOTIVATION HERE. HAS THE U.S. AND DONALD TRUMP’S BEHAVIOR AROUND TRADE. THOUGH PARTICULARLY LATELY ZEROING ON INDIA, CRITICIZING INDIA FOR BUYING ENERGY FROM RUSSIA WHICH IS SUPPORTING ITS WAR AGAINST UKRAINE. WHAT WE HAD IS XI JINPING SENDING A LETTER BACK IN MARCH TO THE INDIAN PRESIDENT SUGGESTING SOME OUTREACH. THAT SAT FOR A FEW MOPS BUT WHEN THINGS STARTED TO DETERIORATE BETWEEN THE U.S. AND INDIA, WE HAD THE PAROLE MINISTER SAYING HOLD ON. LET’S OPEN UP SOME DOORS HERE. YOU’D A LOT OF BACK CHANNEL DELL CATS CONVERSATIONS GOING ON. IN A MATTER OF DAYS, THE INDIAN PRIME MINISTER WILL BE VISITING CHINA AS PART OF A BROADER MEETING WITH A BUNCH OF OTHER COUNTRIES. IT SHOWS THE CATALYST FOR ALL OF THIS HAS BEEN THE TENSIONS THAT HAVE ESCALATED BETWEEN THE U.S. AND INDIA. GUY: NOTHING LIKE A COMMON ENEMY TO BRING PEOPLE TOGETHER, DONALD TRUMP. > > THAT’S RIGHT. DID DONALD TRUMP ACTUALLY INTEND THIS TO HAPPEN OR WAS IT AN UNINTEND CONSEQUENCE OF IT? HE HAS REALLY GONE HARD ON INDIA. THAT HAS PUT MODI IN A DIFFICULT SPOT AT HOPE. HE HAS TO SHOW THAT HE IS TOUGH AND IS STANDING UP. MIGHT BE TRUMP DIDN’T THINK THESE COUNTRYS WITH THEIR LONG HISTORY OF TENSIONS WOULD GO THIS FAR? GUY: ENORMOUS COUNTRIES. BASICALLY FORCING THEM TOGETHER. THAT CHANGES THE DYNAMIC QUITE SIGNIFICANTLY PARTICULARLY IN ASIA. > > IT DOES. THE QUESTION IS DOES IT LAST? THAT WILL BE ONE INTERESTING THING TO SEE. THERE ARE A LOT OF THINGS THAT ARE UNDER THIS RELATIONSHIP THAT ARE NOT GREAT. YOU HAVE CHINA’S SUPPORT FOR PAKISTAN. ONE THING. YOU HAVE THEIR LONG RUNNING BORDER DISPUTES THAT BUBBLE UP EVERY COUPLE OF YEARS, GET CONTAINED AND BUBBLE UP AGAIN. THERE ARE DEEP RIFTS IN THIS RELATIONSHIP. THEY ARE JOINED TOGETHER NOW BY MUTUAL INTERESTS. ANNA: THANK YOU VERY MUCH. BLOOMBERG’S CHIEF ASIA CORRESPONDENT IN ASIA FOR US. WE’VE BEEN KEEPING AN EYE ON FRENCH POLITICS. FRANCE THE PRIME MINISTER SAID HE WILL NEGOTIATE WITH U.S. LAWMAKERS NEXT WEEK. WANTS TO STOP THEM FROM FORCING HIM TO RESIGN AS PRIME MINISTER. DOES HE STILL THINK HE CAN SURVIVE? WE SPOKE TO A COUPLE OF GUESTS WHO SAID THEY DON’T THINK HE SURVIVES BUT HE SEEMS TO BE CONVINCED THERE IS A PATH FOR HIS SURVIVAL. > > HE STILL BELIEVES HE CAN MAKE IT THROUGH SEPTEMBER 8 AND THIS CONFIDENCE VOTE EVEN THOUGH HE ACKNOWLEDGED LAST NIGHT ON THE 8:00 NEWS THAT AT THIS STAGE, HE CANNOT MAKE IT BUT HE IS FRUSTRATE, HE CAN CONVINCE SOME INCLUDING THE SOCIALISTS NEXT WEEK THROUGH DISCUSSIONS ABOUT THE BUDGET THAT THE DEBT ISSUE IS MOST IMPORTANT FOR FRANCE AND THAT THEY SHOULD APPOINT HIM ON THIS CONFIDENCE ROAD IS. HE SAID HE CAN NEGOTIATE ON EVERY SINGLE ISSUE INCLUDING HOLIDAYS, AND TEXTING THE HIGH -- TAXING THE HIGHEST EARNERS AND FREEZING WELFARE AND PENSIONS FOR THE 2026 BUDGET. SO WE’LL SEE HOW THESE TALKS GO WITH THE OPPOSITION PARTIES THROUGH PHOENIX N.E.C. WEEK. WE’LL SEE -- THROUGH NEXT WEEK. WE’LL SEE HOW THE SOCIALISTS REACT TO THAT. YESTERDAY FROM THE FORMER PRIME MINISTER, WHO SAID THIS MIGHT BE THE ONLY WAY OUT EVEN THOUGH FRANCOIS SAID LAST NIGHT THAT HE BELIEVES THIS WILL NOT CREATE ANY MORE STABILITY FOR FRANCE. GUY: I’VE BEEN DOWN TO WHERE THE FRENCH PRESIDENT HAS A SUMMER PLACE. IT IS LOVELY. IT IS VERY NICE. WHAT ARE THEY GOING TO BE TALKING ABOUT, MERZ AND MACRON? > > IT IS VERY RARE. LAST TIME MACRON INVITED A GERMAN CHANCELLOR THERE, 2019, ANGELA MERKEL. THEY ARE GOING TO TALK ABOUT DEFENSE, SECURITY, TRADE AND ONE OF YOUR FAVORITE SUBJECTS, GUY, THE EUROPEAN FIGHTER JET. THE NEXT GENERATION. THE FRENCH COMPANY HAS 80% OF THE WORK SHARE. GENERALLY DOESN’T AGREE WITH IT. IT IS A JOINT VENTURE. THAT IS PROBABLY GOING TO BE THE ELEPHANT IN THE ROOM AND MAY MAKE SOME PROGRESS ON THE WORK SHARE AT THIS CABINET MEETING. KRITI: ALL RIGHT. WALKING US THROUGH DYNAMICS BETWEEN FRANCE AND GERMANYLE. WE’LL K KEEP AN EYE OUT FOR THE HEADLINES. IN THE NEXT 24 HOURS, JOBS DATA. GDP DATA. MONETARY ACCOUNT. SO EXCITING. ANNA: I THINK WHAT YOU NEED TO KNOW IS NASDAQ FUTURES ARE DOING NOTHING. GUY: AMAZING. ANNA: NVIDIA REPORTED AND NOBODY NOTICED IT SEEMS. GUY: FRENCH BEACHES. GOING TO BE JOINING US SHORTLY ON BLOOMBERG TELEVISION. LOOK FORWARD TO THAT CONVERSATION. THIS IS BLOOMBERG. ♪

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Xi's Secret Letter to India, Nvidia Forecasts Decelerating Growth | The Opening Trade 8/28/2025

The Opening Trade has everything you need to know as markets open across Europe. With analysis you won't find anywhere else, we break down the biggest stories of the day and speak to top guests who have skin in the game. Hosted by Anna Edwards, Guy Johnson and Kriti Gupta. (Source: Bloomberg)

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