Transcript
0:00 >>>> THAT'S THE LAST DAY OF AUGUST. STOCKS A LITTLE WEAKER. >> BLOOMBERG OPEN INTEREST STARTS NOW. DANI: COMING UP, BOND INVESTORS SKEPTICAL THAT FED CHAIR KEVIN WARSH IS READY TO RAISE RATES. BRENT ABOVE $90 AS FRESH U.S.-IRAN STRIKES REIGNITE TENSIONS IN THE MIDDLE EAST. AND NVIDIA MAKES ANOTHER BIG BET ON THE FUTURE OF AI, DEEPENING ITS TIES WITH TAIWANESE CHIPMAKER MEDIATECH.
0:38 AND Q ALL THE CONCERNS ABOUT CIRCULAR FINANCING. WE WILL HEAR FROM THEM MAN HIMSELF, JENSEN HUANG. NVIDIA UP BY 0.3%. THE INVESTMENT AIMED AT GETTING MORE COMPANIES TO BUILD CUSTOM AI CHIPS USING NVIDIA'S PLATFORMS. STAY WITH US. WE WILL HAVE AN EXCLUSIVE INTERVIEW WITH THE NVIDIA CEO JENSEN HUANG AND MEDIATEK'S CEO. WE BEGIN WITH OUR TOP STORY. FRESH ANGST IN THIS BOND MARKET FOLLOWING FED CHAIR KEVIN WARSH'S JACKSON HOLE SPEECH.
1:16 INVESTORS, SOME OF THEM, WE ARE PRICING IN THE ODDS AT 60%. OTHERS ARE QUESTIONING WHETHER HE IS WILLING TO RAISE RATES TO TACKLE SEPARATE INFLATION. THESE ARE THE COMMENTS WE GOT FROM HIM LAST WEEK. >> WE MUST BE CONFIDENT THE UNDERLYING INFLATION IS MOVING TO OUR OBJECTIVE CLEARLY AND AT SUFFICIENT SPEED. OTHERWISE WE HAVE WORK TO DO. DANI: AND TRADERS AS I MENTIONED, 60% ODDS OF A HIKE. THIS IS A MARKET THAT MOVED TO PRICE IT IN.
1:48 LET’'S DISCUSS WITH MICHAEL MCKEE. I WAS SPEAKING WITH RBC EARLIER. HE SAID, THIS WAS A NORMIE SPEACH. -- SPEECH. IS THERE A SIGNAL FOR WHAT SHOULD HAPPEN IN SEPTEMBER FROM WHAT WE GOT FROM CHAIR WARSH? MICHAEL: THE IDEA OF IT BEING A NORMIE SPEECH IS CORRECT BECAUSE THIS IS WHAT EVERYONE HAS BEEN SAYING. THIS IS THE SORT OF SPEECH HE SHOULD HAVE GIVEN TWO MONTHS AGO WHEN HE FIRST TOOK THE JOB, BECAUSE ALL HE DID WAS REAFFIRM WHAT FED OFFICIALS DO, WATCH INFLATION AND REACT TO IT.
2:26 YOU CAN SEE NOW, THE CHART SHOWS THAT AT ONE POINT WHEN HE FIRST WAS COMING IN, THAT'S WHAT PEOPLE THOUGHT WOULD HAPPEN. THEN HE HAD HIS PRESS CONFERENCES AND THEY DIDN'T GO WELL, THAT EVERYONE HAS BACKED OFF THE IDEA OF A RATE INCREASE, NO WE ARE BACK TO 60% CHANCES. WHEN YOU LOOK FORWARD ON THE CALENDAR, WE HAVE THE JOBS REPORT ON FRIDAY BUT EVERYONE AGREES THAT IS NOT REALLY AN ISSUE UNLESS WE GET A SHOCK. SEPTEMBER 10 IS PPI, SEPTEMBER 11 IS CPI. THEY ARE IN THE BLACKOUT PERIOD NOW. THERE IS NO WAY TO PUSH BACK IF THE NUMBERS ARE BAD OR PARTICULARLY GOOD ONE WAY OR ANOTHER. IF WE GET A BAD INFLATION REPORT FROM THOSE TWO, MARKETS ARE GOING TO PRICE IN 100%.
3:08 HE IS GOING TO HAVE TO DELIVER OR HE IS GOING TO LOOK BAD. BUT HE DID SEEM TO SET HIMSELF UP FOR THAT BY SAYING HE DOESN'T THINK WE ARE THAT TIGHT AND THAT INFLATION IS STILL HIGH. WHILE HE IS NOT GIVING COMPLETE FORWARD GUIDANCE THAT I AM GOING TO TIGHTEN, HE IS SAYING IT IS CERTAINLY POSSIBLE AND THAT IS WHAT THE MARKET WANTED TO HEAR. DANI: THANK YOU SO MUCH FOR JOINING US. IT WILL BE A BUSY WEEK WITH THE ECONOMIC DATA. BLOOMBERG'S MICHAEL MCKEE.
3:37 ELSEWHERE, BRENT CLIMBING ABOVE $90 AFTER THE U.S. AND IRAN EXCHANGED STRIKES FOR THE FIRST TIME IN A MONTH. JOINING US IS TYLER KENDALL. THERE HAD BEEN A HOPE THAT WE WERE MOVING AWAY FROM CONNECTICUT WARFARE INTO WHAT TREASURY SECRETARY BESSENT CALLED ECONOMIC WARFARE. WHAT IS THE LATEST NOW? TYLER: AT THIS POINT, IT HAS BEEN 24 HOURS OF ESCALATION. NEW THIS MORNING, PRESIDENT TRUMP OUT WITH A NEW THREAT, TELLING FOX NEWS THE U.S. WILL RETALIATE AFTER U.S. FORCES WERE TARGETED BY IRAN OVERNIGHT. WE HAVE SEEN THIS CYCLE OF TIT-FOR-TAT ESCALATION AFTER SENSE, CONFIRMED THIS WEEKEND -- AFTER CENTCOM CONFIRMED THEY FLOYD ROCKET LAUNCHERS -- DEPLOY ED ROCKET LAUNCHERS. WE SAW IRAN GO AFTER U.S.
4:26 TROOPS IN JORDAN. NOW THE PRESIDENT'S NEW THREAT THIS MORNING. TO YOUR POINT, THIS MARKS THE FIRST KINETIC ACTION TAKEN BY THE U.S. IN NEARLY A MONTH AS THE ADMINISTRATION HAS OPTED FOR THAT ECONOMIC PRESSURE CAMPAIGN. IT SEEMED LIKE IT MAY HAVE OPENED THE DOOR OVER THE WEEKEND. WE HAD HEARD FROM IRAN'S PRESIDENT SAYING DIPLOMACY WAS NOT IMPOSSIBLE, WHICH YOU CAN BELIEVE TO BE A RELATIVELY POSITIVE STATEMENT IN REGARDS TO THE TALKS. THIS MORNING, WE SAW PAKISTAN'S PRIME MINISTER MEETING WITH IRAN'S FOREIGN MINISTER AS WELL. AT THIS POINT, IT DOES NOT FEEL LIKE THOSE DIPLOMATIC EFFORTS ARE WORKING. DANI: THANK YOU VERY MUCH. THAT IS TYLER KENDALL AS THE PRICE OF OIL MOVES HIGHER THIS MORNING. ELSEWHERE, WE MENTIONED NVIDIA'S LATEST INVESTMENT IN MEDIATECH.
5:13 THE THREE AND A HALF BILLION DOLLAR DEAL IS MEANT TO HELP COMPONENTS COMMUNICATE MORE SEAMLESSLY IN DATA CENTERS. SHARES UP 0.3%. LET'S GO TO ED LUDLOW FOR AN EXCLUSIVE CONVERSATION WITH BOTH CEOS. ED: WELCOME TO OUR AUDIENCES AROUND THE WORLD. WE ARE JOINED BY NVIDIA CEO JENSEN HUANG AND MEDIATECH CEO RICK SAIEH, WHO JOINS US FROM TAIWAN LATE IN THE EVENING. THE IDEA IS YOU CAN TAKE CUSTOM SILICON AND PLUG IT INTO ANY GPU-BASED ARCHITECTURE, SHARE THE MEMORY AND NETWORKING.
5:49 JENSEN, CAN WE START WITH YOU AND ASK YOU TO EXPLAIN THE TECHNOLOGY AGREEMENT HERE? JENSEN: TODAY, WE ARE ANNOUNCING A BIG PARTNERSHIP. WE'VE ALREADY HAD A BIG PARTNERSHIP WITH MEDIATECH. TODAY, WE ARE GOING TO MAKE IT A LOT BIGGER. IT STARTED WITH US RECOGNIZING THAT MEDIATEK MAKES THE WORLD'S BEST SOC'S. AND WE INTEGRATED THE NVIDIA CHIP TO CHIP INTERFACE TO MEDIATEK SO WHENEVER THERE IS AN SOC, WE CAN CONNECT IT TO NVIDIA'S GPU. WHAT CAME OUT OF THAT FIRST ENDEAVOR IS THIS PROJECT CALLED DGS SPARK. THIS INCREDIBLE COMPUTER ALLOWS YOU TO RUN AN ADVANCED INJECT TAKE AI -- AGENTIC AI ON YOUR DESKTOP INSTEAD OF RUNNING IT ON THE CLOUD.
6:37 WHAT WE WILL DO IS EXPAND OUR PARTNERSHIP SO WE DO MULTIPLE GENERATIONS OF THIS. THIS PROCESSOR IS ALSO GOING TO BE THE FOUNDATION OF THE REVOLUTIONARY NEW COMPUTER THAT IS COMING FROM MICROSOFT. A REINVENTION OF THE WINDOWS PC FOR THE AGE OF AGENTS. THE SECOND THING WE ARE DOING IS THAT MEDIATECH IS INCREDIBLY SUCCESSFUL BUILDING SPU'S. AND WE ARE GOING TO CONNECT OUR SYSTEM SO THAT NVIDIA'S SCALE UP SYSTEM, WHICH HAS REVOLUTIONIZED AI, AND OUR SPECTRUM X SWITCHES, OUR ENTIRE NETWORKING CHASITY TO MEDIATEK.
7:23 WHEN THEY WIN PROJECTS, IT BRINGS ALONG NVIDIA NETWORKING. HOWEVER, YOU ALSO KNOW THAT NVIDIA IS IN EVERY CLOUD AND DATA CENTER. WHENEVER THERE IS A MEDIA TECH SPU, WE WILL BE ABLE TO COMMIT THAT INTO THE DATA CENTER IN A SEAMLESS WAY. OF COURSE, WE ARE PARTNERING IN ROBOTIC SYSTEMS LIKE AUTONOMOUS VEHICLES. YOU KNOW THAT AI HAS REVOLUTIONIZED HOW WE DO COMPUTING, AND WE ARE GOING TO WORK WITH MEDIATEK IN ALL THESE DIFFERENT IDEAS. ED: RICK, THE CUSTOMER BUILDS THEIR OWN ACCELERATOR.
8:01 THEY DON'T NEED TO REINVENT THE REST OF THE ARCHITECTURE. BUT FROM MEDIATEK'S PERSPECTIVE, IT IS WORTH SAYING, WHAT IS THE PITCH TO YOUR CUSTOMERS ON THE VALUE OF DOING THIS WITH NVIDIA? RICK: THANK YOU FOR THE OPPORTUNITY. I WANT TO THANK NVIDIA AND JENSEN FOR HAVING THE CONFIDENCE IN MEDIATEK. AND FOR US, I BELIEVE IF YOU LOOK AT THE WHOLE AI COMPUTING STOCK FROM THE VERY TOP FROM THE HYPERSCALERS TO THE MID END OF THE ENTERPRISE DATA CENTERS, A NEW COST TO WHAT JENSEN JUST DESCRIBED, TO THE DESKTOP FOR THE AI APPLICATIONS.
9:04 I THINK THE COLLABORATION, THE CONVERSATION WE ARE HAVING WITH NVIDIA, WE SAW NVIDIA'S FUSION WILL ENABLE THROUGHOUT THIS COMPUTING STACK THE CUSTOMERS. THE IMPORTANT THING FOR THIS ERA OF AI, IT IS INCREDIBLY FAST-CHANGING. SO, IT IS CRITICAL THAT TOGETHER WE CAN ENABLE THE CUSTOMERS TO BUILD THE DATA CENTER, TO SCALE WITH HIGH SPEED, LIKE JENSEN ALWAYS LIKES TO SAY, THE SPEED OF LIGHT. AND WE WILL WORK WITH OUR CUSTOMERS WITH TREMENDOUS FLEX ABILITY.
9:48 SO, THAT IS PART OF THE ESSENCE OF THE COLLABORATION WITH NVIDIA. ED: RICK, YOU SAID YOUR AI CHIP BUSINESS WOULD BE ABOUT $2 BILLION THIS YEAR. BUT IT WOULD ACCELERATE TO GET 15% IN AN ADDRESSABLE MARKET OF $80 BILLION NEXT YEAR. DOES THIS ARRANGEMENT WITH JENSEN AND NVIDIA HELP YOU TO ACCELERATE THE GROWTH IN THAT BUSINESS? RICK: WE CERTAINLY EXPECT THAT TO HAPPEN. IT WILL TAKE A LITTLE TIME BECAUSE WE ARE NOW GETTING STARTED BUILDING JENSEN'S LATEST VERSION THAT YOU JUST MENTIONED.
10:31 I THINK IT WILL PROVIDE THE POTENTIAL CUSTOMERS WITH A TREMENDOUS VEHICLE TO ENABLE FAST TIME-TO-MARKET. AND THAT IS A KEY FOR TODAY'S WORLD. FAST TIME-TO-MARKET. ED: JENSEN, YOU'RE MAKING A 3.5 MILLION DOLLAR INVESTMENT IN MEDIATEK THROUGH THE PURCHASE OF CONVERTIBLE BONDS. WHY? JENSEN: THIS IS ONE OF THE LARGEST PARTNERSHIPS WE HAVE. WE ARE BUILDING, AS I MENTIONED, MULTIPLE GENERATIONS OF EDGE AI AND PC CHIPS.
11:07 AND OUR CHIPS ARE GPU'S AND ARE CONNECTED TO DIE TO DIE WITH MEDIATEK'S SOC'S. THEY'RE WORKING WITH US ON MULTIPLE GENERATIONS SO WE CAN CONNECT OUR GPU'S TO THEM. THIS NEW PRODUCT LINE WE CALLED DGS SPARK AND RTX SPARK FOR PC'S. IT IS A MAJOR INVESTMENT FOR US. WE HAVE A COMMITMENT TO THE ENTIRE PC INDUSTRY. THIS PARTNERSHIP EXPANDS UPON THAT. THIS PARTNERSHIP, THIS INVESTMENT ALSO FORMALIZES THE PARTNERSHIP THAT WE HAVE IN BUILDING AI FACTORIES. AS YOU KNOW, TODAY'S AI FACTORIES IS NOT JUST THE GPU. IT IS GPU'S AND SCALE UP SWITCHES AND IT SCALE OUT SWITCHES.
11:47 THE AMOUNT OF NETWORKING NECESSARY, THERE ARE FIVE DIFFERENT TYPES OF NETWORKING NECESSARY TO BUILD OUT AN ENTIRE FACTORY. NOT TO MENTION THE NVIDIA CPUS. THIS PARTNERSHIP ALLOWS MEDIATEK TO PLUG DIRECTLY INTO THAT ENTIRE AI FACTORY PLATFORM. SO, WHEREVER WE HAVE NVIDIA IN THE CLOUD ALREADY, WHICH WE ARE IN ABOUT EVERY CLOUD, WE NOW HAVE THE OPPORTUNITY USING EXACTLY THE SAME AI FACTORY ARCHITECTURE TO PLUG IN MEDIATEK SPU'S.
12:21 THIS IS A MASSIVE ENGINEERING ALIGNMENT BETWEEN OUR TWO COMPANIES. WE HAVE BEEN WORKING WITH MEDIATEK FOR A LONG TIME. I HAVE KNOWN RICK FOR 25 YEARS. WE HAVE SO MUCH CONFIDENCE IN THIS PARTNERSHIP THAT WE WANTED TO MAKE AN INVESTMENT INTO MEDIATEK. OF COURSE, MEDIATEK IS IMMENSELY PROFITABLE AND, INCREDIBLY SUCCESSFUL ALREADY SO THE OPPORTUNITY TO BE ABLE TO MAKE THIS INVESTMENT IS A GREAT PLEASURE FOR US. ED: YOU HAVE ALREADY FIELDED SOME QUESTIONS ABOUT CIRCULAR FINANCING AND YOU AND COLETTE, YOUR CFO, ARE PRETTY CLEAR YOU SEE IT DIFFERENTLY TO HOW THE WORLD INTERPRETS.
13:01 IN THIS CASE, YOU'RE MAKING INVESTMENT INTO A PARTNER AS OPPOSED TO INDIRECT CUSTOMER. WHY IS THIS OR IS THIS NOT CIRCULAR FINANCING? JENSEN: THIS IS NOT CIRCULAR BECAUSE OBVIOUSLY THEY DO THEIR OWN BUSINESS AND WE DO OUR OWN BUSINESS. AND MEDIATEK IS ALREADY INCREDIBLY PROFITABLE, INCREDIBLY SUCCESSFUL. THEY ARE THE WORLD'S BEST SOC MAKER. THEY MAKE MORE SOC'S THAN ANY COMPANY IN THE WORLD. IT IS A GREAT PLEASURE FOR US TO INVEST IN A TECHNOLOGY COMPANY IN TAIWAN.
13:36 IT IS A GREAT PLEASURE FOR US TO INVEST IN MEDIATEK. OF COURSE, THE INVESTMENT IS GROUNDED ON A DEEP PARTNERSHIP THAT WILL BE MULTIPLE YEARS. THE ROADMAP WE ARE EXECUTING ON RIGHT NOW IS NOT ONE OR TWO YEARS, IT IS A DECADE-LONG. SO, THIS PARTNERSHIP IS EXTREMELY IMPORTANT TO US AND WE WANT TO MAKE SURE WE DEMONSTRATE EVERY OPPORTUNITY, EVERY TAKE, EVERY OPPORTUNITY TO DEMONSTRATE THE IMPORTANCE OF IT, THE SERIOUSNESS WE TAKE IT, THE CONFIDENCE WE HAVE IN THE PARTNERSHIP AND THE INVESTMENT WE ARE MAKING DEMONSTRATES THAT. BUT ULTIMATELY, THIS IS GOING TO BE A PHENOMENAL INVESTMENT FOR US. IT'S GOING TO GENERATE INCREDIBLE RETURNS. I HAVE EVERY CONFIDENCE. ED: IN JULY, MEDIATEK SAID IT WOULD USE ITS BOND PROGRAM, 5 MILLION DOLLARS OF DOLLAR BONDS, BASICALLY TO SUPPORT AND GROW THE SUPPLY CHAIN. EARLIER IN OUR CONVERSATION, YOU TALKED ABOUT THE BENEFIT OF WORKING WITH NVIDIA AND FUSION IS SPEED TO MARKET. WHAT DO YOU PLAN TO DO WITH THE PROCEEDS? WHEN YOU TALK ABOUT SUPPLY CHAIN, DO YOU NEED TO DO MORE ON TAIWANESE RICK: I THINK THE BACK IN END OF JULY, WE WOULD NOT -- WE WERE NOT ABLE TO DISCUSS STRATEGIC INVESTMENT PART OF THE BANK.
15:04 BUT THE PROCEEDS I THINK WILL BE FOR MULTIPLE PURPOSES. SUPPLY CHAIN DEFINITELY BEING ONE OF THEM AND THE SUPPLY CHAIN IS GLOBAL. WHEREVER NEEDED TO ENHANCE, ENABLE THE CUSTOMERS. BUT ON THE OTHER HAND, I THINK AS JENSEN SAID SO EL QUEPTLY -- ELOQUENTLY, THE INVESTMENT IN THE TECH COMPANY IS A VERY STRONG TECH COMPANY.
15:35 WE WILL DEFINITELY INVEST IF ANYTHING MORE INTO THE TECHNOLOGY, OUR CAPABILITY TO MAKE THE CHIP IN THE I.P. FOR INTERCONNECTS IN PACK PACKAGING. I THINK THE KEY HERE IS REALLY THE COLLABORATION AGREEMENTS THAT WE HAVE BUILT AND EXPENDED WITH NVIDIA AS DESCRIBED IN OUR PRESS RELEASE.
16:07 THOSE ARE THE KEY THINGS. HAPPEN BETTER AND FURTHER. ED: JENSEN, ON THE EARNINGS CALL LAST WEEK, WE TALKED ABOUT WITH CONFIDENCE, RIGHT, THAT THE G.P.U. BASED ARCHITECTURE HAS SUPERIOR ECONOMICS. YOU WERE TALKING ABOUT THAT IN THE CONTEXT OF THE FRONTIER LABS LARGELY BECAUSE YOU WERE ASKED ABOUT CUSTOM SILICON. THE SIMPLE TERMS OF IT IS THE FUSION MAKES IT EASY TO TAKE X.P.U. AND DROP IT INTO THE DATA CENTER.
16:37 THAT WOULD SHOW THAT NVIDIA DOES SEE X.P.U. COMING INTO THE MARKET, THE DIFFERENCE OF YOUR THINKING THIS WEEK TO WHAT YOU OUTLINED LAST WEEK. JENSEN: I SEE X.P.U.’S IN THE MARKET. IT’S NOT COMING INTO THE MARKET. IT’S IN THE MARKET. LOOK, AN X.P.U. IS A SPECIALIZED CHIP. NVIDIA’S G.P.U. IS A GENERAL PURPOSE ACCELERATOR. WE ACCELERATE THE ENTIRE LIFE CYCLE OF A.I. FROM DATA PROCESSING, WHICH DATA PROCESSING TO PRETRAINING, TO POSTTRAINING, TO AGENTIC INFERENCING.
17:15 WE ACCELERATE EVERY SINGLE A.I. MODEL IN THE WORLD FROM CLOSED MODELS, EVERY CLOSED MODEL, EVERY OPEN MODEL, VIDEO MODELS, LAJ WAJ -- LANGUAGE MODELS, PHYSICS MODELS, ROBOTICS MODELS. WE LITERALLY ACCELERATE EVERY SINGLE AREA OF A.I. THAT EXPLAINS WHY IT IS THAT WE ARE THE MOST FUNGIBLE AND MOST DURABLE AND THEREFORE THE MOST RENTABLE G.P.U., MOST RENTABLE COMPUTE INFRASTRUCTURE IN THE WORLD. WE ARE IN EVERY CLOUD.
17:45 WE ARE AT THE EDGE. SO WE ARE ABLE TO ADDRESS MARKETS THAT FRANKLY NOBODY ELSE CAN BECAUSE OF THE ARCHITECTURE OF OUR COMPANY AND THE ENTIRE FULL STACK A.I. FACTORY PLATFORM THAT WE HAVE. HOWEVER, THERE ARE CUSTOMERS AND THEY’RE VERY IMPORTANCE PARTNERS OF MINE AS WELL, CUSTOMERS OF RICK’S AND PARTNERS OF MINE, THESE ARE INCREDIBLY IMPORTANT TO US. IF THEY WOULD LIKE TO PUT A SPECIALIZED X.P.U. INTO A DATA CENTER, WHY NOT MAKE IT EASIER FOR THEM TO CONNECT IT TO THE NVIDIA INFRASTRUCTURE? AND SO THIS WAY IF THEY WOULD LIKE TO BUILD US SOMETHING, WE MAKE IT EASIER FOR THEM TO BUILD IT AND WE BENEFIT AS WELL. IT MAKES IT EASIER FOR EVERYBODY INVOLVED. SO IT’S NOT A QUESTION ABOUT IF ONE OR THE OTHER. THERE’S NO QUESTION NVIDIA’S FOOTPRINT IS THE LARGEST. THERE IS NO QUESTION WE ARE GROWING SHARE IN CLOSED MODELS AND OPEN MODELS.
18:45 WE ARE GROWING SHARE ACROSS THE ENTIRE A.I. OPPORTUNITY, AND SO WE ARE NOT INTIMIDATED BY THIS. WE ARE IN FACT WELCOMING IT AND OPENING OUR PLATFORMS SO THEY CAN CONNECT X.P.U.’S INTO IT. ED: WE ARE LIVE ON BLOOMBERG TELEVISION AND ON BLOOMBERG RADIO, SPEAKING WITH NVIDIA C.E.O. JENSEN HUANG AND LIH-SHYNG TSAI. RICK, I GUESS THE ANSWER IS NO, BUT IS THERE A CASE STUDY OF AN ASIK CUSTOMER THAT YOU CAN TAKE US THROUGH IN HOW YOU THINK THE CUSTOMER WILL RESPOND TO THIS ANNOUNCEMENT THIS MORNING, HOW THEY MIGHT MOVE IN REACTION TO THE IDEA THAT THE LINKED FUSION PROVIDES AN OPPORTUNITY FOR THEM TO MOVE FASTER? RICK: WE ARE ENGAGING WITH SOME CUSTOMERS THAT WE ARE ACTUALLY KIND OF GO TO MARKET WITH OUR PARTNERS, NVIDIA. AND I THINK THE ANNOUNCEMENT TODAY WILL FURTHER STRENGTHEN THEIR CONFIDENCE IN THE RELATIONSHIP WITH THIS STRONG BOND BETWEEN NVIDIA AND MEDIATEK. SO THEY KNOW THEY CAN COUNT ON US IF THEY GO FOR THIS UNVEILING FUSION OF BUSINESS MODEL. LOOK, AS JENSEN SAID JUST NOW, THERE ARE DIFFERENT NEEDS FOR DIFFERENT CUSTOMERS, AND THE A.I. MARKET, COMPUTE MARKET IS ENORMOUS.
20:20 SO THERE ARE DIFFERENT CUSTOMERS NEEDING SMALLER AMOUNTS OF COMPUTING POWER, BUT THEY DO WANT TO HAVE DIFFERENTIATION IN THEIR OWN OFFERING. AND SO I THINK THIS UNVEILING FUSION AGAIN WILL ACCELERATE THEIR GO TO MARKET CAPABILITY. THAT WILL BE BENEFICIAL FOR THEM, FOR NVIDIA, AND FOR MEDIATEK. ED: JENSEN, WHAT I FIND INTERESTING -- JENSEN: IN A LOT OF WAYS, THIS WHOLE THING STARTED BECAUSE OF CUSTOMER REQUEST. AS YOU KNOW, THERE ARE ALREADY CUSTOMERS THAT HAVE COMMITTED TO FUSION. BUILDING THE S.P.U.
20:59 IS VERY HARD AND THERE IS NO QUESTION WITH HA -- ABOUT THAT. WITH THE PARTNERSHIP WITH MEDIATEK, MEDIATEK CAN HELP CUSTOMERS BUILD AMAZING X.P.U.’S. HOWEVER, INSIDE AN A.I. FACTORY, IT INCLUDES FIVE DIFFERENT TYPES OF NETWORKING TECHNOLOGY. OF COURSE, THE C.P.U. AND WE NOW MAKE IT POSSIBLE FOR ALL OF THAT TO COME TOGETHER REALLY EASILY. AND SO A LOT OF CUSTOMERS ARE ASKING FOR THIS AND THEY WANT TO ACCESS THE N.V. LINK TECHNOLOGY BECAUSE IT’S COMPLETELY REVOLUTIONARY AND IT’S INCREDIBLY HARD TO DO.
21:31 WE ARE IN THE SIXTH GENERATION OF DOING SO, SO THIS IS REALLY, REALLY DRIVEN BY CUSTOMER REQUEST AND I THINK IT MAKES A LOT OF SENSE AND IT’S GREAT FOR BOTH OF US. ED: JENSEN, THE PART WE HAVEN’T TALKED ABOUT IS MVHBN. YOU ARE CLEAR THE BOTTLENECK IS IN MEMORY, PRICING AND SUPPLY. WHAT IS THE PITCH THERE ON WHAT THAT ALLOWS AN X.P.U. BASED ARC TECH TOWER TO DO? A LOT OF PLATFORMS MIGHT BE SRAM BASED. NO ONE HAS ASKED YOU FOR QUITE SOME TIME. WHAT IS THE SORT OF PERCENTAGE OR PROPORTION OF CONTENT OF THE SERVER DESIGN NVIDIA IS PUSHING ON ITS LATEST GENERATION PLATFORM?
22:17 AND HOW THAT KIND OF CHANGES IN THE X.P.U. CASE STUDY WHERE YOU HAVE A HYBRID A.I. FACTORY ESSENTIALLY. JENSEN: INSIDE THE GIGAWATT IF WE WERE TO EXTRAPOLATE, IN THE GIGAWATT HOPPER WAS $18 BILLION OF ECONOMICS FOR NVIDIA PER GIGAWATT. GRACE BLACKWELL IS ABOUT 25. THE VERA REUBEN GENERATION IS 40 PLUS BILLION DOLLARS PER GIGAWATT OF TOTAL NVIDIA COMPUTE ECONOMICS. AND THE REASON FOR THAT IS BECAUSE WE HAVE BEEN EXPANDING BEYOND THE G.P.U.
22:55 TO ONE TYPE OF SWITCH AFTER ANOTHER TYPE OF NETWORKING, AND NOW THE AMOUNT OF CHIPS -- THERE’S LIKE SEVEN DIFFERENT TYPES OF NVIDIA CHIPS THAT HAS TO GO INTO AN A.I. FACTORY. AN X.P.U. WOULD BE A REPLACEMENT OF ONE OF THOSE. MY SENSE IS THAT WE WILL CONTINUE TO BE IN EVERY SINGLE CLOUD. WE WILL CONTINUE TO BE IN EVERY SINGLE ASMGHT -- A.I. FACTORY. SOME OF THOSE MIGHT BE AUGMENTED WITH X.P.U.’S AND SO IN THOSE CASES, NVIDIA’S NETWORKING, NVIDIA’S SWITCHING WOULD ALSO HAVE AN OPPORTUNITY TO PARTICIPATE.
23:30 WE MEAK IT -- MAKE IT EASIER FOR THE CUSTOMERS TO BE ABLE TO EXTEND OUT THEIR A.I. FACTORY USING EXACTLY THE SAME SYSTEM ARCHITECTURE AND NETWORKING ARCHITECTURE. IN THE CASE OF MEDIATEK, IT ALLOWS MEDIATEK TO OFFER AN END-TO-END SOLUTION THAT IS COMPLETE. THAT X. U. OTHERWISE WOULD HAVE TO GO AND SOLVE N.V. LINK SWITCHING PROBLEM, A BUNCH OF ETHERNET SWITCHING, SCALE OUT, SCALE UP, SCALE ACROSS, SCALE IN. THERE ARE SO MANY DIFFERENT TYPES OF NETWORKING TECHNOLOGIES THAT HAVE TO COME TO BEAR AND WE OFFERED THE ENTIRE THING. SO BETWEEN US AND MEDIATEK, IF A CUSTOMER WANTS TO BUILD X.P.U.’S THEY NOW HAVE AN ENTIRE SOLUTION AS WELL. SO OUR OPPORTUNITY WILL CONTINUE TO GROW IN THESE A.I. FACTORIES. ED: RICK, VERY QUICKLY, WHAT IS THE BIGGEST BOTTLENECK FOR MEDIATEK RIGHT NOW? RICK: I THINK SUPPLY CHAIN DOES PRESENT CHALLENGES, YOU KNOW, NOT JUST H.B.M., GO DOWN TO -- ETC., BUT AGAIN BEING IN TAIWAN, ALMOST LIKE THE CENTER OF THE A.I.
24:52 INFRASTRUCTURE ECOSYSTEM, REALLY HELPS. WE ALSO WORK CLOSELY WITH NVIDIA, WITH OUR CUSTOMER. IT’S TOUGH, BUT I THINK -- I REALLY SEE BLUE SKIES IN THE FUTURE. JENSEN: NVIDIA’S ECOSYSTEM IS NOW PART OF MEDIATEK’S SUPPLY CHAIN, AND TO MEDIATEK’S X.P.U. IS PART OF OUR SUPPLY CHAIN AND SO IN A LOT OF WAYS, BOTH OF US EXPANDED OUR SUPPLY CHAIN IN THIS PARTNERSHIP.
25:24 ED, IN ALL THAT, IT’S EARLY FOR ME. HERE WE ARE, I FORGOT TO ANSWER YOUR QUESTION. OUR NEXT GENERATION H.B.M. IS A CUSTOM H.B.M. AND THE H.B.M. STACKS ARE BUILT ON AN NVIDIA CUSTOM BASED LAYER. THAT BASE LAYER WE HAVE EXTENDED TO OUR PARTNERS. THE REASON FOR THAT IS BECAUSE THAT NVHBM HAS TO BE STACKED WITH THE X.P.U. DYE INTO A PACKAGE. AND THAT PACKAGE AND THE H.B.M.’S ARE INCREDIBLY COMPLEX. SO WE HAVE EXTENDED THAT TO MEDIATEK. WE HAVE EXTENDED IT TO AMAZON AS WELL AND THEY’RE ONE OF THE FIRST PARTNERS BUILDING IT WITH US. SO THIS ALLOWS US TO AGO HE ARE -- AGGREGATE ALL OF OUR SUPPLY CHAIN INTO SOMETHING THAT IS MUCH MORE IF YOU WILL STANDARD, AND THEY’LL BE ABLE TO BENEFIT FROM OUR LARGE INSTALL BASE AND OUR LARGE SUPPLY CHAIN AND WILL BE ABLE TO BENEFIT FROM THEIRS. ED: NVIDIA C.E.O.
26:30 JENSEN HUANG ALONGSIDE MEDIATEK C.E.O. LIH-SHYNG TSAI -- RICK TSAI. NVIDIA SHARING ON THE DATA CENTER ARCHITECTURE. THANK YOU BOTH VERY MUCH, IN PARTICULAR TO YOU RICK, LATE IN TAIWAN. THAT DOES IT FOR THAT CONVERSATION. YOU ARE LIVE ON BLOOMBERG TELL VIG AND BLOOMBERG RADIO. "OPEN INTEREST" CONTINUES SHORTLY. THIS IS BLOOMBERG. ♪ >> SECONDS UNTIL YOUR TRADING DAY BEGINS.
27:08 I'M IN NEED -- I'M DANI BURGER. WE START OF THE LAST DAY OF AUGUST DOWN ONLY ABOUT ONE THIRD OF 1% FOR THE S&P. NASDAQ DOES BETTER. ABOUT THE SAME LEVEL AS THE OTHER ONES. OPENING BELLS OF THE STOCK EXCHANGE, VANGUARD BRINGING THE BELL. 50 YEARS OF THEIR LAUNCH OF THEIR BROAD ETF. THEY ARE CELEBRATING THAT. IN THE NASDAQ THE 25TH ADDITION OF THE CHICAGO INNOVATION AWARD SO THAT'S VERY EXCITING. HOLDING UP THERE MAY BE SOMETHING INNOVATIVE GETTING AN AWARD. WE ARE LOOKING AT NVIDIA OPENING BELL YOU ARE JUST LISTENING TO A CONVERSATION WITH THE MEDIATECH CEO AND JENSEN HUANG.
27:55 NVIDIA UP 6/10 OF 1%. DEEPENING ITS TIES WITH A TAIWANESE CHIPMAKER. MEDIATECH WITH A STAKE IN THE COMPANY MORE CUSTOM -- MORE COMPANIES USING THE PLATFORM. WE HEAR FROM JENSEN HUANG. ONE TO BE MORE COMPANIES INTO THE ECOSYSTEM WHICH ALSO FOLLOWS THE BIG RISK EVENT OF NVIDIA'S EARNINGS. SO WE GOT THROUGH THAT, A SPEECH AT JACKSON HOLE FROM THE CHAIR OF THIS FEDERAL RESERVE. WHAT COMES NEXT, JOINING US IS MARIAN BARTEL'S. THE TRUNK OF HER EARNINGS JACKSON HOLE WE HAVE A LOT OF ECONOMIC DATA AND A SPEECH FROM WALLER. HOW ARE YOU ASSESSING WHERE THIS EQUITY MARKET GOES FROM HERE.
28:38 WHAT ARE THE CATALYST TO HAVE YOUR EYE ON? >> I'VE ALWAYS SAID IT'S ALL ABOUT HER EARNINGS. INTEREST RATES ARE AN IMPORTANT COMPONENT TO THE ECONOMY THAT HELPS TO ROOT -- PRODUCE THE EARNINGS. BUT WE ARE STILL IN A VERY STRONG ECONOMY AND THE EARNINGS AT CORPORATE AMERICA IS PUTTING OUT ACROSS THE BOARD NOT JUST TECHNOLOGY IS REALLY ASTOUNDING. THE EARNINGS ESTIMATES FOR AN ANALYST CONTINUE TO GO UP. SO THAT CONTINUES OR I CONTINUE TO BELIEVE THAT WITH THE EARNINGS POWER WITHIN THE MARKET, AND THE STRENGTH OF THE ECONOMY, OF THE MARKETS WILL CONTINUE TO MARCH HIGHER. IT DOESN'T MEAN THAT WE DON'T HAVE SOME VOLATILITY IN SOME PULLBACKS ALONG THE WAY, BUT I THINK BY YEAR-END WE WILL SEE HIGHER HIGHS IN THE S&P 500.
29:30 >> WITH U.S. PAYROLL GROWTH BACK ON TRACK AND FED CHAIR WARSH REALLY CALLING AT FULL EMPLOYMENT AND INFLATION IS SHOWING US SLIGHTLY TO GO DOWN. WHAT DO YOU THINK WILL POTENTIALLY DERAIL AN ACTUAL RATE HIKE IN SEPTEMBER? MARY ANN: I DON'T KNOW IF IT WILL DERAIL A RATE HIKE, BUT LET'S SAY WE DO GET A RATE HIKE. EVERYONE SEEMS TO FOCUS ON WHAT WE GET A RATE HIKE. LET'S LOOK AT WHAT HAPPENS IF WE GET A RATE HIKE. PROBABLY NOT MUCH OF ANYTHING.
29:58 IF ANYTHING THE FIXED INCOME MARKETS WILL PROBABLY CALM DOWN A LITTLE BIT. THERE'S A VERY OLD RULE OF THUMB ON WALL STREET THAT SAYS THREE STEPS AND A STUMBLE WHICH SAYS IF RATES GO UP THREE TIMES, THEN YOU GET A NEGATIVE IMPACT. THE FIRST COUPLE RATE HIKE'S DON'T ACTUALLY EVER HAVE AN IMPACT ON THE MARKETS. I THINK THERE'S WAY TOO MUCH FOCUS ON THE NEXT MOVE IN INTEREST RATES AND NOT ENOUGH FOCUS ON WHERE EARNINGS POWER CONTINUES TO GO. NOT JUST INTO THIS YEAR BUT NEXT YEAR. DANI: YOU POINT OUT THAT MODERN INFLATION AS HISTORICALLY ESPECIALLY COMING OUT OF COVID FOR EQUITY MARKETS.
30:41 NOT ONLY DO THEY PRESERVE MARGINS THEY EXPANDED THEM. THEY HAD PRICING PATTERN. JUST PRICING POWER STILL EXIST ESPECIALLY IN THE CONSUMER SECTOR. WHAT WE'VE SEEN QUITE A VARIETY OF RESULTS THIS EARNINGS SEASON. MARY ANN: I STILL THINK THERE'S EARNINGS POWER. AND WHAT WE CALL IT IS WE LOOKED AT INFLATION AND SAID THERE'S THREE MAJOR CYCLES TO INFLATION. THERE IS THE INFLATION BOOST, THERE IS THE INFLATION SQUEEZE AND THE INFLATION BUST. AND DURING THE EARLY PHASES OF INFLATION. BUSINESSES CAN RAISE THEIR PRICES AND THE CONSUMERS ARE ABLE TO PAY FOR IT.
31:19 WE ARE REALLY IN THAT, I STILL THINK WE ARE IN THAT PHASE. SO I CONTINUE TO THINK ALTHOUGH WE HAVE SOME INFLATION AND IT'S COME DOWN. IT'S BEEN VERY GOOD FOR CORPORATE EARNINGS. YOU REALLY ARE GOING TO HAVE A SIGNIFICANTLY HIGHER INFLATION BEFORE IT REALLY STARTS TO IMPACT MARGINS. I DON'T EXPECT THAT THIS YEAR OR NEXT YEAR. BUT THAT MAY HAPPEN IN THE NEXT THREE TO FIVE YEARS. >> ON FRIDAY, KEVIN WARSH BETRAYED THE ECONOMY IN GOOD HEALTH BUT DID SINGLE OUT AGRICULTURE AND HOUSING AS SECTORS THAT MIGHT BE SEEING SOME STRAIN.
31:57 SO FROM AN INVESTOR'S PERSPECTIVE SHOULD YOU BE THINKING ABOUT ROTATING OUT OF THOSE SECTORS OR TO SOME OF THE STRONGER SPENDING WE'VE BEEN SEEING ACTUALLY PROTECT IN THAT CASE. MARY ANN: WITH HOUSING HOPEFULLY YOU HAVEN'T BEEN INVESTING. BECAUSE IT HASN'T BEEN WORKING AND IN TERMS OF AGRICULTURE. THAT'S COMMODITIES. IN GENERAL THE COMPLEX HAS BEEN DOING VERY WELL. WE ARE STARTING TO SEE A RETURN TO PRICES IN THE PRECIOUS MARKETS IN TERMS OF GOLD AND SILVER.
32:32 YOU KNOW ENERGY OBVIOUSLY HAS BEEN ELEVATED AND THOSE ALL SIGNAL THAT WE HAVE EARLY PHASES OF INFLATION. IN FACT, I LOVED HOW CHAIR WARSH OPENED UP HIS STATEMENT SAYING THAT HE'S GOING ON A HIKE. AND HE KIND OF GAVE US TWO PATHS OF A HIKE BASICALLY AN AGGRESSIVE ONE AND A SOFT ONE. SO I REALLY WANT TO CONTINUE TO HEAR HIS COMMENTARY BECAUSE HE'S REALLY PUTTING SOME LANGUAGE INTO HIS SPEECHES THAT ARE STARTING TO GIVE US BETTER GUIDANCE ON HIS THOUGHT PROCESS.
33:07 DANI: YOU DON'T THINK I WAS JUST A FUEL THE ALGORITHMS INTO THE METAPHORICAL HIKES. MARIANNE, WE ARE DOWN ONE HALF PERCENT SINCE WE REACHED A HIGH LAST MONTH. YOUR BREAD-AND-BUTTER ARE TECHNICALS. WHAT ARE THEY SHOWING YOU IN TERMS OF WHERE THIS MARKET PRICING STANDS? MARY ANN: OUR YEAR-END TARGET I RAISED IN JULY BECAUSE THE TRENDS OF THE MARKET WERE MADE VERY STRONG. SO WE ARE AT 8220 FIVE. AND THAT WAS A COMBINATION OF TECHNICALS AND THE CONTINUED IMPROVEMENT IN EARNINGS. BASED ON MY YEAR-END FORECAST I CONTINUE TO THINK THE TRENDS WITHIN THE MARKET ARE HIGHER.
33:46 WHAT I DO LIKE IS THE BREATH OF THE MARKET CONTINUES TO EXPAND. THE BREATH OF THE MARKET CONFIRMED WITHIN THE MARKETS. AND I LIKE THAT IT'S NOT JUST A GROWTH MARKET ANYMORE, IT IS NOT JUST TECH. YOU SEEN A LOT OF POCKETS OF VALUE LIKE HEALTH CARE AND FINANCIALS DO WELL. THE BREATH OF THE MARKET CONFIRMS THE OVERALL TREND WITHIN THE MARKETPLACE. >> YOU MENTIONED VOLATILITY IN THE POTENTIAL FOR THAT EARLIER. ON FRIDAY WARSH PRETTY MUCH EXPLICITLY KILLED OFF POTENTIAL FOR FORWARD GUIDANCE. DO YOU THINK WE CAN ANTICIPATE JUST GENERALLY STRUCTURALLY HIGHER VOLATILITY IN THE MARKETS AND HOW DO INVESTORS POSITION FOR THAT? MARY ANN: BASICALLY I HAVE BEEN SAYING WE HAVE VOLATILITY AND VOLATILITY THAT'S NOT NORMAL. A LITTLE BIT ACCESS.
34:39 HOW DOES AN INDIVIDUAL INVESTOR GET THROUGH THE PERIODS OF VOLATILITY, THEY HAVE TO HAVE PATIENCE. YOU HAVE TO HAVE A WELL DIVERSIFIED PORTFOLIO AND A LOT OF PATIENCE IN ORDER TO WITHSTAND VOLATILITY. I HAVEN'T SAID HAVING A REALLY DIVERSE PORTFOLIO FOR A LONG TIME. IN THE SENSE THAT I HAVE BEEN VERY FOCUSED ON TECHNOLOGY, PARTICULARLY THE SEMI. NOW WE ARE SEEING A BREADTH OF OPPORTUNITY WITHIN THE MARKETPLACE. AND AGAIN YOU ARE SEEING PART OF THE COMMODITY COMPLEX, ON THAT WILL ALSO HELP DIVERSIFY SPECIFICALLY OLD WITHIN THE PORTFOLIO.
35:20 WE ALWAYS RECOMMEND THE PRIVATE MARKETS WHERE IT IS APPROPRIATE IN CLIENT ACCOUNTS. DANI: GREAT TO GET YOUR TAKE ON THIS MONDAY MORNING. SANCTUARY WEALTH'S MARY ANN BARTEL'S. DAY TRENDING LOWER AT ABOUT 4/10 OF A PERCENT. STOCKS ARE TRENDING LOWER THIS MORNING. THE GAINERS ON THE GREEN SIDE IT IS ENERGY. BASICALLY ONE OF THE ONLY INDEXES, WHAT ARE THE ONLY SECTORS HAVING A GOOD DAY IS THE PRICE OF OIL.
35:54 THE WAR IN IRAN AND THE RAIN SECURITY A CONNECTICUT WARFARE AND THE PRESIDENT WILL BE MEETING WITH OIL EXECUTIVES LIKELY OVER VENEZUELA. ALSO LIFTING THEM HIGHER. CROWDSTRIKE ONE OF THE BIGGER GAINERS TO ANNOUNCE IT. A PARTNERSHIP WITH GOOGLE. ON THE DOWN SIDE OF THINGS IT'S THE BIG CAP TECH STOCKS IT'S A HYPERSCALERS. YIELDS ARE MOVING HIGHER THIS MORNING, PERHAPS WEIGHING ON THESE LONGER DURATION EQUITIES. FOR THE MARKET WHEN YOU LOOK AT THE SECTORS IT IS JUST ENERGY. ONE OF THE ONLY ONES IN THE GREEN THIS MORNING. 2.6% IS THE GAIN WE ARE SEEING.
36:30 THIS HAS BEEN A SHINING PART OF THE MARKET NOT JUST IN SECTOR PERFORMANCE BUT ALSO EARNINGS. SOME OF THE BOND PROXIES NOT DOING AS WELL. COMMUNICATION SERVICES ALL AT THE BOTTOM OF THE LEDGER. COMING UP, SANDRA LANDING A MAJOR 10 YEAR WITH ALGAE ENERGY SOLUTION. WE TALK TO THE CEO AND ASK WHAT IT MEANS FOR U.S. LITHIUM SUPPLY PER YOUR WATCHING OPEN INTEREST. ♪ A CHECK ON YOUR EQUITY MARKET MORE THAN 10 MINUTES INTO YOUR TRADING DAY. PRESSURE FROM HIGHER OIL PRICES THEY ARE UP 3% AT $90 A BARREL JUST BELOW 91.
37:21 THE FRONT-END COMES IN AFTER IT MOVED HIGHER. PRESSURE ON THE LONG END CONSIDERING THE PRICE PUTTING PRESSURE ON THAT DOWN MORE THAN A FOURTH OF A PERCENT. LET'S HEAR FROM THE SELL SIDE. >> WE WILL KICK IT OFF OF ANALYST ACTION. UPGRADING DEER TO A BUY FROM HOLD SEEING SOYBEAN ECONOMICS GOING TO MEAN STRONGER MARGINS FOR FARMERS AND MORE DEMAND FOR EQUIPMENT. THE FIRM'S'S SHARES OVER THE CLEAREST EXPOSURE TO A NORTH AMERICAN AGRICULTURAL RECOVERY.
37:54 SHARES UP ABOUT 2% THIS MORNING. NEXT UP WE MOVED TO PG&E. THAT'S AFTER CALIFORNIA LAWMAKERS PROPOSE A WILDFIRE BILL THE LEAVES UTILITIES ON THE HOOK FOR DAMAGES. THE COMPANY HAS BEEN DOWNGRADED BY LEAST THREE. MIZUHO SANG THE BUILDING SHAREHOLDERS EXPOSED TO WILDFIRE COSTS AND BARCLAYS SAYS IT WILL EXTENDED TO THE NEXT YEAR. SHARES DOWN 19%. SO FAR. AND FINALLY OVER TO RETAIL. MARCUS UPGRADING ABERCROMBIE AND FITCH TO A BUY WITH STRONGER SALES AND WIDER MARGINS IN THE LATEST QUARTER. THE FIRM ALSO POINTS TO A BULLISH TECHNICAL TREND. SHARES DOWN A LITTLE BIT THIS MORNING.
38:44 >> IS THAT IMPLYING THAT I'M ABERCROMBIE FAN? I WAS IN ABERCROMBIE FAN. I WOULD BRAVE THE HORRIBLE COLOGNE IN THOSE STORES TO BUY A PAIR OF JEAN SHORTS THERE WAY TOO SHORT. >> ABSOLUTELY. >> THANK YOU SO MUCH. I'M SURE YOU HAD SOME ABERCROMBIE AND FITCH? >> ABSOLUTELY DABBLED. MAYBE I STILL DO. >> IT HAD A WHOLE REBRAND. THEY'VELET'S MOVE FAR AWAY FROM THE WORLD OF ABERCROMBIE & FITCH.
39:17 STANDARD LITHIUM MOVING CLOSER TO BECOMING A MAJOR U.S. LITHIUM SUPPLIER AFTER ANNOUNCING A DEAL WITH LG ENERGY SOLUTION, ONE OF THE BIGGEST BATTERY MAKERS ON THE PLANET. STARTING IN 2029, ITS ARKANSAS PLANET THIS PROJECT WILL PROVIDE 8000 TONS OF LITHIUM FOR A YEAR FOR A DECADE. JOINING US NOW IS THE LITHIUM STANDARD CEO DAVID PARK. EGGS WERE COMING IN THIS MORNING. YOU HAVE SOLD 90% OF YOUR PLANT'S LITHIUM. DOES THIS GIVE THE GREEN LIGHT FOR CONSTRUCTION? DAVID: WE HAVE TARGETED FROM DAY ONE TO SOLO ABOUT 80% OF OUR VOLUMES THROUGH LONG-TERM CONTRACTS.
39:56 WE ARE 90% OF THE WAY THERE TO THAT 80%. ALL IN, WE ARE ABOUT 75% DONE. WE BELIEVE IT GIVES US WHAT WE NEED TO HAVE A BANKABLE PROJECT AND LEADING TO A FINAL INVESTMENT DECISION WITH OUR PARTNER BY THE END OF THIS FALL. SALLY: TAKING A STEP BACK, WHY IS SECURING A DOMESTIC LITHIUM SUPPLY SO IMPORTANT? WHAT IS THE CURRENT STATE OF THE MARKET THERE? DAVID: CHINA CONTROLS ABOUT 70% OF LITHIUM CHEMICALS, THE LITHIUM CHEMICALS MARKET. THEY COULD WEAPONIZE THAT MARKET POSITION, MUCH LIKE THEY HAVE WITH RARE EARTH, AS WE HAVE SEEN OVER THE LAST COUPLE OF YEARS. BUILDING OUT A U.S.
40:46 SUPPLY CHAIN ALLOWS US TO CONTROL OUR DESTINY WITH LITHIUM. WITHOUT LITHIUM, THERE IS NO ENERGY STORAGE. WITHOUT ENERGY STORAGE, THERE IS NO ENERGY DOMINANCE. WITHOUT ENERGY DOMINANCE, THERE IS NO AI DOMINANCE. IT'S VERY IMPORTANT FOR US TO BUILD OUT. DANI: HOW FAR AWAY ARE WE FROM THAT WORLD WHERE YOU HAVE A RELIABLE DOMESTIC SUPPLY CHAIN FOR LITHIUM, ONE THAT CAN COUNTERACT CHINESE SUPPLY CHAINS? DAVID: WE HAVE A LOT OF WORK TO DO.
41:21 THIS ADMINISTRATION AND THE PRIOR ADMINISTRATION UNDERSTANDS THE IMPORTANCE OF BUILDING AT WESTERN SUPPLY CHAINS. CHINA HAS BEEN SUBSIDIZING THEIR INDUSTRY FOR DECADES, MANY BILLIONS OF DOLLARS TO SUBSIDIZE IT. CHINA ATTEMPTED TO MANIPULATE THE MARKET FOR THE LAST FEW YEARS TO KEEP PRICES THAT UNSUSTAINABLY LOW LEVELS TO ENSURE THAT PRODUCTION WOULD NOT COME ON IN THE WEST. THOSE OF US LOOKING TO DEVELOP PROJECTS HAVE HAD HARD BATTLES WITH THE BANKS AND EQUITY SOURCES TO TRY TO CONVINCE THEM THAT THESE PROJECTS MAKE SENSE.
42:02 TO BE ABLE TO UNDERWRITE THE FINANCING, HAVING LONG-TERM CONTRACTS WITH CREDIT WORTHY COUNTERPARTIES IS CRITICAL TO BE ABLE TO SECURE THE FINANCING FOR THE BILLING AND A HALF DOLLAR PROJECTS. SALLY: YOU MENTIONED A. HOW MUCH OF THIS DEMAND BOOM IS HITCHED TO THE AI EXPANSION, WHAT KIND OF CONCERNS DOES THAT GENERATE, GIVEN THERE ARE POTENTIAL HEADWINDS TO THE AI EXPANSION? DAVID: WHEN WE STARTED TO LOOK FOR CUSTOMERS, IT WAS IMPORTANT FOR US TO SECURE CONTRACTS FROM CUSTOMERS THAT REPRESENTED A DIVERSE PORTFOLIO OF APPLICATIONS.
42:39 SO, WE DIDN'T WANT TO PUT ALL OF OUR EGGS INTO ONE WESTERN AUTO OEM BASKET. WITH OUR CONTRACT WITH LG, WITH OUR OTHER CONTRACT, WE ARE EXPOSED TO ALL OF THE OTHER MARKET SEGMENTS. WE HAVE EXPOSURE TO ELECTRIC VEHICLES, EXPOSURE TO AI, DRONES, ROBOTICS, WARFARE OF THE FUTURE, A LOT OF THEM. ANSWERING YOUR QUESTION DIRECTLY, RIGHT NOW, WE ARE GETTING TAILWINDS IN THE MARKET DRIVEN BY DEMAND FOR BATTERY ENERGY STORAGE SYSTEMS TO SUPPORT THE ELECTRICITY BILL.
43:16 FOR DATA CENTERS. IT IS AN IMPORTANT SEGMENT, WE WANT EXPOSURE TO IT, BUT WE ALSO DON'T WANT ALL OF OUR EGGS IN THAT BASKET EITHER. DANI: WHEN IT COMES TO SECURING THE SUPPLY CHAINS AND GETTING THE BACKING FROM BANKS THAT YOU NEED FROM YOUR FINANCING, HOW IMPORTANT IS IT NOT TO JUST HAVE A U.S. GOVERNMENT ON BOARD, BUT GLOBAL GOVERNMENTS, TOO? IT IS G20 THIS WEEK IN THE CAROLINAS, WE EXPECT TO HEAR FROM THE TREASURY SECRETARY WHO WILL SAY, COUNTRIES, NEED TO CHANGE YOUR TERMS OF TRADE WITH CHINA, STOP ACCEPTING THEIR DUMPING. HOW IMPORTANT IS IT TO HAVE GLOBAL LEADERS PUSH BACK AGAINST CHINA AND THEIR CHEAP LITHIUM THEY ARE PUTTING INTO THE WATER SUPPLY SYSTEM? DAVID: IT'S VERY IMPORTANT. YOU HAVE SEEN THIS ADMINISTRATION TAKE A LOT OF FOCUS ON TRYING TO PUT IN PLACE, I BELIEVE, 55 DIFFERENT TRADE DEALS WITH THE SPEC TO CRITICAL MINERALS TO MAKE SURE THAT DUMPING WAS NOT HAPPENING.
44:21 IT'S CRITICALLY IMPORTANT BECAUSE THERE ARE SOME BAD ACTORS IN THE MARKET. ONE BAD ACTOR IS CHINA, WHO IS TRYING TO CONTROL THE SYSTEM FOR STRATEGIC REASONS. IT IS CRITICAL. I GET SKEPTICAL OF VERY LARGE 55-PARTY DEALS. VERY HARD TO EXECUTE, TAKES A LOT OF TIME. BUT I THINK IT IS WELL WORTH THE EFFORT. DANI: WE HAVE TO LEAVE IT THERE. APPRECIATE YOU JOINING US.
44:52 DAVID PARK OF STANDARD LITHIUM. ANTHROPIC IS ON THE VERGE OF FILING WHAT COULD BE THE BIGGEST -- ONE OF THE BIGGEST IPO'S EVER. THAT IS NEXT. THIS IS BLOOMBERG. ♪ DANI: GO CHECK ON HER EQUITY MARKET THIS MORNING, 20 MINUTES INTO YOUR TRADING DAY. WE ARE STILL FEELING THE PRESSURE OF HIGHER ENERGY PRICES. ENERGY IS ONE OF THE ONLY SECTOR DOING WELL IN THE S&P SO FAR THIS MORNING.
45:28 NASDAQ DOES NOT PERFORM. RUSSELL 2000 AND DOING EVEN WORSE BECAUSE OF WHAT INTEREST RATES ARE DOING THIS MORNING. LOOK AT THE MOVE ON THE 10-YEAR, UP FOUR BASIS POINTS. BRENT CRUDE NOW ABOVE $91 A BARREL. NVIDIA SIGNING AN AGREEMENT WITH MEDIATECH THIS MORNING. APPLE SHARES ARE DOWN. THE ENERGY COMPLEX DOES WELL BECAUSE OF THE PRICE OF OIL AND WHAT IS HAPPENING IN VENEZUELA, AN AGREEMENT THAT WE NEED TO SORT THROUGH, WHAT EXACTLY IT MEANS. TAKE-TWO INTO A NEWCOMER SHARES ARE DOWN 7%. THEY RELEASED A VERSION OF GRAND THEFT AUTO. PRODUCER SAID IT WAS 30 MINUTES LONG. SPACEX SHARES ARE UP 0.4%. WE ARE EXPECTING AT ANY MOMENT A FILING FOR ANTHROPIC'S IPO. THEY WERE SET TO DO IT BY THE END OF THE MONTH. BAILEY LIPSCHULTZ JOINS US NOW.
46:30 ARE WE GOING TO GET THIS THING TODAY, WHAT IS GOING ON? BAILEY: WE DID REPORT AT THE END OF THE MONTH, YOU ARE HOLDING ME TO MY REPORTING. THAT IS WHY WE HEDGE OUR VERBIAGE. WE USE, AS SOON THE END OF THE MONTH. DANI: IT COULD BE TODAY, THIS WEEK, IT COULD BE SOON. BAILEY: TECHNICALLY, IT COULD BE NEVER. THE EXPECTATION IS THAT THEY STILL NEED TO FINALIZE THAT REVOLVING CREDIT FACILITY.
47:02 THAT IS THE FIRST BOX THAT NEEDS TO BE CHECKED. THEY ALSO NEED TO HAVE AN ANALYST DAY OF SOME FORM. DOING THE MATH, THAT MEANS PROBABLY LATER THIS WEEK AT THE EARLIEST. WE ARE STILL KEEPING A CLOSE EYE ON ALL OF THESE EXPECTATIONS FOR WHAT SHOULD BE ANOTHER RECORD-SETTING IPO. SALLY: WHAT SHOULD BE READ INTO THAT REVOLVING CREDIT FACILITY THAT IS NOW PAST $10 BILLION? IS THAT GENUINE FINANCIAL BUFFER OR IS THIS ANTHROPIC MAKING SURE THE BANKS COMPETE FOR THE KEY ROLES? BAILEY: I THINK IT IS THE LATTER. THE WAY THAT BANKERS HAVE PUT IT TO ME, IF YOU ARE ANTHROPIC AND YOU HAVE THE OPPORTUNITY TO ASK FOR 10, $15 BILLION, THE ONUS IS ON YOU TO TAKE ADVANTAGE OF THAT. NOT THAT YOU HAVE TO USE THAT FACILITY, BUT IS YOUR OPPORTUNITY TO DEMAND THE BANKS SHOW UP, AND AS WE REPORTED, YOU ARE PUTTING UP 1.20 5 BILLION DOLLARS, WHICH IS A LOT OF MONEY. DANI: WAITING FOR THE SHEIN IPO IN ASIA.
48:02 WHAT HAS BEEN THE RECEPTION SO FAR? BAILEY: IT WAS PRICED COMPARABLY TO ZARA WHICH DOESN'T HAVE THE UNCERTAINTY. YOU ARE BAKING IN A GROWTH STORY THAT HAS NOT PLAYED OUT. THERE IS A LOT OF UNCERTAINTY AROUND THE COMPANY, ITS AMBITIONS COME IN ITS ABILITY TO GROW IN ORGANICALLY. DANI: THANKS FOR COMING ON. WHENEVER IT HAPPENS. SOON. MAYBE NEVER, APPARENTLY. SO GREAT TO CATCH UP WITH YOU.
48:34 COMING UP, WE WILL TALK WITH GEORGE COLONY ON THE NEW NVIDIA DEAL AND MARKETS MORE BROADLY. CHRIS PETERSON. MORE ON THE STATE OF METALS. THIS IS OPEN INTEREST. ♪ DANI: WE ARE A MINUTE INTO YOUR TRADING DAY, WELCOME TO "BLOOMBERG OPEN INTEREST," I'M DANI BURGER ALONGSIDE SALLY BAKEWELL. STARTING THE LAST DAY OF AUGUST. BRENT ABOVE $90 A BARREL AFTER THE U.S.
49:12 AND IRAN TRADED STRIKES FOR THE FIRST TIME IN ABOUT A MONTH. BOYLE RE-IGNITES INFLATION FEARS AND KEVIN WARSH RENEWED HIS HAWKISH TONE. NVIDIA MAKES ANOTHER BIG BET ON THE FUTURE OF AI, INVESTING $3.5 BILLION INTO TAIWANESE CHIPMAKER MEDIATECH. JENSEN HUANG EXPLAIN WHY THIS ISN'T AN EXAMPLE OF CIRCULAR FINANCING. >> IT IS NOT CIRCULAR BECAUSE OBVIOUSLY THEY DO THEIR OWN BUSINESS AND WE DO OUR OWN BUSINESS AND MEDIATECH IS ALREADY INCREDIBLY PROFITABLE AND SUCCESSFUL.
49:52 THEY ARE THE WORLD'S BEST SOC MAKER. THEY MAKE MORE THAN ANYBODY IN THE WORLD. IT'S A GREAT PLEASURE TO INVEST IN MEDIATECH AND IN TAIWAN AND THIS IS GOING TO TURN OUT, THE INVESTMENT IS GROUNDED ON A DEEP PARTNERSHIP THAT IS GOING TO BE MULTIPLE YEARS. DANI: JOINING US IS GEORGE COLONY, FOUNDER AND CEO OF FORRESTER RESEARCH. GREAT TO SEE YOU AND IT IS ALWAYS THE QUESTION WHETHER NVIDIA DOES ANY OF THESE INVESTMENTS, IS IT HELPING THE ECOSYSTEM OR IS IT CONCERNING BECAUSE THEY DO END UP FUNDING SOME OF THEIR CUSTOMERS?
50:30 HOW ARE YOU VIEWING NVIDIA AS IT STANDS TODAY? GEORGE: IT REMINDS ME OF THE LATE 1990'S WHEN CISCO WAS DOMINANT IN NETWORKS AND THEY WERE SPREADING THE MONEY AND PARTNERSHIPS, IT LOOKS LIKE THEY COULD LOCK UP THE NETWORK BUT THAT WAS QUITE IMPOSSIBLE. I THINK NVIDIA IS MAKING THIS ATTEMPT TO LOCK UP THE CHIP BUSINESS BUT ULTIMATELY THEIR MONOPOLY IS GOING TO FADE AS WE SEE OTHER CHIPMAKERS COME TO THE FOREFRONT HERE. I LOVE WHAT THEY ARE DOING BUT I DON'T THINK IT IS ULTIMATELY GOING TO MEAN THEY WILL HAVE A FULL MONOPOLY. SALLY: NVIDIA JUST DELIVERED THIS BLOWOUT SALES FORECAST AND OF COURSE IT'S GROWTH IS HEAVILY DEPENDENT ON HYPERSCALERS AND OTHER AI STARTUPS WHICH THEMSELVES ARE HEAVILY DEPENDENT ON DEBT.
51:26 I'M CURIOUS TO HEAR YOUR THOUGHTS ABOUT KEVIN WARSH IS HAWKISH TONE AND HOW THAT COULD UNDERMINE THE ECOSYSTEM. GEORGE: THESE HYPERSCALERS ARE GOING TO NEED LOTS MORE CAPITAL TO MAKE THIS ALL HAPPEN. THE MONEY COMING FROM NVIDIA WILL BE CRITICAL HERE. AS I WOULD LIKE TO SHIFT TO LARGE LANGUAGE MODELS, LARGE LANGUAGE MODELS, A LANGUAGE MODEL IS NOT A BUSINESS MODEL.
52:03 IF YOU LOOK AT ANTHROPIC'S IPO WHICH IS GOING TO BE UPCOMING, THE TRILLION DOLLAR MARKET CAP COMPANIES TEND TO BE COMPANIES WITH VERY STRONG MONOPOLIES. APPLE AND IPHONES, MICROSOFT AND OFFICE, GOOGLE AND SEARCH. I DO NOT SEE IN THE LANGUAGE MODEL BUSINESS THE STRONG MONOPOLIES. VERY EASY TO SWITCH LANGUAGE MODELS AND ENTER THE LANGUAGE MODEL BUSINESS. THIS IS GOING TO BE THE ANTHROPIC IPO IS GOING TO BE, A TRILLION DOLLARS IS AN OVERVALUED DEAL.
52:40 WE MIGHT CALL THIS ARTIFICIAL EXUBERANCE. DANI: I'M SO HAPPY ONE THERE. IT IS INCREDIBLY EXPENSIVE TO GET AND DO THE TYPE OF RESEARCH ANTHROPIC WANTS TO DO FOR THE MOST ADVANCED AI SYSTEMS. THE COST OF COMPUTE HAS BEEN CRATERING BECAUSE OF THESE OPEN-SOURCE MODELS THAT ARE VERY CHEAP TO DO. GEORGE, WHAT DOES THAT MEAN FOR SOMEONE LIKE ANTHROPIC?
53:11 IF MULTIPLE TRILLIONS IS NOT REASONABLE, WHAT IS REASONABLE? IS THIS A BUSINESS MODEL THAT CANNOT WORK AS IT EXISTS? GEORGE: REMEMBER, I'M NOT AN INVESTMENT ANALYST, I'M AN INDUSTRY ANALYST. WHAT I WOULD SAY IS YOU HAVE THESE NEW FOUNDATION MODELS , I DON'T SEE THE BARRIERS TO ENTRY HERE IN THAT BUSINESS THAT CAN PROTECT A $3 TRILLION MARKET CAP.
53:52 ALL OF US HAVE THREE OR FOUR MODELS ON OUR LAPTOPS, VERY EASY TO SWITCH BETWEEN THEM. AND LOWER BARRIERS TO ENTRY. INTERESTING TO SEE THE PROSPECTUS, IT IS GOING TO BE VERY DIFFICULT TO DEFEND THAT TERRITORY AND ALSO FOR OPENAI. SALLY: TO BRING IT BACK TO NVIDIA, SECURING THE $500 BILLION PARTNERSHIP, DO YOU THINK THAT'S THE FIRST OF MANY? AND HOW THE CEO AT THE TIME SAID IT WAS TO ALLY A THE CONCERNS AROUND CIRCULAR FINANCING AND PROVIDE THE RESIDUAL VALUE SUPPORT GUARANTEE, DO YOU THINK THAT REALLY WOULD AL SUCH CONCERNS?
54:46 GEORGE: I DON'T WANT TO USE THE WORD HOUSE OF CARDS, BUT THIS FEELS VERY DELICATE , THIS FEELS THAT ONE FAILURE HERE COULD HAVE AN IMPACT ON THAT FINANCIAL ECOSYSTEM NVIDIA IS BUILDING. IT'S INTERESTING BECAUSE I THINK 70% OF THE BUSINESS OF AI IS NOT GOING TO BE IN PUBLIC MODELS BUT IT IS GOING TO BE IN WHAT I CALL PRIVATE MODELS, A MODEL BUILT BY BANK OF AMERICA OR J.P. MORGAN.
55:31 70% WILL BE IN THE PRIVATE MODELS, NOT THE PUBLIC MODELS. THE PROBLEM FOR NVIDIA IS THAT WHEN BANK OF AMERICA BUILDS THEIR PRIVATE MODEL, WILL THEY USE NVIDIA CHIPS? THEY ARE VERY HARD TO ACQUIRE AND VERY EXPENSIVE. THE PRIVATE MODELS WILL RUN ON LOWER-COST CHIPS AND THAT IS THE NEXT MODEL THAT WILL DEVELOP. I THINK THIS IS WORRISOME. THIS CIRCULAR FINANCING TERM IS A GOOD TERM. DANI: YOU ARE POURING A LOT OF COLD WATER ON TWO OF THE THREE BIGGEST AI RELATED COMPANIES.
56:13 IS IT JUST CONCENTRATED YOUR CONCERN AND THOSE LARGE LEADERS OR IS THERE SOMETHING ABOUT THE AI ECOSYSTEM AS A WHOLE THAT YOU THINK MIGHT HAVE TOO MUCH HYPE ATTACHED TO IT? GEORGE: IT REMINDS ME OF THE LATE 1990'S WHEN YOU HAD CISCO, THE HIGHEST MARKET CAP COMPANY IN THE WORLD AT THE TIME. WE WERE BUILDING OUT THE WEB, WE NEEDED A NETWORK. TODAY WE ARE BUILDING OUT AI AND WE NEED CYCLES.
56:47 IT IS A MARKET, LOOK, SORRY TO USE A BASEBALL ANALOGY, WE ARE IN THE TOP OF THE SECOND INNING. VERY EARLY INTO THIS BUSINESS. AS I SAID, WHAT IS INTERESTING IS HOW THE PRIVATE MODEL MARKET IS GOING TO DEVELOP VERSUS THE PUBLIC MODEL. THAT IS WHERE THE ACTION IS GOING TO BE OVER THE NEXT FIVE YEARS, HOW IS J.P. MORGAN AND BANK OF AMERICA GOING TO BUILD THAT OUT? I THINK YOU COULD SEE ANTHROPIC AND OPENAI BECOME THE S.A.P.'S AND THE ORACLES OF THE NEXT 10 YEARS BECAUSE THEY WILL BE UNDERLYING A NUMBER OF THOSE PRIVATE MODELS.
57:33 IMAGINE BANK OF AMERICA'S PRIVATE MODELS ON TOP OF A PUBLIC MODEL AND THEY COULD BE SELLING TO THOSE LARGE COMPANIES FOR FOUNDATION CAPABILITIES. WE ARE IN THE VERY EARLY DAYS HERE. IT WILL BE FASCINATING AS TO HOW THIS WILL DEVELOP. DANI: GEORGE, REALLY INTERESTING STUFF. THANK YOU SO MUCH FOR YOUR TIME, LET'S GET A CHECK ON YOUR EQUITY MARKETS THIS MORNING AS THEY CONTINUE TO FALL.
58:04 UNDER PRESSURE THIS MORNING FROM HIGHER OIL PRICES. WE ARE STILL UP NEARLY 3% WITH A RENEWED ACTION IN THE MIDDLE EAST. TWO YEAR YIELDS, 10-YEAR GILTS CONTINUE TO TREND HIGHER. LET'S LOOK AT SOME OF THE INDIVIDUAL MOVERS. GOOD MORNING. >> GOOD MORNING, THANK YOU. WE ARE LOOKING AT PG&E.
58:34 TANKING THIS MORNING AFTER CALIFORNIA LAWMAKERS INTRODUCED A WILDFIRE BILL THAT WILL NOT SHIFT WILDFIRE LIABILITY AWAY FROM ENERGY COMPANIES. SINKING THIS MORNING MORE THAN 19%. NEXT UP WE ARE MOVING TO PINTEREST, ANNOUNCING THAT CEO WILL STEP DOWN FROM HER ROLE AT THE END OF OCTOBER. SHE IS PURSUING AN OPPORTUNITY AT A PRIVATE COMPANY. PINTEREST SEARCHING FOR ITS NEXT CFO. SHARES DOWN ABOUT 5%.
59:09 THE U.S. AND IRAN EXCHANGED STRIKES FOR THE FIRST TIME IN ABOUT A MONTH. WE ARE LOOKING AT CHEVRON, SHARES UP ACROSS THE BOARD. UP MORE THAN 2% AFTER IT ANNOUNCED IT IS IN TALKS TO EXPAND OPERATIONS IN VENEZUELA. THOSE ARE YOUR MORNING MOVERS. DANI: JOINING US NOW, MORE IN OIL MARKETS. BLOOMBERG'S WASHINGTON CORRESPONDENT TYLER KENDALL JOINS US NOW. TYLER, THIS IS THE PRESIDENT SAID TO BE MEETING WITH OIL EXECUTIVES THIS WEEK, BUT WHAT ARE WE EXPECTING? TYLER: IN THAT MEETING WE KNOW THE PRESIDENT IS TRYING TO URGE OIL COMPANIES TO BRING DOWN THE COST FOR CONSUMERS.
59:50 THERE ARE A BUNCH OF DIFFERENT FACTORS THAT GO INTO THAT SUPPLY CHAIN IN TERMS OF WHAT ACTUALLY ENDS UP BEING THE COST AMERICANS PAY AT THE PUMP EVERY DAY BUT IT IS CLEAR THAT THE U.S. IS TRYING TO BUILD UP ITS ARSENAL AS WE GET CLOSER AND CLOSER TO THE MIDTERM ELECTIONS. WE ARE NOT SEEING MOVEMENT WHEN IT COMES TO THE DIPLOMATIC SOLUTION. WE ARE SEEING ESCALATION AS THE U.S. IS PREPARING TO RETALIATE AFTER THE U.S. TARGETED FORCES.
60:28 CENTCOM STARTING THE QINETIQ ACTION GOING AFTER IRANIAN ROCKET LAUNCHERS THAT CENTCOM SAYS WERE INTENDED TO LAY MINES IN THE STRAIT OF HORMUZ. THE CYCLE IS CONTINUING. WE ARE HEARING MORE LOUDLY THAT THEY WANT DECIDES TO GET BACK TO THE NEGOTIATING TABLE. SAYING THERE NEEDS TO BE A MORE REALISTIC SOLUTION THAN TO THE CONTINUOUS FIGHTING. WE WILL SEE IF THAT YIELDS ANYTHING. WE DID HEAR THAT QATAR, QATARI OFFICIALS MET WITH IRANIAN OFFICIALS, BUT SO FAR WE HAVEN'T GOTTEN INDICATIONS THEY ARE MOVING TOWARD A DIPLOMATIC SOLUTION.
61:12 SALLY: ONE THING WAS WHETHER THE U.S. WAS WILLING TO HIT A MAJOR CHINESE FINANCIAL INSTITUTION BUT IT SEEMS TO HAVE SPARED THAT. IS THE U.S. TERRIFIED OF WHAT THE GLOBAL ECONOMIC FALLOUT OF THAT WOULD BE? TYLER: THE U.S. HAS SAID NO ONE WOULD BE SAFE FROM THIS ECONOMIC PRESSURE CAMPAIGN THAT WE HAVEN'T SEEN IRAN'S TOP TRADING PARTNERS TAKE MEASURES TO CURB THEIR FINANCIAL LIFELINES WITH THE COUNTRY. THERE ARE A COUPLE OF DIFFERENT BACKDROPS WHEN IT COMES TO THE RELATIONSHIP WITH CHINA INCLUDING WE ARE GETTING CLOSER TO THAT SUMMIT BETWEEN PRESIDENT TRUMP AND CHINESE PRESIDENT XI JINPING IN LESS THAN A MONTH. THE TREASURY SECRETARY IS AT A GATHERING OF THE G20 FINANCE MINISTERS THIS WEEK WHERE WE ARE EXPECTING HIM TO PRESSURE OTHER COUNTRIES REGARDING THEIR TIES WITH CHINA INCLUDING ALLEGATIONS OF OVERCAPACITY AND IT COULD PRESSURE THEM TO MOVE MORE INWARD INSTEAD OF RELYING ON FOREIGN EXPORT MARKETS SO IT IS A DUAL TREND IN TERMS OF WHAT WE ARE EXPECTING FINANCE MINISTERS TO DISCUSS. PERHAPS THERE WILL BE ADDITIONAL THREATS AGAINST CHINESE ENTITIES, BUT WE HAVEN'T SEEN THE U.S. GO THAT FAR QUITE YET.
62:35 BUT THE U.S. STILL MAINTAINS IT IS AN OPTION ON THE TABLE AS AT LEAST AT THIS POINT WE HAVEN'T SEEN IT COME TO FRUITION. THE TREASURY SECRETARY DID SAY TO EXPECT SECONDARY SANCTIONS TO BE ROLLED OUT AFTER THE FIRST SUCH THREAT OF ONE AFTERNOON, RODDY ARM OF AN EGYPTIAN BANK DIDN'T REALLY MAKE THE TYPE OF NEWS I THINK THE ADMINISTRATION WAS PREPARING FOR. DANI: TYLER, THINK YOU SO MUCH FOR YOUR REPORTING.
63:07 COMING UP, NVIDIA DEEPENS ITS TIES WITH THE CHINESE CHIPMAKER MEDIATEK AND MORE FROM AN EXCLUSIVE INTERVIEW WITH JENSEN HUANG. THAT IS COMING UP NEXT. THIS IS "OPEN INTEREST." ♪ DANI: NVIDIA IS INVESTIGATING 3.5 BILLION DOLLARS INTO MEDIATECH, DEEPENING ITS COLLABORATION TO GET MORE COMPANIES TO BUILD THEIR OWN CUSTOM CHIPS. ED LUDLOW SPOKE WITH JENSEN HUANG ABOUT THE DEAL.
63:43 >> TODAY WE'RE ARE ANNOUNCING A BIG PARTNERSHIP. WE ALREADY HAVE A BIG PARTNERSHIP WITH MEDIATEK. TODAY WE WILL MAKE IT A LOT BETTER. IT STARTS WITH US RECOGNIZING MEDIATEK MAKES THE WORLD'S BEST SOC'S AND WE STARTED INTEGRATING SO WHENEVER THERE IS AN SOC FROM MEDIATEK WE CAN CONNECT THEM TO NVIDIA'S GPU. WHAT CAME OUT OF THAT ENDEAVOR IS THIS PROJECT.
64:14 THIS COMPUTER ALLOWS YOU TO RUN AN ADVANCED AGENTIC AI RIGHT ON YOUR DESK INSTEAD OF THE CLOUD. TODAY WE WILL EXPAND OUR PARTNERSHIP SO WE DO MULTIPLE GENERATIONS OF THIS. THIS PROCESSOR WILL ALSO BE THE FOUNDATION OF THE REVOLUTIONARY NEW COMPUTER COMING FROM MICROSOFT AND OURSELVES. REINVENTION OF THE WINDOWS PC FOR THE AGE OF AGENTS. THE SECOND THING WE ARE DOING IS MEDIATECH IS INCREDIBLY EFFICIENT BUILDING SPU'S.
64:54 NVIDIA'S SCALE UP SYSTEM, WHICH HAS REVOLUTIONIZED AI AND OUR SPECTRUM ACTS SWITCHES, OUR ENTIRE NETWORKING FRANCHISE TO MEDIATEK. SO WHEN THEY WIN PROJECTS IT BRINGS ALONG NVIDIA NETWORKING. YOU ALSO KNOW THAT NVIDIA IS ALREADY IN EVERY CLOUD AND EVERY DATA CENTER. WHENEVER THERE IS A MEDIATEK XPU WE WILL CONNECT THEM TO THE DATA CENTER IN A SEAMLESS WAY. WE ARE PARTNERING IN ROBOTIC SYSTEMS LIKE AUTONOMOUS VEHICLES. YOU KNOW THAT AI HAS REVOLUTIONIZED HOW WE DO COMPUTING.
65:36 WE WILL WORK WITH MEDIATEK AND ALL OF THESE DIFFERENT AREAS. WHEN THEY WIN WE HAVE AN OPPORTUNITY TO SELL MORE, WHEN WE WIN THEY HAVE AN OPPORTUNITY TO SELL A LOT MORE. DANI: JENSEN HUANG SPEAKING WITH ED LUDLOW WHO JOINS US NOW. TRANSLATE THAT FOR US NON-ENGINEERING INCLINED. WHAT IS NVIDIA DOING AND WHAT IS IT DOING TO RETAIN ITS HOLD ON THE AI ECOSYSTEM? ED: JENSEN IS A KNOWLEDGE THAT CUSTOM SILICON ARE ALREADY IN THE MARKET IN COMPETITION WITH NVIDIA'S TECHNOLOGY, WHICH ARE GPU'S USED TO TRAIN OR RUN AI MODELS.
66:18 THE THING THAT HAS CHANGED THIS YEAR RELATIVE TO FOUR YEARS AGO IS INSIDE OF A DATA CENTER NVIDIA IS RESPONSIBLE FOR MUCH MORE OF THE CONTENT. THE WAY THE SERVICES SPEAK TO EACH OTHER, THE WAY MEMORY IS PASSED FROM ONE PART OF THE SERVER TO THE OTHER. WHAT THEY ARE DOING IS SAYING LET'S DO THIS AS A PACKAGE, EVEN IF YOU ARE IS A CUSTOMER THAT HAS ITS OWN CUSTOM CHIP, LET'S MAKE IT AS EASY AS POSSIBLE FOR THEM TO DROP IT INTO A DATA CENTER WHERE THERE IS ALREADY NVIDIA GEAR. FREE TO SEE GROWTH IN THAT CUSTOM MARKET NVIDIA GOES WITH IT. THAT WAS SUPER INTERESTING.
66:53 THE ONE THING I DID NOT APPRECIATE AT THE TIME IS $3.5 BILLION IS AN INVESTMENT INTO MEDIATEK. IT IS NVIDIA'S BIGGEST EVER NON-US DIRECT INVESTMENT. CLEARLY THEY SEE BOTH SIDES BENEFITING ABOUT SPEED TO MARKET WITH THIS AGREEMENT. SALLY: ARE THERE ANY PLACES IN THE MARKET WHERE NVIDIA DOES NOT HAVE THAT ABILITY TO ACCOMPANY THE COMPANIES IT WANTS TO GROW TO HELP ITSELF AS WELL? IS THERE ANYWHERE IT CAN STILL GO AND SIGN SIMILAR DEALS? ED: THIS IS THE BEST EXAMPLE AND GIVEN RECENT NEWS FLOW OVER ALL OF THE TALK ABOUT THE FRONTIER LABS, WHICH ARE SOME OF NVIDIA'S BIGGEST CUSTOMERS OR THE HYPERSCALERS THEMSELVES, THERE IS TONS OF EVIDENCE THEY ARE CONTINUING TO RAMP UP THERE SPENT DIRECTLY ON THE VIDEO GEAR AS WELL. THE BEST EXAMPLE WAS AMAZON AWS, THE NUMBER ONE AND CLOUD COMPUTING MAKING A MASSIVE COMMITMENT ACROSS EVERYTHING NVIDIA OFFERS.
67:51 THE DIFFERENCE IN THE WORLD IS FOR THE LAST THREE OR FOUR YEARS ALL OF THE ACTIVITY WAS BASED ON TRAINING AI MODELS. TODAY IS IN RUNNING THEM. THE PROPOSED BENEFIT OF A CUSTOM CHIP IS IT IS BETTER AT THAT. THE ECONOMICS ARE BETTER. NOW NVIDIA IS SAYING WE CAN HAVE IT BOTH WAYS. IF YOU WANT TO GO FOR A CUSTOM CHIP YOU MAKE SURE WE PUT INTO A DATA CENTER WE DO EVERYTHING ELSE WHICH IS AN INTERESTING BUSINESS MODEL. THE STOP IS UP MORE THAN 1%.
68:19 I DON'T KNOW IF THAT IS A DIRECT RESPONSE TO THIS BUT THAT IS SOME MOMENTUM. DANI: YOU ASKED JENSEN ABOUT ONE OF THE BIG FEARS OF THE MARKET IS CIRCULAR FINANCING. WHAT DID YOU MAKE OF HIS ANSWER? ED: CIRCULAR FINANCING COMES IN DIFFERENT SHADES. JENSEN HUANG'S ARGUMENT IS THEY ARE HIGHLY PROFITABLE. THEY DO THEIR BUSINESS, WE DO OUR BUSINESS. THE ARGUMENT HE OFTEN MAKES WHEN IT IS ABOUT THIS TYPE OF ARRANGEMENT WHEN THEY ARE INVESTING IN A PARTNER DIRECTLY AS THEY THINK THEY WILL SEE A BIG RETURN ON THAT INVESTMENT.
68:55 PART OF THE CRITICISM NVIDIA. GOING TO EARNINGS WAS WHAT DID THEY DO WITH THAT FREE CASH FLOW. YOU DO DIVIDEND BUYBACK. PEOPLE DO SEE THEM DEPLOY CAPITAL IN A WAY THAT SPEEDS THINGS UP. THIS IS COMPLETELY DIFFERENT TO WHERE YOU MAKE INVESTMENT OR BACKSTOP A CUSTOMER. THIS IS A PARTNER. DANI: A FANTASTIC INTERVIEW THIS MORNING. THAT IS ED LUDLOW. CHECK OUT BLOOMBERG TECH IN 40 MINUTES. STILL AHEAD, WE WILL GET A READ ON THE U.S. CONSUMER. THE CEO OF NEWELL BRANDS WILL BE JOINING US, THE COMPANY BEHIND SHARPIE AND RUBBERMAID.
69:35 THIS IS "BLOOMBERG: OPEN INTEREST." ♪ DANI: HIGHER OIL PRICES. THE NASDAQ DOES A LITTLE BIT BETTER THANKS TO NVIDIA RALLYING THIS MORNING. THE PRESSURE COMING FROM 10 YEAR YIELDS UP FOR BASIS POINTS BECAUSE OF BRENT CRUDE UP 3% SO FAR THIS YEAR WITH THE U.S.
70:09 ANNOUNCING MORE STRIKES ON IRAN TO STOP SHIPS FROM LANGE MINDS IN THE STRAIT OF HORMUZ. NVIDIA UP ABOUT 1% AFTER FALLING FRIDAY. CHEVRON AND EXXON BENEFITING FROM THE HIGHER PRICE OF BRENT CRUDE THIS MORNING ALONG WITH AN ANNOUNCEMENT OF PLANS IN VENEZUELA. PG&E FALLING OVER CONCERNS THAT NEED TO SHARE MORE UTILITY COSTS AFTER WILDFIRES. GAMESTOP UP 3.4%. WE GET THE CONSUMER VIEW FROM THE NEWELL BRANDS CEO CHRIS PETERSON.
70:46 DANI: U.S. CONSUMER SENTIMENT FELL IN AUGUST FOR THE FIRST TIME IN THREE MONTHS IN WHAT WORSENING ECONOMIC OUTLOOK EVEN AFTER INFLATION EXPECTATIONS EASED. NEWELL BRANDS CEO CHRIS PETERSON SEES A SELECTIVE AND VALUE CONSCIOUS CONSUMER. PLEASED TO SAY CHRIS JOINS US NOW. GREAT TO SEE YOU. EVEN WITH A MORE SELECTIVE CONSUMER, YOU DID LOG THE FIRST QUARTER OF SALES GROWTH SINCE THE COVID BOOM.
71:18 FOR NEWELL BRANDS, WHAT CHANGED? CHRIS: WE PUT HER TURNAROUND STRATEGY IN PLACE THREE YEARS AGO THAT WAS VERY FOCUSED ON IMPROVING THE COMPANY'S INNOVATION, BRAND BUILDING CAPABILITY, AND GO TO MARKET CAPABILITY AND ALL OF THAT CAPABILITY IMPROVEMENT WE HAVE BEEN WORKING ON MANIFESTED ITSELF IN THE SECOND QUARTER. AS YOU RIGHTLY SAID, THE U.S. LED THE WAY, WE GREW THE U.S. CORE SALES WHICH WAS AN OUTSTANDING RESULT AND WE ARE BROADLY GAINING MARKET SHARE BEHIND STRONGER INNOVATION, DISTRIBUTION GAINS AND IMPROVED MARKETING CAPABILITY. SALLY: I WANT TO ASK YOU ABOUT INFLATION.
72:10 IN YOUR RECENT EARNINGS, THAT HAS DOUBLED. HOW ARE YOU NAVIGATING THAT? ARE YOU GOING TO PASS PRICES TO CONSUMERS? CHRIS: THE INFLATION PICTURE HAS GOTTEN TOUGHER LARGELY DRIVEN BY THE CONFLICT IN THE MIDDLE EAST. OIL PRICES HAVE GONE UP SIGNIFICANTLY, WHICH HAS AFFECTED US IN TERMS OF HIGHER RESIN PRICES, HIGHER TRANSPORTATION COSTS THAT HAS ROUGHLY DOUBLED AS YOU RIGHTLY POINT OUT. OUR INFLATION FORECAST. TO OFFSET THAT WE HAVE BEEN VERY FOCUSED ON DEVELOPING A VERY STRONG PRODUCTIVITY PROGRAM ACROSS THE ORGANIZATION THAT INTERNALLY WE HAPPEN TO CALL FUEL PRODUCTIVITY.
72:55 WE ARE GENERATING OVER TWO HUNDRED MILLION DOLLARS OF PRODUCTIVITY SAVINGS YEAR-OVER-YEAR IN OUR SUPPLY CHAIN. LARGELY, WE ARE USING THE PRODUCTIVITY EFFORTS TO OFFSET INFLATION AND THAT HAS ALLOWED US TO MAINTAIN PRICING DESPITE THE HIGHER INFLATION OWNED THE VAST MAJORITY OF OUR PORTFOLIO. DANI: IS NOT AN ACKNOWLEDGMENT THAT A CONSUMER WON'T PAY MORE AND HOW MUCH CAN BE PASSED ON? CHRIS: IT IS CERTAINLY AN ENVIRONMENT WHERE CONSUMER VALUE REMAINS CRITICAL, HOWEVER CONSUMERS ARE VERY MUCH WILLING TO PAY FOR TERRIFIC INNOVATION. IT DOESN'T MEAN LOW PRICE POINTS. REALLY WHAT WE ARE SEEING IS THE PEOPLE DRIVING THE GROWTH THAT WE WERE ABLE TO REPORT LAST QUARTER TENDS TO BE THE MIDDLE AND UPPER INCOME CONSUMERS AND IF YOU COME WITH A PRODUCT THAT CAN BE AT A HIGHER PRICE POINT BUT IS A TERRIFIC INNOVATION WE HAVE SEEN NO BARRIER FOR CONSUMER RESPONSE BUT THEY STILL NEED TO REPRESENT A STRONG VALUE. SALLY: ON YOUR PRODUCTIVITY POINT, HOW ARE YOU USING AI THERE?
74:11 WE KNOW THAT YOU ARE LOOKING AT HOW SYNTHETIC AUDIENCES CAN IMPROVE UNDERSTANDING, WOULD LOVE TO HEAR ABOUT WHAT ACTUALLY THAT MEANS, WHAT IS SYNTHETIC? CHRIS: WHEN WE PUT THE TURNAROUND STRATEGY IN PLACE A LITTLE OVER THREE YEARS AGO, THERE WERE A NUMBER OF CAPABILITIES WHERE WE NEEDED TO MAKE A LEAP FROG IMPROVEMENT AND WE MADE THE DECISION AT THE TIME THAT WE WOULD BROADLY IMPLEMENTING AND WE HAVE MADE TREMENDOUS PROGRESS. WE HAVE AN AI ROADMAP FOR EVERY SINGLE FUNCTION IN THE COUNTRY. WE HAVE ROLLED OUT AI TOOLS AND HAVE TRAINED THE VAST MAJORITY OF OUR EMPLOYEE BASE SO WE ARE AI ENABLED. WE ARE USING IT A LOT IN THE FRONT END SO AS WE DO CONSUMER INSIGHTS WE HAVE CREATED DIGITAL PERSONAS WE CAN DO FAST CYCLE CONCEPT TESTING WITH TO IMPROVE THE SPEED AT WHICH WE DEVELOP AND ITERATE CONCEPTS.
75:14 WE ARE ALL SAVED USING AI -- ALSO USING AI TO TEST MARKETING MATERIALS AT A MUCH GREATER SCALE. AS AN EXAMPLE, LAST YEAR OUR COST OF DIGITAL CONTENT CREATION WENT DOWN 80% VERSUS THE PRIOR YEAR. WE USE THAT TO CREATE A SIGNIFICANT AMOUNT OF ADDITIONAL DIGITAL CONTENT WHICH IS ALSO PART OF THE REASON WE HAVE GOTTEN BACK TO GROWTH. FINALLY WE ARE USING IT IN THE NEW PRODUCT INNOVATION TIME CYCLE WHICH HAS ALSO COME DOWN AS WE USE AI TOOLS ON THINGS LIKE 3D CAD DESIGN AND RD USE CASES ACROSS THE COMPANY.
75:59 DANI: DOES THAT MEAN YOU NEED TO USE LESS EMPLOYEES AND TO LOOK OUTSIDE THE COMPANY TO HIGHER MARKETING EXPERTS OR OTHER CONSULTANTS? CHRIS: IT'S INTERESTING BECAUSE THERE HAS BEEN A LOT OF DISCUSSION AS YOU RIGHTLY KNOW AROUND IS AI GOING TO ELIMINATE JOBS OR CREATE NEW JOBS? WE HAVE SEEN A LITTLE BIT OF BOTH. LET'S TAKE THE MARKETING EXAMPLE. OUR COST OF CREATING DIGITAL CONTENT WENT DOWN 80%, WE CHOSE NOT TO ELIMINATE ANY JOBS IN THAT AREA.
76:44 AS WE INVEST IN AI WE ARE SEEING OUR EMPLOYEE BASE IS BECOMING MUCH MORE PRODUCTIVE AND CAPABLE AND IN MANY CASES WE ARE CHOOSING TO MAINTAIN THAT HEADCOUNT AND DO MORE TO GET THE COMPANY BACK TO STRONGER CORE SALES GROWTH. THERE ARE SOME AREAS WHERE WE HAVE MADE SOME REDUCTIONS BUT LARGELY WE ARE USING IT AS CAPABILITY BILLS. SALLY: GOING BACK A LITTLE BIT TO YOUR EARNINGS, YOU ALSO PART OF THE GROWTH WAS DOWN TWO TARIFF REEF -- DOWN TO TARIFF REFUNDS. WHAT IS YOUR ORGANIC GROWTH RATE ACTUALLY LIKE? CHRIS: TOPLINE GROWTH AND AS I MENTIONED FIVE OF OUR SIX BUSINESS UNITS GROUP.
77:46 AND THE U.S. GREW UP 5%. WE HAVE ALSO GUIDED FOR Q3 AND TO ACCELERATE A LITTLE BIT. THE GUIDANCE FOR Q3 ON THE TOPLINE IS TO GO TO PERCENT TO 3% WHICH AT THE MIDPOINT IS SLIGHTLY FASTER THAN WE GREW IN Q 2. THE TARIFF REFUNDS IF YOU STRIPPED OUT THE IMPACT WHICH WAS LARGELY A GROSS MARGIN AND EARNINGS IMPACT, WE WERE STILL RUNNING AHEAD OF PLANS WITH THE TARIFF REFUNDS AND WE TOOK THE PRICE UP RELATED TO THE PRIOR YEAR TARIFFS THAT WERE PAID ON A PENNY FOR PENNY BASIS. DANI: JUST BEFORE YOU GO THERE IS THIS DEBATE FORMING, WHAT IS YOUR VIEW ON THE CONSUMER RIGHT NOW, STRENGTH OR WHEAT -- WEAKNESS, WHERE DO WE STAND? CHRIS: WE CONTINUE TO SEE THE HIGH INCOME CONSUMER SPENDING MORE ON GENERAL MERCHANDISE WHICH IS WHAT OUR BRANDS GENERALLY FALL INTO. THE MIDDLE INCOME CONSUMER IS STILL TREADING WATER A BIT. THE LOW INCOME CONSUMER REMAINS THE MOST UNDER PRESSURE, BUT THE LOW INCOME CONSUMER WHICH HAD BEEN PULLING BACK SIGNIFICANTLY HAS BEEN SEEMINGLY GETTING MORE STABLE. IN THE SECOND QUARTER, WE SAW THAT OUR CATEGORIES WERE ROUGHLY FLAT VERSUS A YEAR AGO.
79:19 WHICH WAS A BETTER RESULT THAN WE HAVE BEEN RUNNING AROUND -2. WE HAVE IMPROVED TOO FLAT AND WE WOULD LIKE TO SEE THE CATEGORIES GET BACK TO GROWTH AND WE ARE WORKING TO MAKE THAT HAPPEN. BUT WE STILL ARE SEEING THIS BIFURCATED CONSUMER ENVIRONMENT THAT CONTINUES. DANI: CHRIS, REALLY INTERESTING. THAT IS THE NEWELL BRANDS CEO CHRIS PETERSON. LET'S GET A CHECK ON YOUR MARKETS CONTINUING TO DECLINE, DOWN 0.2 5%.
79:53 ENERGY, THE ONLY SECTOR THAT IS OUTPERFORMING GIVEN BRENT CRUDE OF 2.6% WITH THE RENEWED STRIKES ON IRAN PREVENTING THE LAYING OF MORE MINES IN THE STRAIT OF HORMUZ. THAT IS ALSO LEADING TO MORE PRESSURE IN THE BELLY OF THE CURVE AND ON THE LONGHAND SIDE. WE ARE NOW AT 4.7 580. HEMA: WE ARE GOING TO KICK IT OFF WITH GAMESTOP. A BOOST IN SECOND QUARTER PROFIT.
80:31 SHARES UP MORE THAN 3% THIS MORNING. TURNING TO PHARMA NEXT. ELI LILLY PLANNING TO BUY AMERICAN BIOSCIENCE AS FAR AS MUCH IS $2.9 BILLION AS PART OF ITS EFFORT TO EXPAND INTO AUTOIMMUNE AND ALLERGIC DISEASES. SHARES DOWN SLIGHTLY ON THE NEWS. FINALLY, WE ARE CHECKING BACK IN ON NVIDIA, SHARES RISING AFTER THE TECH GIANT ANNOUNCES $3.5 BILLION INTO CHINESE CHIPMAKER MEDIATECH. AIMING TO GET MORE COMPANIES PLUGGING INTO THE DOMINANT ECOSYSTEM. DANI: THANK YOU VERY MUCH. LET'S GET BACK TO OUR OTHER TOP STORY, TREASURIES TUMBLING AS RISING OIL PRICES FUEL FRESH INFLATION FEARS AFTER FED CHAIR KEVIN WARSH STRUCK A HAWKISH TONE AT JACKSON HOLE. MICHAEL MCKENZIE JOINS US NOW.
81:28 MIKE AFTER CHAIR WARSH SPOKE, IMMEDIATELY THERE WAS A RALLY ON THE LONGHAND, FOLLOWED BY SELLING IT AGAIN AND THE DATES HIGHER. THEY MOVE HIGHER. IS THIS A RATES MARKET WHICH IS MOVING ON FACTORS THAT ARE OUT OF THE CONTROL OF THIS FED CHAIR? MICHAEL: I THINK IT IS QUITE UNIQUE. YOU GOT SOME VOLATILE MOVES IN THE LONG END. WE WILL HAVE TO SEE WHAT HAPPENS BY THE END OF THE DAY. USUALLY 4:00 IN THE AFTERNOON YOU COULD SEE SOME INVESTORS COME IN AND YOU COULD END UP BEING UNCHANGED.
82:10 WHILE THE MARKET WAS HEARTENED TO SOME DEGREE FRIDAY AFTERNOON, YOU COULD SEE A GOOD PERFORMANCE BY THE LONGHAND. BASICALLY THE BOTTOM LINE FOR THE BOND MARKET IS WARSH KEEPS TALKING BUT HE HAS NOT WALKED THE WALK YET AND WE DO HAVE JOBS DATA FOLLOW THE FOLLOWING FRIDAY BY THE CPI. THE RETURNS OF THOSE WILL DETERMINE WHETHER THE FOMC AS A BODY WILL WANT TO HIKE RATES AND WHETHER OR NOT HE FOLLOWS THROUGH WITH THAT AND I THINK THAT IS WHAT THE MARKET IS WAITING FOR.
82:45 YOU WILL SEE BOND YIELDS MOVING AROUND UNTIL WE GET CLARITY ON OF THE DATA AND WE KNOW THAT KEVIN WARSH IS GOING TO HIKE OR NOT. SALLY: INVESTORS GOING INTO THE MEETING URGED WARSH TO STRONG DETERMINATION TO ASSUAGE SOME OF THE CONCERNS AROUND FED CREDIBILITY, HOW DO YOU THINK HE SUCCEEDED IN DOING THAT? MICHAEL: I THINK HE UNDID THE DAMAGE FROM HIS JULY PRESS CONFERENCE WHEN HE DIDN'T WANT TO ENGAGE WITH THE MARKET AT ALL ABOUT A FRAMEWORK HE WAS PRETTY ADAMANT SAYING THEY ARE GOING TO GET IT DOWN TO 2%.
83:30 THAT IS GREAT TO HEAR, BUT DO SOMETHING ABOUT IT. WE ALSO HAVE TO WAIT AND WE WILL GET A CLEARER IDEA ABOUT WHETHER THIS IS A FED THAT IS GOING TO DEAL WITH INFLATION OR IS THIS FED GOING TO ALLOW INFLATION TO REMAIN ABOVE TREND, IT HAS BEEN ABOVE TREND FIVE YEARS? THE 30-YEAR YIELD IS A COUPLE BASIS POINTS LOWER ON THE MONTH. WE HAVE BUYBACKS STARTING ON SEPTEMBER 9.
84:10 AS THE FEND DOESN'T DELIVER, YOU'VE GOT TO HIKE HIGH-END RATES. DANI: FOR YOU COULD LISTEN TO THE TREASURY SECRETARY SAME TRADITIONAL YOU DON'T RAISE INTO A SUPPLY SHOCK AND CORE INFLATION HAS REMAINED VERY RESTRAINED. HE SAYS HE THINKS HE LOST MONEY THE DAY HE SENT THAT EDITORIAL AND HE HAS TALKED TO HIM AND THAT HEDGE FUND MANAGERS LIKE TO SPEED THINGS UP. DO WITH THAT WHAT YOU WILL. MICHAEL MCKENZIE, THINK YOU SO MUCH. COMING UP, PRESIDENT TRUMP CALLING IN TOP U.S.
84:42 REFINERS AS GAS PRICES STAY ABOVE FOUR DOLLARS A GALLON. WE WILL DISCUSS WHAT THE MOVE WOULD MEAN WHEN IT COMES TO PRICES AT THE PUMP AND WHAT EXACTLY IS HAPPENING IN PRESIDENT TRUMP WILL MEET WITH U.S. OIL REFINERS TOMORROW TO DISCUSS LOWERING GASOLINE PRICES NOW AVERAGING OVER $4 A GALLON AMID THE IRAN WAR. FOR MORE, WE ARE JOINED BY BLOOMBERG'S CHERYL PORTER.
85:24 A LOT HAPPENING IN THE BACKDROP. WHAT CAN WE EXPECT FROM THIS CONVERSATION? >> I WOULD IMAGINE YOU WOULD HEAR A LOT FROM PRESIDENT TRUMP EXPLAINING FRUSTRATION THAT PRICES CAN'T COME DOWN AND A LOT OF PUSHING FOR PRICES TO COME DOWN, BUT UNFORTUNATELY, IT IS NOT THAT SIMPLE FOR THIS INDUSTRY. THEY HAVE NOT BUILT A NEW MAJOR REFINERY IN THE U.S. IN ALMOST 50 YEARS, SO YOU ARE DEALING WITH LIMITED SUPPLY. THESE REFINERS ARE RUNNING AT ALMOST ALL CAPACITY, MORE THAN 95% OF WHAT THEY CAN RUN, SO THEY ARE ALMOST RUNNING OUT.
86:02 NOT A LOT CAN COME. THEY MAY BE TRIMMING AT THE EDGES OF ASKING FOR FAULT -- SMALL WAYS COSTS CAN COME DOWN BASED ON FEDERAL AND STATE FUEL STANDARDS. OTHER THAN THAT, IT MAY JUST BE A LOT OF TRUMP YELLING AT THEM. SALLY: WHEN IT COMES TO THE U.S. ASSERTING CONTROL OVER THIS 65 BILLION BARRELS OF OIL IN VENEZUELA, WHAT ARE THE PROSPECTS FOR THOSE OIL FIELDS? DOES THE INFRASTRUCTURE NEED A LOT OF SCALING UP? HOW MUCH WILL THAT ACTUALLY HELP IN THIS SITUATION? DAVID: YOU NAILED IT.
86:37 IT WILL TAKE A LOT OF INFRASTRUCTURE, EFFORTS TO COME IN AND BUILD IT BACK TO WHAT IT EVEN WAS COMPARED TO A NUMBER OF YEARS AGO, TO GET BACK TO ITS PREWAR LEVEL, AS FAR AS BEFORE THE LEADER WAS TAKEN OUT. A LOT OF THE FIELDS HAVE LOST A LOT OF THEIR MAINTENANCE. SO THE HOPE IS, DOWN THE ROAD, MANY YEARS DOWN THE ROAD, YOU COULD HAVE THAT FIGURE OIL COME INTO THE U.S., AND IT COULD HELP, BECAUSE THAT IS WHERE OUR REFINERIES REALLY NEED, MUCH MORE THAN U.S. SHALE, LIGHTER OIL.
87:13 SO DOWN THE ROAD, MORE OIL FROM VENEZUELA CAN HELP THINGS, BUT THAT IS NOT A QUICK FIX. DANI: BLOOMBERG'S DAVID WETHE OUT OF HOUSTON. APPRECIATE YOUR TIME HERE COMING UP, WE CAN TO CONVERSATION ON COMMODITIES. TIMNA TANNERS OF WELLS FARGO JOINS TO DISCUSS HER MEDALS OUTLOOK AS CANADA PREPARES 50% TARIFFS ON STEEL AND ALUMINUM. THIS IS "OPEN INTEREST." ♪ DANI: TIME NOW FOR OUR METALS SPOTLIGHT.
87:49 CANADA IS PREPARING TO PLACE COUNTER-TARIFFS ON MORE THAN 700 GOODS MADE IN THE U.S., INCLUDING LEVIES UP TO 50% ON STEEL AND ALUMINUM PRODUCTS. THE MEASURES ARE SET TO TAKE EFFECT NEXT WEEK. JOINING US NOW IS TIMNA TANNERS, WELLS FARGO EQUITY RESEARCH ANALYST. THANKS FOR POPPING BY. I KNOW YOU JUST CAME BACK FROM THE BIGGEST STEEL GATHERING, CONFERENCE IN ATLANTA. JUST LOOKING AT SOME OF YOUR RESEARCH, IT FEELS THERE IS THIS CONTINUED OPTIMISM OF ELEVATED PRICES.
88:16 YOU ARE A BIT MORE CAUTIOUS. WHY? TIMNA: I THINK WE HAVE COME OFF A REALLY STRONG YEAR IN THE LAST 12 MONTHS OR SO. STOCKS HAVE DOUBLED, STEEL PRICES EXPLODE -- MUCH ABOUT TO THE 50% TARIFFS PUT IN PLACE A LITTLE OVER A YEAR AGO GIVE A EFFECT OF THE MARKET ON A LAG. AND DEMAND WAS BETTER-THAN-EXPECTED AS WELL. I THINK THERE IS A SNOWBALL EFFECT OF ENTHUSIASM. BUT IT IS REALLY HARD TO REPLICATE THAT KIND OF YOU AFTER WHAT WE HAVE COME OFF OF. AND THESE PRICES, IT'S HIGH ENOUGH TO ATTRACT IMPORTS, EVEN WITH A 50% TARIFF.
88:53 SO WE THINK IT IS HARD TO ARGUE FOR MUCH MORE UPSIDE ON THESE PRICES. THE QUESTION IS MORE CAN WE HOLD ONTO THESE HIGH PRICES IN LIGHT OF SOME OF THE SEASONALITY, IMPORTS, AND MORE CAPACITY COMING ON DOMESTICALLY? SALLY: AND INDEED PRIME MINISTER MARK CARNEY PLEDGED TO SUPPORT -- TO OFFER SUPPORT IN THE FACE OF THESE TARIFFS. DO YOU SEE THAT CAUSING ANY IMPACT TO PRICING AT ALL? TIMNA: IF YOU ARE REFERRING TO CANADA PUTTING ITS OWN TARIFFS ON THE U.S., IT IS PRETTY IRRELEVANT.
89:22 IT IS VERY MUCH FOR SHOW COME AS MANY OF THESE ANNOUNCEMENTS ARE. CANADA ABOUT -- HAS BEEN A NET EXPORTER TO THE U.S. CANADA HAD BEEN SUBJECT TO THE SAME 50% TARIFF AS A REST OF THE WORLD, WHEREAS PRIOR TO THE TRUMP MOVES IN THE PAST YEAR, CANADA AND MEXICO WERE EXCLUDED GEAR THAT CAUSED SOME ANIMOSITY, AMONG OTHER THINGS, BETWEEN THE TWO COUNTRIES. AND I THINK -- ACTUALLY, CANADA DOES NOT HAVE THAT MUCH IMPACT ON THE U.S.
89:48 ANYMORE, BECAUSE CANADIAN PRICES HAVE ALREADY RISEN, SO THE CANADIAN STEEL INDUSTRY SHOULD BE KEEPING THEIR TONS IN CANADA, BECAUSE THEY PUT THEIR OWN BARRIERS ON EXPORT IN PLACE. DANI: IN TERMS OF GETTING EXPOSURE, YOU PREFER NUCOR AND STEEL DYNAMICS. WHY IS THAT? TIMNA: WHAT WE DID IS RUN SOME ANALYSIS OF PAST YEARS WHERE IT STEEL PRICES ROLLED OFF THEIR PEAKS. IN LIGHT OF THAT, WHEN STEEL PRICES RETREAT, YOU OFTEN SEE EITHER THE STOCKS RETREAT OR THE HIGHEST QUALITY NAMES HOLD UP BETTER THAN OTHERWISE. SO WE ARE LOOKING AT PAST BEHAVIOR AND THINKING THOSE NAMES HAVE A BIT MORE RESILIENCE, IN ADDITION TO THE FACT THAT THEY BOTH HAVE AN INTERESTING FREE CASH FLOW INFLECTION INTO 2027, WITH LARGE YEARS OF ROLLING OFF. THAT SHOULD BE AN OPPORTUNITY FOR THEM TO HAVE ADDITIONAL GAINS NEXT YEAR. SALLY: HOW ABOUT ALUMINIUM -- OR ALUMINUM, I SHOULD SAY -- DANI: WELL DONE -- SALLY: IN TERMS OF IMPACT IT MAY HAVE?
90:54 TIMNA: ALUMINUM HAS BEEN MORE MUTED. PRICE VOLATILITY AND ALUMINUM IS DIFFERENT. ALUMINUM IS MORE ABOUT BUYERS AND SELLERS OF THE LME. THE ALUMINUM MARKET RAN UP WITH OIL BUT SINCE THEN HAS RETREATED. THERE SEEMS TO BE INCREASED CONCERN IN THE ALUMINUM INDUSTRY ABOUT NEW CAPACITY COMING INTO MARKET, INDONESIA, FUNDED BY CHINA BUT NOT IN CHINA, AND OTHER MARKETS WHERE CHINA IS FINDING NEW CAPACITY. SO THE ILLUMINA MARKET IS MORE TENTATIVE. OUR VIEW IS ALUMINUM PRICES WILL BE STRONGER FOR LONGER.
91:27 PART OF THAT IS HIGHER ENERGY PRICES. HIGHER INPUT COSTS -- ALUMINUM IS ABOUT 30% ELECTRICITY. THEREFORE, THAT SHOULD KEEP PRICES HIGH. BUT WE THINK IN THE ALUMINUM MARKET IS FOLLOWING BETTER STOCKS THAN THE STEEL INDUSTRY. DANI: THANKS. YOU GOT TO GET THEM TO CHANGE THEIR MINDS ABOUT DOING A SUMMER CONVERTS IN ATLANTA. CAN'T THEY DO MARTHA'S VINEYARD? TIMNA: I'LL WORK ON IT. DANI: THANK YOU. THAT IS TIMNA TANNERS.
92:02 DOWN ABOUT HALF OF 1%, 10 YEAR YIELD CONTINUE TO MOVE HIGHER COME OFF THE WORST OF THE GAINS COME UP ABOUT 3.5 BASIS -- THREE POINTC FIVE BASISO POINTS. MING UP, SCOTT CHRONERT, ELIZABETH BURTON. THAT DOES IT FOR "OPEN INTEREST. " BLOOMBERG TECH IS NEXT." THIS IS BLOOMBERG.