WEBVTT - Bloomberg Surveillance TV: May 28, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.360 with Lisa Bromwitz and a Marie Hordern. Join us each 0:00:18.480 --> 0:00:21.360 day for insight from the best in markets, economics, and 0:00:21.400 --> 0:00:24.720 geopolitics from our global headquarters in New York City. We 0:00:24.760 --> 0:00:27.400 are live on Bloomberg Television weekday mornings from six to 0:00:27.480 --> 0:00:31.000 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:31.200 --> 0:00:33.479 or anywhere else you listen, and as always on the 0:00:33.479 --> 0:00:35.840 Bloomberg Terminal and the Bloomberg Business app. 0:00:36.520 --> 0:00:36.960 So here's the. 0:00:37.000 --> 0:00:40.120 Lass this morning. President Trump's policy stoken concerns about the 0:00:40.159 --> 0:00:43.320 dollars dominance each four percent of Cornell University. Righting the 0:00:43.360 --> 0:00:46.880 dollars de throning is unlikely, Luckily for the United States 0:00:46.960 --> 0:00:50.199 and unfortunately for the dollars detractors, there appears to be 0:00:50.240 --> 0:00:53.360 no competitor strong enough. Each war joins us now for more. 0:00:53.400 --> 0:00:55.440 Each one. Welcome back to the program sir. It's always 0:00:55.440 --> 0:00:58.000 good to get your thoughts on Bloomberg Surveillance. Let's take 0:00:58.000 --> 0:01:01.640 it from the top. What's the difference between diversification and 0:01:01.760 --> 0:01:02.640 de dollarization? 0:01:04.160 --> 0:01:07.240 So the two could very well be related John, what 0:01:07.400 --> 0:01:10.400 is the reality the world faces is that if you're 0:01:10.400 --> 0:01:14.680 holding you know, more than fifty seven percent of your assets, 0:01:14.720 --> 0:01:18.200 that is reserves in one currency or one asset class, 0:01:18.240 --> 0:01:20.680 you really should be diversifying, which is something that the 0:01:20.720 --> 0:01:23.119 world has been trying to do for a long time. 0:01:23.160 --> 0:01:25.319 So there are very good reasons to step away from 0:01:25.360 --> 0:01:27.959 the dollar now. The issue, of course, is that the 0:01:28.000 --> 0:01:30.560 dollar is very important, not just as a reserve currency, 0:01:30.600 --> 0:01:33.880 but as a payment currency, as a funding currency, and 0:01:33.959 --> 0:01:37.040 in all of those respects. The reality is that there 0:01:37.080 --> 0:01:41.240 simply isn't another currency that can out muscle the dollar. Certainly, 0:01:41.240 --> 0:01:43.720 a world in which there were multiple currencies that were 0:01:43.720 --> 0:01:47.200 competing on an even basis might be a more efficient world. 0:01:47.200 --> 0:01:50.480 It could create more discipline and more incentives or discipline 0:01:50.480 --> 0:01:53.480 from the issuers of those currencies. But that's not quite 0:01:53.480 --> 0:01:55.680 the world we live in right now, and the weaknesses 0:01:55.680 --> 0:01:58.560 of the other currencies are still keeping the dollar in 0:01:58.680 --> 0:01:59.680 pretty good shape. 0:02:00.040 --> 0:02:02.040 Let's talk about some of those weaknesses. It feels like 0:02:02.080 --> 0:02:04.120 for money that China is just a Nonstanzer because of 0:02:04.120 --> 0:02:08.120 the lack of capital mobility. What about the Europeans is Ishua, 0:02:08.160 --> 0:02:09.000 where do they fit in? 0:02:10.160 --> 0:02:12.840 That would be a very logical alternative to the dollar, 0:02:12.880 --> 0:02:15.320 and in fact, when the Euro was created in two thousand, 0:02:15.840 --> 0:02:19.240 there was an upsurge of excitement about an alternative to 0:02:19.280 --> 0:02:22.120 the dollar finally, and the euro did seem ready to 0:02:22.160 --> 0:02:23.360 fulfill those promises. 0:02:23.639 --> 0:02:24.840 In the first seven. 0:02:24.680 --> 0:02:27.560 To eight years after its creation, the share of the 0:02:27.560 --> 0:02:30.240 Euro in foreign exchange reserves, for instance, went up by 0:02:30.240 --> 0:02:33.560 about eight percentage points from about twenty to twenty eight 0:02:33.560 --> 0:02:36.760 percentage twenty eight percent, and there was a sense that 0:02:36.800 --> 0:02:40.239 the euro was an unstoppable linear paths to taking over 0:02:40.280 --> 0:02:40.919 from the dollar. 0:02:41.400 --> 0:02:42.639 But then it all ended. 0:02:42.800 --> 0:02:46.800 The global financial crisis and the Eurozone debt crisis revealed 0:02:47.280 --> 0:02:50.520 that Europe does not quite have all the elements of 0:02:50.600 --> 0:02:53.600 a monitory union. Yes, there is monitor union, but the 0:02:53.639 --> 0:02:57.080 true banking union, the fiscal union, and other parts of 0:02:57.120 --> 0:03:00.200 economic union did not really hold together. So you think 0:03:00.200 --> 0:03:03.000 about the core part of the Eurozone, you know, countries 0:03:03.040 --> 0:03:05.840 like Germany, Austria and the Netherlands and Swan that's a 0:03:05.960 --> 0:03:09.760 much smaller share of the overall Eurozone bond market, and 0:03:09.919 --> 0:03:13.119 even those core countries and not exactly doing very well 0:03:13.200 --> 0:03:16.720 right now. Germany is struggling, for instance, so it doesn't 0:03:16.800 --> 0:03:19.600 look like Europe is ready to step up and take 0:03:19.639 --> 0:03:22.000 on the mantle. And certainly since two thousand and eight, 0:03:22.280 --> 0:03:24.560 the euro has done very poorly. It's shared as a 0:03:24.560 --> 0:03:28.640 payment currency, it's shares a reserve currency, have all fallen 0:03:28.720 --> 0:03:31.400 back to about the pre Euro levels. 0:03:32.120 --> 0:03:35.080 This is the institutional weakness that you're talking about that 0:03:35.160 --> 0:03:38.280 leads the dollar to remain on a much longer leash 0:03:38.280 --> 0:03:40.280 than any currency should rightfully have. 0:03:40.680 --> 0:03:41.600 That's your words. 0:03:41.840 --> 0:03:43.560 At the same time, the dollar is still in a 0:03:43.640 --> 0:03:46.520 leash and Steve England are a Standard Chartered said overnight 0:03:47.320 --> 0:03:49.880 that a US dollar and race crunch could emerge if 0:03:49.880 --> 0:03:54.120 the fiscal bill steepens the debt path without boosting growth. 0:03:54.200 --> 0:03:56.320 How much do you see that as a possibility, say 0:03:56.320 --> 0:03:58.760 in twenty twenty six or twenty twenty seven. 0:04:00.080 --> 0:04:02.720 You know, by all logically so the dollars should not 0:04:02.800 --> 0:04:06.480 be where it is. We're seeing that macroeconomic policies in 0:04:06.520 --> 0:04:09.760 the US, especially the physical deficit and debt levels, do 0:04:09.840 --> 0:04:13.560 not show any real discipline by US policymakers. The key 0:04:13.640 --> 0:04:17.280 elements of the institutional framework that are crucial to underpinning 0:04:17.320 --> 0:04:20.800 the dollar's dominance, you know, the independence of the central bank, 0:04:20.839 --> 0:04:24.320 the FED the system of checks and balances, the rule 0:04:24.360 --> 0:04:27.480 of law. All of these have certainly taken a pretty 0:04:27.520 --> 0:04:30.800 strong beating. But the reality is that if you put 0:04:30.839 --> 0:04:35.400 the whole package together, the institutions, but also financial market 0:04:35.480 --> 0:04:38.320 depth and size, and the dynamism of the US economy, 0:04:38.920 --> 0:04:41.960 even if the US does very poorly in each of 0:04:41.960 --> 0:04:45.359 these dimensions in a relative sense, it's still doing better 0:04:45.400 --> 0:04:47.600 than the rest of the world. And that's a difficulty. 0:04:48.040 --> 0:04:50.719 But having said that, we have certainly seen a fall 0:04:50.800 --> 0:04:54.160 off in the dollar's share of global asset flows and 0:04:54.200 --> 0:04:56.599 so on in the last four to five months. But 0:04:56.640 --> 0:04:59.360 it's worth keeping in mind that from September of twenty 0:04:59.400 --> 0:05:02.720 twenty four to about January of twenty twenty four, just 0:05:02.760 --> 0:05:05.919 still about inauguration day for the new president, the dollar 0:05:06.040 --> 0:05:08.920 on a trade weighted basis rose by about ten percent, 0:05:09.160 --> 0:05:12.760 possibly making it quite overvalued. And then it's fallen back 0:05:12.800 --> 0:05:15.039 by about ten percent to about where it was in 0:05:15.080 --> 0:05:17.600 September twenty twenty four. So if you want to tell 0:05:17.640 --> 0:05:20.840 a very negative story about the dollar, you start in January. 0:05:21.160 --> 0:05:23.400 If you want to tell a different story about the dollar, 0:05:23.440 --> 0:05:27.120 that things have changed but not really in a fundamental sense, 0:05:27.400 --> 0:05:29.520 you go back to September twenty twenty four, and not 0:05:29.640 --> 0:05:30.679 that much has changed. 0:05:31.080 --> 0:05:33.320 We know the president hates trade deficits. Do you think 0:05:33.360 --> 0:05:36.039 any of this is strategic to boost US exports? 0:05:37.440 --> 0:05:40.599 That's a very interesting question. We've heard very mixed messages 0:05:40.720 --> 0:05:44.119 from the administration about whether they want a weaker dollar 0:05:44.160 --> 0:05:47.320 in the short run and a long stronger dollar in 0:05:47.360 --> 0:05:50.080 the long run. Trump certainly has spoken about how he 0:05:50.160 --> 0:05:53.160 wants a dollar to remain the dominant currency, but at 0:05:53.160 --> 0:05:56.520 the same time, in many of the issues that we've 0:05:56.560 --> 0:05:59.480 had with other countries, including countries that the US is 0:05:59.520 --> 0:06:02.640 running a t that the US is running a trade 0:06:02.680 --> 0:06:06.760 surplus with the Trump administrations argue that many of those 0:06:06.760 --> 0:06:10.520 countries are manipulating their currencies to keep them weak, suggesting 0:06:10.560 --> 0:06:13.760 that the US would prefer that those currencies be stronger 0:06:13.760 --> 0:06:18.320 and the dollar be weaker. That mixed messaging certainly should 0:06:18.320 --> 0:06:21.400 be hurting the currency, and it probably is, but it 0:06:21.400 --> 0:06:24.120 doesn't seem to be a fundamental aspect of policy that 0:06:24.160 --> 0:06:27.479 they're trying to weaken the dollar through the messaging, but 0:06:27.600 --> 0:06:30.479 certainly the policies they're putting in place. You know, the 0:06:30.640 --> 0:06:33.640 increased likelihood of the US recession later this year because 0:06:33.680 --> 0:06:38.640 of all the tariff troubles, the increasing fiscal deficit levels, 0:06:38.960 --> 0:06:41.640 all of those are certainly going to weaken the dollar. 0:06:42.080 --> 0:06:43.480 I have no doubt this is going to be an 0:06:43.480 --> 0:06:46.960 ongoing conversation, particularly with you, sir, each four percent there 0:06:46.960 --> 0:06:59.400 of Cornow University joining us now the Republican Congressman French Shell, 0:07:00.160 --> 0:07:03.560 Arkansas Congressman Hill, welcome back to the program, sir. Let's 0:07:03.560 --> 0:07:06.120 get into this. I want to understand so here on 0:07:06.160 --> 0:07:07.760 Will Street. As you know, there's a big sense of 0:07:07.760 --> 0:07:10.960 self importance when you put this bill together. How much 0:07:10.960 --> 0:07:13.360 attention do you pay to the bond market, fixed income on 0:07:13.440 --> 0:07:15.000 what's happening on Will Street? 0:07:17.120 --> 0:07:19.320 Well, Jonathan, great to be with you. 0:07:19.360 --> 0:07:23.080 Look, Republicans in the House and Senate have collaborated for 0:07:23.160 --> 0:07:26.320 over a year on the components of this bill, and 0:07:26.400 --> 0:07:30.400 certainly very intensely since the election. We wanted to deliver 0:07:30.480 --> 0:07:35.880 on President Trump's campaign promises. First, redeploy federal spending, cut 0:07:35.880 --> 0:07:38.520 out some of the federal spending but we don't particularly 0:07:38.560 --> 0:07:42.080 agree with, and reinvest in the border and reinvest in defense. 0:07:42.680 --> 0:07:47.840 And secondly, a block a twenty two percent tax increase 0:07:47.920 --> 0:07:51.119 on families by extending the tax cuts and Jobs Act. 0:07:51.160 --> 0:07:55.560 Those were the fundamental components, and we did and believe 0:07:55.640 --> 0:08:00.800 that between the Trump regulatory policies and growth policies and 0:08:00.960 --> 0:08:04.960 tax policies, that we would get some acceleration and economic 0:08:05.040 --> 0:08:06.880 growth from the provisions in. 0:08:06.840 --> 0:08:10.600 The tax code. But we also focused on cutting spending. 0:08:10.240 --> 0:08:12.239 And in the House bill, we cut one point five 0:08:12.800 --> 0:08:15.440 trillion dollars in spending over the next ten years. 0:08:15.960 --> 0:08:18.960 Congressman, there's a handful of vocal Cenaters already who want 0:08:19.040 --> 0:08:21.840 major changes to this bill. Is it going to look 0:08:21.920 --> 0:08:24.360 remotely like anything you sent over to the Senate. 0:08:26.120 --> 0:08:28.320 Well, I'm not going to make predictions about what will 0:08:28.360 --> 0:08:31.440 happen in the Senate. We legislate every single day in 0:08:31.480 --> 0:08:34.600 the House. They legislate periodically over in the Senate, and 0:08:34.640 --> 0:08:37.760 so when they do, they have a lot of concentrated 0:08:37.800 --> 0:08:41.400 effort on it. They have to work by consensus in 0:08:41.440 --> 0:08:43.920 the two parties there, even more so than we do 0:08:44.040 --> 0:08:44.640 in the House. 0:08:45.600 --> 0:08:47.120 So I don't want to predict that. 0:08:47.240 --> 0:08:49.880 But look, I want to be clear that John Thune 0:08:49.880 --> 0:08:54.280 and Mike Johnson and President Trump have collaborated on the 0:08:54.320 --> 0:08:58.400 background and details of these bills. And that's why, based 0:08:58.440 --> 0:09:01.160 on what I've witnessed in the House the last five months. 0:09:01.720 --> 0:09:02.240 I want to. 0:09:02.200 --> 0:09:06.160 Echo Speaker Mike Johnson's point, which is this is a 0:09:06.200 --> 0:09:09.839 delicate dance and a delicate balance, and so the Senate 0:09:09.920 --> 0:09:13.760 has to consider any major changes very very carefully. 0:09:13.760 --> 0:09:16.200 I think, can a bill be big or can it 0:09:16.200 --> 0:09:17.320 be beautiful or can. 0:09:17.200 --> 0:09:17.800 It be both? 0:09:19.360 --> 0:09:21.839 Well, when you've got President Trump, you've got both at 0:09:21.880 --> 0:09:26.600 all times. So I think it can be significant in 0:09:26.600 --> 0:09:32.000 its policy direction and change, as well as very beneficial 0:09:32.040 --> 0:09:35.480 to American families and the growth of the American economy. 0:09:35.480 --> 0:09:36.079 And I think. 0:09:35.960 --> 0:09:39.720 That's delineated in the in the scope of the bill 0:09:39.760 --> 0:09:40.920 that we passed in the House. 0:09:41.160 --> 0:09:44.720 Congressman of course Emory was talking and referencing what Elon 0:09:44.800 --> 0:09:47.160 Musk was talking about as he seemed to distance himself, 0:09:47.200 --> 0:09:50.720 saying he's a bit disappointed that the current iteration of 0:09:50.760 --> 0:09:54.080 the bill does increase the deficit, and as he said, 0:09:54.120 --> 0:09:56.400 it seems to undermine some of the progress made by 0:09:56.480 --> 0:10:00.560 efforts in Doge. Do you agree, does it concern that 0:10:00.640 --> 0:10:03.440 there is this increase in the deficit with out real 0:10:03.480 --> 0:10:05.599 offsets for the longer term. 0:10:06.679 --> 0:10:09.200 Well, I think the work by Doze over the first 0:10:09.240 --> 0:10:12.960 fund months of them and has done a lot to 0:10:13.160 --> 0:10:19.280 uncover productivity loss, needs for reform and full time equivalent positions, 0:10:19.679 --> 0:10:24.360 how to reform IT systems make them more reliable, reduced waste, 0:10:24.360 --> 0:10:27.600 fraud and abuse. All those things found by Doze are helpful, 0:10:28.120 --> 0:10:30.680 and I think they informed Chairman Tom Cole, the chairman 0:10:30.720 --> 0:10:34.600 of the House Appropriations Committee, and his colleagues exactly how. 0:10:34.559 --> 0:10:37.200 To better focus f y twenty six spending. 0:10:37.600 --> 0:10:40.960 When we get back into session next week, you'll see 0:10:41.000 --> 0:10:46.160 the hearings in the House Appropriations Committee start quickly, and 0:10:46.200 --> 0:10:49.080 I think that's where the Doge work will be best 0:10:49.360 --> 0:10:52.400 reflected is in looking at f y twenty six. 0:10:52.920 --> 0:10:55.280 Do you think that the current iteration of the bill 0:10:55.360 --> 0:10:58.520 does enough to reduce growth to offset some of the 0:10:58.640 --> 0:11:01.400 constraints that you're seeing with tariffs, with the idea that 0:11:01.400 --> 0:11:04.680 even Walmart in your home state in Ventonville is being 0:11:04.720 --> 0:11:07.200 told to eat it and you're seeing profit margins contract 0:11:07.240 --> 0:11:10.520 or expectations for it. If you have both the deficit 0:11:10.640 --> 0:11:13.320 increasing and you have the potential for companies having to 0:11:13.320 --> 0:11:16.360 cut back, does that worry you well? 0:11:16.360 --> 0:11:19.120 As I've said on your show before, I remain concerned 0:11:19.120 --> 0:11:23.160 about the uncertainty in the tariff strategy. I think we've 0:11:23.160 --> 0:11:27.280 got regulatory reform going absolutely in the right direction. I 0:11:27.320 --> 0:11:31.559 believe that the tax preservation of no cuts for households 0:11:31.640 --> 0:11:35.360 and tax incentives for business are good in the bill, 0:11:35.400 --> 0:11:39.320 including major tax incentives to bring a new plant and 0:11:39.400 --> 0:11:42.319 facilities to the United States for construction. 0:11:43.000 --> 0:11:45.400 But we need to make sure we have clarity on 0:11:45.480 --> 0:11:47.200 the tariff issue. And you're right. 0:11:47.280 --> 0:11:51.040 Doug McMillan, the CEO of Walmart, met with President Trump 0:11:51.080 --> 0:11:54.840 made it very clear to him how quickly he believes 0:11:54.880 --> 0:11:56.360 that tariff clarity. 0:11:56.000 --> 0:11:58.160 Needs to be found or it's going to. 0:11:58.160 --> 0:12:02.800 Impact store shelves and store prices. 0:12:02.679 --> 0:12:03.600 Across the country. 0:12:03.600 --> 0:12:06.600 And I think you've seen that reflected in the Macy's 0:12:06.679 --> 0:12:08.720 report that you had just a few minutes ago. 0:12:08.960 --> 0:12:11.439 Did you get a send speaking to a Walmart congressman 0:12:11.480 --> 0:12:13.160 that we will get clarity by July. 0:12:13.040 --> 0:12:17.600 Ninth, Well, I believe that what I've heard from business, 0:12:17.840 --> 0:12:20.800 Dillard's Department store here at Little Rock, Arkansas, one of 0:12:20.840 --> 0:12:25.120 the biggest retailers in the South, the Walmart headquartered in Bentonville, Arkansas, 0:12:25.520 --> 0:12:28.000 as well as a number of small manufacturers here in 0:12:28.040 --> 0:12:32.000 the state and large, that they want clarity soon, meaning 0:12:32.760 --> 0:12:37.720 may June early July, because that's going to really impact 0:12:38.280 --> 0:12:42.160 plan shipments, plan purchases, and what's going to be on 0:12:42.200 --> 0:12:45.080 the shelves for back to school and this fall. So 0:12:45.080 --> 0:12:48.720 it's very important, particularly in the retailing industry, other industries 0:12:48.720 --> 0:12:52.240 and manufacturing. Maybe there's a little bit more leeway based 0:12:52.280 --> 0:12:55.920 on inventories that's been built over the inventory that's been 0:12:55.960 --> 0:12:58.319 built over the first few months of this year. 0:12:58.440 --> 0:13:00.280 In Congressman, just before you go, I have a he 0:13:00.320 --> 0:13:02.319 might want to weigh in on this, the anthropic CEO 0:13:02.800 --> 0:13:05.120 and what he had to say to Axios the AI 0:13:05.200 --> 0:13:08.480 could wipe out half of all entry level white college jobs. 0:13:08.840 --> 0:13:10.880 We sleep walking into a bit of a disaster. 0:13:12.720 --> 0:13:17.400 Well. I served last year on the Speaker Johnson's bipartisan 0:13:17.559 --> 0:13:22.080 Full House AI task Force. We had hearings all year 0:13:22.120 --> 0:13:25.240 from every segment and walk of life, from education to 0:13:26.120 --> 0:13:29.720 healthcare to service businesses, and we came up with a 0:13:29.760 --> 0:13:32.760 series of principles, and one is you have to keep 0:13:32.800 --> 0:13:36.840 a human in the loop in applying AI, either internally 0:13:36.920 --> 0:13:40.400 or externally in a business application or a government application. 0:13:41.160 --> 0:13:43.120 And if you use it as a tool, I think 0:13:43.160 --> 0:13:46.559 it's going to be a very big productivity. 0:13:47.640 --> 0:13:50.680 Tool to boost economic output. 0:13:51.240 --> 0:13:53.880 And from what we heard in testimony, I didn't hear 0:13:54.080 --> 0:13:58.560 the armageddon approach in the short run because it's such 0:13:58.600 --> 0:14:01.600 a immer urging, early stage tool. 0:14:01.600 --> 0:14:03.040 It's accelerating rapidly. 0:14:03.760 --> 0:14:05.920 But I think if we keep a human in the loop, 0:14:06.000 --> 0:14:08.960 as we apply it internal and externally in our businesses 0:14:08.960 --> 0:14:11.640 and then government, that we're going to continue to have 0:14:12.559 --> 0:14:15.240 employees that use it effectively and that it's not going 0:14:15.280 --> 0:14:19.040 to be as catastrophic in the short run, particularly as 0:14:19.120 --> 0:14:20.720 that predictions that prediction. 0:14:21.000 --> 0:14:23.280 We hope you write Congressman Hell, it's going to see 0:14:23.280 --> 0:14:26.240 you as always, Congressman Franchl on the LESIS needs the 0:14:26.280 --> 0:14:38.160 smaller invest us bracing front video results south to the closing. 0:14:38.200 --> 0:14:40.640 Now as China Rex spoke cubs, why on the chip 0:14:40.680 --> 0:14:43.080 maker joining us not to look ahead? Mandev Singh of 0:14:43.160 --> 0:14:46.120 Flimperg Intelligence Mandate, Welcome to the program, sir. What are 0:14:46.160 --> 0:14:49.840 you focused on? Lights of the Southternoon, Well, we know. 0:14:49.960 --> 0:14:53.200 That China is the focus, but for me, growth margin 0:14:53.360 --> 0:14:56.920 is where we can determine. You know, in video's pricing 0:14:57.000 --> 0:15:00.880 power and right now everyone is fixated on power supply. 0:15:01.120 --> 0:15:05.640 Six months back, you know, everyone was fixated on supply 0:15:05.800 --> 0:15:09.560 of GPUs. I feel that concern has alleviated and the 0:15:09.640 --> 0:15:12.440 focus is more on power and so what I want 0:15:12.520 --> 0:15:16.360 to know is how does that affect Nvidia's gross martin 0:15:16.440 --> 0:15:20.480 in terms of supply concerns abating And look, the geopolitical 0:15:20.640 --> 0:15:23.840 tensions are still there. They may have to remove some 0:15:23.920 --> 0:15:26.640 of their supply chains, but in the end, it comes 0:15:26.680 --> 0:15:29.760 down to growth smartin because that's the biggest determinant of 0:15:30.080 --> 0:15:31.320 Nvidia's free cash flow. 0:15:31.600 --> 0:15:34.240 There's also a question, Mandy, but about the hyperscalers that 0:15:34.280 --> 0:15:36.440 have come under some unique pressures, and thinking of Google 0:15:36.520 --> 0:15:39.120 or Alphabet the parent company of Google, how much do 0:15:39.160 --> 0:15:43.080 you expect some of these companies to increasingly become competitors, 0:15:43.280 --> 0:15:45.640 not just customers, and for that to be part of 0:15:45.680 --> 0:15:47.960 the narrative mix stemming from earnings today. 0:15:49.200 --> 0:15:49.840 Absolutely. 0:15:49.880 --> 0:15:53.920 I mean, look, we know Nvidia's revenue is concentrated with 0:15:54.000 --> 0:15:57.800 the five big hyperscalers, and we also know OpenAI is 0:15:57.960 --> 0:16:00.920 trying to branch out on its own comes to building 0:16:00.960 --> 0:16:04.640 its data centers, et cetera. So from that perspective, you 0:16:04.680 --> 0:16:09.480 know the commodification of llams. So if Gemini is catching 0:16:09.600 --> 0:16:13.560 up to open Ai, that's bad news for Nvidia. And 0:16:13.960 --> 0:16:18.760 look for Nvidia. Clearly they want the llams to standardize 0:16:18.800 --> 0:16:22.720 on their chips, but there are a lot of alternatives emerging, 0:16:23.400 --> 0:16:26.640 especially in China. And if you know, Chinese aren't getting 0:16:26.680 --> 0:16:29.440 the supply of GPUs and they're still able to train 0:16:29.520 --> 0:16:32.480 the models. They are setting up a precedent that you 0:16:32.640 --> 0:16:36.520 can do influencing without Nvidia GPUs, and that is what 0:16:36.600 --> 0:16:40.800 will determine in this AI infrastructure supercycle. What sort of 0:16:40.880 --> 0:16:43.560 market share will Nvidia have two years from now or 0:16:43.600 --> 0:16:44.520 five years from now. 0:16:44.600 --> 0:16:46.560 The stock is positive in the pre market by zero 0:16:46.600 --> 0:16:49.480 point six percent, mandep appreciate your time. Manday's sing there 0:16:49.480 --> 0:16:51.960 a bloomberg and salentence to build on the conversation. Joining 0:16:52.040 --> 0:16:55.120 us now Frankly of HSPAC, who has a whole writing 0:16:55.120 --> 0:16:57.520 on the stock and a one hundred and twenty dollars 0:16:57.560 --> 0:17:00.120 price target on Nvidia. Frank welcome to the program. I 0:17:00.160 --> 0:17:01.680 just want to build on some of the conversation we've 0:17:01.720 --> 0:17:04.160 already had so far this morning and understand from your 0:17:04.200 --> 0:17:08.000 perspective why this won't be the Beaten Rays quarter that 0:17:08.080 --> 0:17:10.280 maybe some people got used to in years gone by. 0:17:11.400 --> 0:17:13.400 Yeah, I think if you look at the Beaten Rays, 0:17:13.480 --> 0:17:15.720 we haven't really seen that for the last couple of 0:17:15.800 --> 0:17:19.159 quarters in Video since the second half last year, so 0:17:19.240 --> 0:17:21.960 I think what you're seeing is that. And one of 0:17:22.000 --> 0:17:23.880 the reasons I think we see is that there's still 0:17:23.920 --> 0:17:26.480 some ongoing challenges they're facing this year which they didn't 0:17:26.520 --> 0:17:28.879 face last year. You know, Number one, you had, you know, 0:17:28.960 --> 0:17:32.600 the supply chain is still having some ongoing issues, especially 0:17:32.680 --> 0:17:34.879 on the downstream side and the way they ramp their 0:17:35.320 --> 0:17:39.360 their NVL rack architecture. We've had the China ban come 0:17:39.400 --> 0:17:41.800 through earlier as well, and also I think the GtC 0:17:42.000 --> 0:17:45.000 road map that was launched it wasn't as exciting as 0:17:45.040 --> 0:17:48.680 people had hoped. We're not seeing a huge spec migration 0:17:48.800 --> 0:17:52.119 that will drive this incredible pricing power going forward. So 0:17:52.200 --> 0:17:55.000 these I think were the headwinds that I think you're 0:17:55.000 --> 0:17:57.200 in Video is facing in the first half of the year. 0:17:57.800 --> 0:18:00.280 And I think as you go into earnings, I think 0:18:00.280 --> 0:18:02.679 there will be a major surprise. I think the market 0:18:02.680 --> 0:18:06.119 has gotten used to that already. Expectations for earning for 0:18:06.200 --> 0:18:09.080 the revenue has come down over the last three months, 0:18:09.160 --> 0:18:11.120 so I don't think there will be a big disappointment either. 0:18:11.560 --> 0:18:13.880 So I think the focus there will be probably as 0:18:13.880 --> 0:18:15.880 we go into twenty twenty six, there's a. 0:18:15.880 --> 0:18:18.560 Question, frank about the supply side of this story with 0:18:18.600 --> 0:18:22.840 respect to supply chains and other issues, just creating enough 0:18:22.920 --> 0:18:25.480 chips to really meet demand. And then there's a question 0:18:25.520 --> 0:18:28.080 around the demand and how much is coming from China 0:18:28.160 --> 0:18:31.480 versus the Middle East to versus hyperscalers. Which side of 0:18:31.480 --> 0:18:33.080 the equation do you think is going to be the 0:18:33.119 --> 0:18:35.360 more important one this earning season. 0:18:36.560 --> 0:18:39.600 I think the focus will be, you know, the narrative 0:18:39.680 --> 0:18:43.560 someone has actually changed quite a bit, especially after the 0:18:43.880 --> 0:18:47.480 I think the Middle East AI deal, because that represents 0:18:47.840 --> 0:18:51.720 a new greenfield market opportunity for Nvidia that you know, 0:18:51.800 --> 0:18:54.080 over the long run, could perhaps double the revenue from 0:18:54.080 --> 0:18:56.280 where we are today. So I think that has been 0:18:56.280 --> 0:18:58.520 probably the biggest change, the big reason why the stock 0:18:58.520 --> 0:19:01.960 has rebounded off the recent lows. However, I think, you know, 0:19:02.160 --> 0:19:06.320 to get confirmation that this demand, this from the moist 0:19:06.359 --> 0:19:08.879 will materialize, we're going to have to see between now 0:19:08.880 --> 0:19:12.040 and in the year whether the supply chain expectations for 0:19:12.119 --> 0:19:14.879 next year does continue to reverse. Because since the beginning 0:19:14.880 --> 0:19:17.879 of the year, what we've seen is that the capacity 0:19:17.920 --> 0:19:20.959 on their chip side allocation has been coming down, so 0:19:21.000 --> 0:19:23.800 this is trend starts to reverse as we get into 0:19:23.920 --> 0:19:26.680 next year, that will be seen as a very important indicator. 0:19:26.840 --> 0:19:29.159 We may not see that for another couple of months, 0:19:29.520 --> 0:19:31.280 but that will be something I think is really critical 0:19:31.320 --> 0:19:34.719 because that establishes your baseline for twenty twenty six that 0:19:34.720 --> 0:19:37.520 it can grow again. But I think prior to this narrative, 0:19:37.840 --> 0:19:41.000 it was just really the hyperscalar. Capex will slow and 0:19:41.400 --> 0:19:44.360 they will also see more of a focus on their 0:19:44.359 --> 0:19:46.600 own chip, the ACIK chip, and that's why we see 0:19:46.600 --> 0:19:49.040 Broadcom seeing a very strong growth for next year as well. 0:19:49.119 --> 0:19:51.280 Frank, it is a pretty remarkable moment in a photo 0:19:51.320 --> 0:19:54.360 op when you have Jensen Wang basically standing in between 0:19:54.440 --> 0:19:57.360 President Trump and check Muhammad Benzaia and Abu Dhabi when 0:19:57.359 --> 0:20:01.480 they signed this AI partnership. But whether you put all 0:20:01.480 --> 0:20:04.440 of these deals together across the Gulf, is it enough 0:20:04.440 --> 0:20:06.560 of an offset for what's happening with China? 0:20:08.040 --> 0:20:12.320 I think right now the narrative clearly is there to 0:20:12.359 --> 0:20:15.320 suggest that it is. I mean, they've talked about six 0:20:15.400 --> 0:20:19.399 hundred gigawads that potentially over the next ten years or 0:20:19.400 --> 0:20:22.399 so could double their revenue to two hundred billion. But 0:20:23.240 --> 0:20:26.960 you know that's the narrative. Whether it materializes or not, 0:20:27.119 --> 0:20:29.560 we'll have to see. I think again, as we see 0:20:29.640 --> 0:20:32.600 next year that a supply chain start to see upper revisions. 0:20:32.720 --> 0:20:35.040 We've been in a downward revision since beginning of the year. 0:20:35.160 --> 0:20:37.640 Now does that start reversing course, I think that will 0:20:37.680 --> 0:20:39.600 be important thing to see because that's going to be 0:20:39.680 --> 0:20:41.679 the most I think a very important driver for Nvidia 0:20:41.720 --> 0:20:44.560 next year. The hyperscalar will slow down. I think they 0:20:44.640 --> 0:20:46.600 know that, and I think they've been preparing for that, 0:20:46.640 --> 0:20:49.919 which is why I think at Computex Jensen also talked about, 0:20:50.160 --> 0:20:53.879 you know, willing to sell the networking chips so he 0:20:53.920 --> 0:20:56.080 doesn't have to buy the hyper skirits don't have to 0:20:56.080 --> 0:20:58.440 buy the complete solution from him. So I think he's 0:20:58.480 --> 0:21:01.960 become more open minded about selling other chips besides the 0:21:02.119 --> 0:21:02.760 entire solution. 0:21:03.040 --> 0:21:04.680 Frank, just to wrap it up, we'd love a thought 0:21:04.720 --> 0:21:07.840 from you on the man himself, the leadership Jensen, Tim 0:21:07.920 --> 0:21:10.399