Speaker 1: This is Bloomberg day Break Weekend, our global look at
Speaker 1: the top stories in the coming week from our day
Speaker 1: Break anchors all around the world. Straight Ahead on the program,
Speaker 1: the world's most valuable chip maker reports earnings this week.
Speaker 1: I'm Tom Busby in New York. We'll tell you what
Speaker 1: to expect from end video.
Speaker 2: I'm Caroline Hedge in London, where we're looking ahead to
Speaker 2: the UK government's autumn statement and it's a gloomy economic
Speaker 2: back job.
Speaker 3: I'm Bryan Curtis in Hong Kong. We look at the
Speaker 3: US China agreement on fentanyl. What needs to happen to
Speaker 3: disrupt the supply.
Speaker 4: I'm Kaylee Lines in Washington, where Congress has averted a
Speaker 4: government shutdown for now, with the real spending fight still ahead.
Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend, the business
Speaker 5: news you need to wrap up your week in just
Speaker 5: one fifteen minute podcast available on Apple, Spotify, The Bloomberg
Speaker 5: Business Appen everywhere you get your podcasts.
Speaker 1: Good day to you. I'm Tom Busby, and we begin
Speaker 1: today's program with one of the last important third quarter
Speaker 1: earnings reports, and it's a biggie and video reports on Tuesday,
Speaker 1: Fueled by blockbuster demand for its artificial intelligence chips shares
Speaker 1: up more than two hundred and thirty percent just so
Speaker 1: far this year. Also in Vidia's latest breakthrough trip and
Speaker 1: the impact of US restrictions on tech sales to China.
Speaker 1: For all that and more, let's bring in Bloomberg Technology
Speaker 1: host ed Ludlow in San Francisco and Bloomberg Intelligence senior
Speaker 1: technology analyst man Deep Singing here in New York. Both
Speaker 1: of you welcome, Ed. Let's start with you. What are
Speaker 1: you expecting to see from Nvidio's earnings and its outlook?
Speaker 6: So they'll just be a big focus on the data
Speaker 6: center business for Nvideo, right and in the context of
Speaker 6: artificial intelligence, in video makes GPUs graphics processing units, and
Speaker 6: those are chips that are basically capable of doing lots
Speaker 6: of parallel data processes at a very high level. It's
Speaker 6: kind of what you need in an AI accelerator to
Speaker 6: train the foundation models that POWERAI. And they've just seen
Speaker 6: massive growth in that data center business. You know, last
Speaker 6: quarter it was kind of one hundred and seventy percent
Speaker 6: top line growth year on year, and going into this
Speaker 6: fiscal third quarter, the expectation is that that growth jumps
Speaker 6: to two hundred and thirty percent approximately year on year,
Speaker 6: but as you pointed out, the stocks had an incredible
Speaker 6: run in twenty twenty three so far the story is
Speaker 6: well known in video. Is still the kind of market
Speaker 6: incumbent for this specialized AI chip, and so expectations will
Speaker 6: be really high. And around the corner they have their
Speaker 6: next generation chip, the GH two hundred, which is due
Speaker 6: to go in production in the second quarter of next year.
Speaker 6: So you know that's how earnings always go, right, how
Speaker 6: did they do on the things we know they're doing?
Speaker 6: And when's the next big thing actually going to come
Speaker 6: and materialize in their financials? And I'm sure that that
Speaker 6: will be the discussion man do well.
Speaker 7: So from my perspective, you know, the last two quarters
Speaker 7: and videos come out not only beat their numbers, but
Speaker 7: raise the guidance by you know, almost thirty forty percent,
Speaker 7: And now that you know it's happened two times, I
Speaker 7: think the bar is pretty high. But at the same time,
Speaker 7: we know the market is still supply constrained. I mean,
Speaker 7: everyone that we talk to keep saying, you know, they
Speaker 7: can't find the GPUs, whether it's a eight hundred or
Speaker 7: the h hundreds, to train the models to really invest
Speaker 7: in GENAI. And so from that perspective, it still feels
Speaker 7: like the market is supply constrained and that goes in
Speaker 7: in Video's favor. Look, there are announcements from Microsoft yesterday
Speaker 7: and then from AMD saying that their GPU business could
Speaker 7: be two billion dollar und rate in twenty twenty four.
Speaker 7: But when you compare to where in Video is we're
Speaker 7: talking about sixty billion in data center revenue next year
Speaker 7: or even higher, it just tells you like they have
Speaker 7: the dominant share and they continue to be the preferred
Speaker 7: accelerator for anyone who is training these a lot of
Speaker 7: language models.
Speaker 6: And Mandy, let me jump in and kind of help
Speaker 6: out the audience with some of what you said. So
Speaker 6: supply constrained means that basically there is more demand for
Speaker 6: their AI accelerators or GPUs than they can actually make
Speaker 6: right now. And that's kind of important because the risk
Speaker 6: or the unknown in the background is China, and China
Speaker 6: in the data center context has been like twenty to
Speaker 6: twenty five percent of their business historically, and there are
Speaker 6: technology export curbs, and how originally Nvidia got around that
Speaker 6: was to make a lower spec version of the H
Speaker 6: one hundred called the H eight hundred, or a lower
Speaker 6: spec version of the A one hundred called the A
Speaker 6: eight hundred. Those were GPUs specifically for the China market
Speaker 6: that were conforming with the US technology export curbs that
Speaker 6: were put in place. Those curbs were then expanded, and
Speaker 6: you probably noticed last week some activity in the share
Speaker 6: price around reports that they're planning three new chips next gen,
Speaker 6: even lower spec to comply with those with those curbs.
Speaker 6: But the reason I make that point, and I'm interesting
Speaker 6: you take on this, man deep, is that when your
Speaker 6: supply constrained, if one of your big market, China is
Speaker 6: a warrior or a problem, there's plenty of demand elsewhere.
Speaker 6: You know, from countries and companies all over the world
Speaker 6: who are kind of clamoring to get hold of those
Speaker 6: those specialist GPUs. And I know that on the Bloomberg
Speaker 6: Technology Show and everyone I speak to that's certainly the case, right,
Speaker 6: people would say, I'll take some of those if we
Speaker 6: can get them.
Speaker 7: Yeah, And look the way to model the revenue for
Speaker 7: Nvidia or AMD. You know the lift from Jenni is
Speaker 7: look at the hyperscaler CAPEX. I mean, these are still
Speaker 7: the largest customers for these chips, because all these chips
Speaker 7: are being deployed on public cloud. And we know Microsoft
Speaker 7: has phrased their CAPEX expectations Googled not so much, and
Speaker 7: Jensen was there at the Microsoft event. So it just
Speaker 7: tells you that, you know, there is an appetite to
Speaker 7: get these chips. However many Nvidia has, and you know,
Speaker 7: if it's a hyperscaler, they're going to buy it, even
Speaker 7: if they're investing in their own chips. And right now,
Speaker 7: the definitely the markets seems like, you know, there is
Speaker 7: a huge appetite for whatever and video is making on
Speaker 7: the Accelerator.
Speaker 6: Site exactly, and it's kind of important to think about
Speaker 6: how those chips manifest in the real world. You just
Speaker 6: outlined it. But in the courter Gone, I actually visited
Speaker 6: in Nvidia and I got my hands on the now
Speaker 6: infamous H one hundred. And when we're talking about GPUs
Speaker 6: or literally semiconductors that are the brains behind training AI models,
Speaker 6: it's not like a chip you can just hold in
Speaker 6: your hand. You know, when people say, oh, I secured
Speaker 6: a cluster of ten thousand, h one hundreds, they don't
Speaker 6: just sort of have them in a bag slung over
Speaker 6: their shoulder. As Mandeep explained, these GPUs go in combination
Speaker 6: several GPUs into a box called a server design. That
Speaker 6: server design goes, alongside dozens of others, into the infrastructure
Speaker 6: that forms data centers. We're talking about like massive scale here.
Speaker 6: And what Invidia has done and how it's been able
Speaker 6: to maintain its lead is that right now, the work
Speaker 6: that's being done on AI is training foundation models or
Speaker 6: large language models that have billions and billions of parameters,
Speaker 6: tens of billions, sometimes hundreds of billions of parameters. Only
Speaker 6: the h one hundred can can really handle that right now?
Speaker 6: And what was so interesting manib reference the news from AMD,
Speaker 6: but specifically Microsoft coming out with its own silicon this week,
Speaker 6: the Azure MAYA one hundred. You know, from what I
Speaker 6: can tell, that's an AI accelerator that's much lower spec
Speaker 6: right and it will do some of the more the
Speaker 6: smaller models, more basic models. I guess what I'm saying
Speaker 6: is like the market expectations super high because in Vidia
Speaker 6: has a lead, and it looks like it will continue
Speaker 6: to grow and maintain that lead for the time being.
Speaker 7: I mean, what I'm interested in is what the software
Speaker 7: strategy is so what people forget with then Vidia is
Speaker 7: not only they have the accelerator, but they also had
Speaker 7: the Kuda software that really makes it easy to train
Speaker 7: your llms. And in this case, you know, if the
Speaker 7: hyperscalers are spending five to ten billion dollars every hyperscaler
Speaker 7: is spending on these GPU chips, how does it translate
Speaker 7: into the cloud revenue next year? Because right now, when
Speaker 7: you look at the cloud estimates, whether it's Azure, Amazon AWLS,
Speaker 7: or Google GCP, the accelerator revenue is still not reflected
Speaker 7: in the number. So I'm curious to see what is
Speaker 7: the lag when you know the monetization starts to show
Speaker 7: up in the cloud numbers.
Speaker 1: You know, let's talk then let's pivot to the newest
Speaker 1: chip that it's going to develop and come out next year.
Speaker 1: You talked at about the Age one hundred, it's going
Speaker 1: to come out with an Age two hundred. Sure, how
Speaker 1: will that be different and how much more will it
Speaker 1: be able to handle these large data sets?
Speaker 8: Yes?
Speaker 5: Go ahead.
Speaker 6: So what we're talking about is the Grace Hopper super chip,
Speaker 6: and it is both a GPU that we've just been
Speaker 6: talking about a graphics processing unit, but also it has
Speaker 6: within the design other components a processor, but particularly it
Speaker 6: addresses the issue of memory. One of the challenges in
Speaker 6: artificial intelligence and training large language models, which are basically
Speaker 6: the underpinnings of artificial intelligence, is something called the memory wall. Okay,
Speaker 6: and the memory wall basically is an issue where when
Speaker 6: you have a really big AI workload, large AI models
Speaker 6: have basically poor data reuse. They're drawing on lots of
Speaker 6: data for their training, but when you deploy that AI
Speaker 6: technology as a chatbot or another generative AI tool, it
Speaker 6: basically has a poor success rateed cycling data that's already there,
Speaker 6: and so it's really important to increase the memory capacity.
Speaker 6: So in simple terms, the super chip GH two hundred
Speaker 6: just has a more cutting edge inclusion of high BAM
Speaker 6: with memory, and GH two hundred is going to go
Speaker 6: into production in the second quarter of twenty twenty four,
Speaker 6: so it's not going to be out there in the
Speaker 6: real world at volume for some time. But from the
Speaker 6: sheer technology standpoint, this is now the battleground. If you
Speaker 6: look at AMD's equivalent, their AI accelerator, they lean very
Speaker 6: heavily in this idea that they've addressed the high bandwidth
Speaker 6: memory issue but AMD ain't going to be in production
Speaker 6: at volume for some time as well.
Speaker 5: Well.
Speaker 1: A lot to look forward to our thanks to Bloomberg
Speaker 1: Television Technology host ed Ludlow in San Francisco and Bloomberg
Speaker 1: Intelligence Senior technology analyst man Deep sing here in New York.
Speaker 1: Catch Bloomberg Technology weekdays at noon Wall Street Time and
Speaker 1: get the B Tech podcast wherever you download. Coming up
Speaker 1: on Bloomberg day Break Weekend, a preview of UK Prime
Speaker 1: Minister Rishi Sunak's spending plans. I'm Tom Busby and this
Speaker 1: is Bloomberg. This is Bloomberg Daybreak Weekend, our global look
Speaker 1: ahead at the top stories for investors in the coming week.
Speaker 1: I'm Tom Busby in New York. Up later in our
Speaker 1: program a look at one of the key agreements reached
Speaker 1: by the US in China following that presidential meeting in
Speaker 1: San Francisco. But first in the UK, Rishi Sunak's government
Speaker 1: will unveil its tax and spending plans in the coming days.
Speaker 1: Some positive economic data has given the Prime minister a
Speaker 1: boost on achieving its economic goals, but the budget may
Speaker 1: not make for such optimistic reading. For more or let's
Speaker 1: go to London and bring in Bloomberg Daybreak, europe Banker
Speaker 1: Caroline Hepger tom.
Speaker 2: Rischie Sunak has been on a roller coaster in the
Speaker 2: past week. He met one of his five key pledges
Speaker 2: to votus that inflation should come down below five percent
Speaker 2: by the end of the year, but he suffered a
Speaker 2: major setback on another to reduce illegal migration, when the
Speaker 2: UK's top court said that his plan to deport asylum
Speaker 2: seekers to Rwanda was illegal. Add to that a controversial
Speaker 2: reshuffle of his top team and it has been a
Speaker 2: busy few days. So in the coming week, the Prime Minister,
Speaker 2: along with his Chancellor Jeremy Hunt, will be trying to
Speaker 2: reset the government's economic agenda. All this with one eye
Speaker 2: on a general election that is expected within the next year.
Speaker 2: The economic and fiscal situation in the UK is still
Speaker 2: pretty gloomy, with growth flatlining, inflation is still well above
Speaker 2: the Bank of England's two percent target, and rising borrowing costs.
Speaker 2: On Blueberg Radio, I've been speaking to Elizabeth Martin's UK
Speaker 2: economist at HSBC for her view about the situation facing
Speaker 2: the chancellor.
Speaker 9: What's the UK government borrowing is actually coming in below
Speaker 9: what the OBR had been expecting in the near terms
Speaker 9: it's okay, but you know, the amount of issuance into
Speaker 9: the guilt market is concerning, I think to everyone involved
Speaker 9: in in that market, and I think, look, we're servicing
Speaker 9: a debt level of nearly one hundred percent of GDP
Speaker 9: at rates at fifteen year half. So all of those
Speaker 9: things do worry me. And I think whoever wins the
Speaker 9: election is going to have some difficult choices to make
Speaker 9: unless we can find that holy grail supply side growth
Speaker 9: and you know, grow the pie, as Let's Trust used
Speaker 9: to say.
Speaker 2: So that was Elizabeth Martin's UK economists at HSBC for herview.
Speaker 2: As the governing Conservatives continue to trail behind the opposition
Speaker 2: Labor Party in the polls, the Chancellor will be keen
Speaker 2: to make an impact with his autumn statement. And I've
Speaker 2: been discussing the context with Bloomberg opinion columnist Marcus Ashworth
Speaker 2: asking him what he thinks the context is to the
Speaker 2: autumn statement.
Speaker 8: I actually think that the data out recently has been
Speaker 8: very good for the UK and it's why sterling is
Speaker 8: at one twenty four. So I appreciate that's more dollar
Speaker 8: drive them, but you know, look, the economy is only
Speaker 8: at zero. I mean, that's a great result, and I
Speaker 8: do think interest rates are have Peete and I will
Speaker 8: come lower. The interesting point is he's got a little
Speaker 8: bit of wiggle room because if you look at numbers
Speaker 8: year today, the public finances as ever are completely different
Speaker 8: for what the Ober thought they might be. I'm not
Speaker 8: having a go at them, it's it's the way the
Speaker 8: system works. But we're probably going to be about thirty
Speaker 8: six billion or something like that better by the end
Speaker 8: of this financial year. Were already about twenty billion better.
Speaker 8: And that means that probably we will have to issue
Speaker 8: about twenty twenty six less guilts and t bills. He
Speaker 8: can play around this stuff. He has some headroom that
Speaker 8: could of course go away, and it's more a political
Speaker 8: question whether he wants to spend it now. I think
Speaker 8: he made There's lots of hints already coming in as
Speaker 8: his usual UK politics, and I think inheritance tax is
Speaker 8: something he wants to do something about very soon. He
Speaker 8: may cup the limit from forty percent tax down to say,
Speaker 8: I know, thirty or even twenty percent. That's a sort
Speaker 8: of to keep the background is happy a bit, but
Speaker 8: he wants to keep the dry powder for clearly the
Speaker 8: the budget in March, and I think all they can
Speaker 8: really do this government is at least give the inclination
Speaker 8: that they will cut taxes in the future, wait for
Speaker 8: the Bank of the until possibly have cut rates by
Speaker 8: the time of the next election. But you know, they've
Speaker 8: not got much room, but they have enough room to
Speaker 8: do something. They could of course increase spending, but I
Speaker 8: think all they'll really do is set traps for the
Speaker 8: next labor government.
Speaker 2: What about any tax books do you think for UK businesses,
Speaker 2: because that's the other big kind of lobby is companies
Speaker 2: who want to be able to invest, to grow businesses,
Speaker 2: to get to get well an extension of tax breaks
Speaker 2: that they've enjoyed. Do you think that's possible. Would it
Speaker 2: be well received by market?
Speaker 8: It should be possible, It should be the right thing
Speaker 8: to do. The question is how many votes are actually
Speaker 8: in there, and that's a very horrible situation we're in.
Speaker 8: The right thing to do is to extend these basically
Speaker 8: all investments investment be set up against tax, which they've
Speaker 8: had to because of again these OBR rules, they had
Speaker 8: to limit that to three years. They're playing games of
Speaker 8: their around their own rules. It's a situation we're in. Unfortunately,
Speaker 8: we're boxed in by this this ridiculous fiscal framework, and
Speaker 8: that's why if you're investing, you will need an horizon
Speaker 8: longer than three years. At the moment, the tax breaks
Speaker 8: only out for three years and it's about to expire.
Speaker 8: They will increase that. Will they extend it permanently? I
Speaker 8: hope they do so in essence or business investment can
Speaker 8: be offset against corporation tax. I don't think they'll cut
Speaker 8: corporation tax every roll, but they'll increase analysis. It's the
Speaker 8: right thing to do. I hope they do it. Whether
Speaker 8: they do it or not depends purely on the politics
Speaker 8: sadly here, and I think there is a chance they
Speaker 8: may delay that or certainly put that into it in
Speaker 8: a situation where it makes it all that pain will
Speaker 8: come in future fiscal years and not this currently.
Speaker 2: There's also been a drive to try to turn around
Speaker 2: the fortunes of London listings to try to get pension
Speaker 2: funds and we've spoken about this before, to get them
Speaker 2: to invest into UK businesses. Now today we've been talking
Speaker 2: this money on big Radio about the British ier. I mean,
Speaker 2: is that the answer to the poor performance of UK stocks.
Speaker 2: Would it work. There's a chance they're going to do it.
Speaker 8: It's the answer for UK stockbreakers for sure. I mean
Speaker 8: it's amazing to read some of the commentary on perhaps
Speaker 8: great ideas coming out. Let's make a British ier and
Speaker 8: increase the allowances. I'm very, very nervous when they're talking
Speaker 8: about putting our pensions, for instance, into sort of infrastructure products.
Speaker 8: Please leave our sayings alone. That's not where the government
Speaker 8: should be. If you want to give us greater allowances, fine,
Speaker 8: but don't alter or steer it in such a way
Speaker 8: that you are making you invest in something which we
Speaker 8: shouldn't necessarily be investing in. And I think it's a
Speaker 8: very dangerous subject. I do think there's a halfway house.
Speaker 8: They can increase the allowance if you put it into
Speaker 8: UK things, but I don't think you should be altering
Speaker 8: the current allowances to invest around the world or where
Speaker 8: you want to, because I don't think that's what and
Speaker 8: should be steering and picking winners. So yes, they may
Speaker 8: play with this. This has been flagged quite hard, so
Speaker 8: I imagine there will be something, whether they leave it
Speaker 8: till the budget or they do it now. They also
Speaker 8: said I don't know, but yeah, we might get something
Speaker 8: on that. To sound all pro British.
Speaker 2: The issue, you know, more broadly is about the kind
Speaker 2: of inflationary pressures and what the Bank of England does.
Speaker 2: I mean, put that into context. How much further does
Speaker 2: the Bank of England have to work to bring down
Speaker 2: inflation in the UK.
Speaker 8: They don't have to do anything. They've overdone it. In fact,
Speaker 8: I think the panic hike in Dune and fifty basis
Speaker 8: points two days later they got the CPI number which
Speaker 8: realized the actual fact they didn't need to do anything.
Speaker 8: And we've seen the numbers out this week that you know,
Speaker 8: particularly services inflation down to six point six that's already
Speaker 8: well above where the Bank of England expects to be
Speaker 8: a six point nine at the end of this quarter.
Speaker 8: They've overdone it, as has I think the European Central
Speaker 8: Bank as well, which brings us into As I said,
Speaker 8: I expect a rate cut before the next election. As
Speaker 8: I think the economy, as I said, flatlining at zero.
Speaker 8: It's a fantastic result. In our economists expect overall drop
Speaker 8: a one four percentage point in ghost domestic product over
Speaker 8: the course of the next year. I think that's certainly possible,
Speaker 8: and I think we'll be talking more about the prospect
Speaker 8: of inflation coming down too quickly. And I'm the worries
Speaker 8: again of getting below that target a little and earth
Speaker 8: than they're expected.
Speaker 1: So I think the cost.
Speaker 8: Of living crisis we're now should we say, reverse earnings
Speaker 8: are now substantially above where inflation is. I think food
Speaker 8: prices can you come down. We've already seen the energy
Speaker 8: stuff watch out, so I personally think we'll get some
Speaker 8: good us on that front.
Speaker 2: That was Bloomberg opinion columnist Marcus Ashworth. My thanks to
Speaker 2: him for joining me. I'm Caroline Hepgar here in London.
Speaker 2: You can catch us every weekday morning for Bloomberg Daybreak
Speaker 2: eu at beginning at six am in London. That's one
Speaker 2: am on Wall Street.
Speaker 1: Tom our thanks to Bloomberg Daybreak Europe banker Caroline Hepgar
Speaker 1: and coming up on Bloomberg day Break weekend, the plan
Speaker 1: for a crackdown on fentanyl by both the US and China.
Speaker 1: I'm Tom Busby and this is Bloomberg. I'm Tom Busby
Speaker 1: in New York with your global look ahead at the
Speaker 1: top stories for investors in the coming week. The US
Speaker 1: government avoids another possible shutdown, at least for now, as
Speaker 1: we'll look at what's next for Congress. But first, the
Speaker 1: deal that President Biden reached with Chinese President shi Jinping
Speaker 1: to combat the manufacture and export of fentanyl into the
Speaker 1: US has been characterized by senior US officials as the
Speaker 1: most important agreement coming out of that summit. So what's next?
Speaker 1: What steps are needed to disrupt the supply?
Speaker 3: For more?
Speaker 1: Bloomberg Daybreak Asia anchor Brian Curtis speaks with Michelle Cortes
Speaker 1: Bloomberg Medical Science and Tech reporter.
Speaker 3: Tom We focus on one of the key areas of
Speaker 3: agreement between President Biden and Chinese Leadershijenping, combating the spread
Speaker 3: of fentanyl. Fentanyl is a synthetic opioid produced by companies
Speaker 3: in China. China said that it would take actions to
Speaker 3: prevent the raw materials of the drug, known as precursors,
Speaker 3: from being exported without controls. The precursors find their way
Speaker 3: into Mexico and into the hands of primarily two criminal gangs,
Speaker 3: the Sineloa Cartel and the Cartel Jalisco New Generation. The
Speaker 3: gang synthesize the chemicals into fentanyl and hire US citizens
Speaker 3: for the most part, to smuggle the drugs into the
Speaker 3: United States. So how does that chain get disrupted? Well,
Speaker 3: joining us now is Michelle Cortez from Bloomberg's Global Business
Speaker 3: Asia team, So in terms of how does he get disrupted,
Speaker 3: I suppose it's at the source. That's what this is
Speaker 3: all about. Can they do it?
Speaker 10: Good news, of course that China and the US are
Speaker 10: working together on pretty much anything these days. We're a
Speaker 10: fan of that, but particularly when we're talking about something
Speaker 10: like the opioid christ which is killing about one hundred
Speaker 10: and fifty Americans every single day. And Brian, you're exactly right.
Speaker 10: What they're doing is they're going after the source material,
Speaker 10: the active pharmaceutical ingredient for the fentanyl. China is the
Speaker 10: manufacturing hub of the entire world. That is certainly true
Speaker 10: for pharmaceutical products, and fentanyl is an improved drug. It
Speaker 10: is used for real medical reasons and a lot of
Speaker 10: that production comes out of China. But what is also
Speaker 10: happening is this illegal production that is being also done
Speaker 10: in China, and for a long time was fed directly
Speaker 10: to the US. There was a crackdown on that, and
Speaker 10: what has happened since then is a lot of those
Speaker 10: precursor ingredients are now being sent to Mexico in the
Speaker 10: form of powders and liquids. They're being built into medicines,
Speaker 10: pills and drops that are smuggled over the border as
Speaker 10: you pointed to, getting to Americans. And it's that piece.
Speaker 10: It's actually nailing down who's making the active ingredients in China,
Speaker 10: making sure that only the legitimate stuff is shipped out
Speaker 10: to the right place.
Speaker 3: So do we know much about the way in to
Speaker 3: these companies and the flow out of the chemicals.
Speaker 10: Right, So that's exactly the point. We don't know certainly
Speaker 10: as people in general, as users, as reporters, we don't
Speaker 10: know who's making real ventanyl, who's making illicit ventanyl, and
Speaker 10: where it's going. That is going to require the Chinese
Speaker 10: government to really buckle down and to put money, time
Speaker 10: and effort into organizing and they're going to really have
Speaker 10: to put effort into figuring out which companies, which manufacturing plants,
Speaker 10: are making what medicines and where they're sending it. And
Speaker 10: that's the piece that's where the rubber hits the road
Speaker 10: that they're going to have to actually do the investigations.
Speaker 10: The bureaucracy, the paperwork, all of that kind of nitty
Speaker 10: gritty stuff. It is not easy. It is not going
Speaker 10: to be fast, but that's the stuff that's going to
Speaker 10: have to happen in order to reduce the trade.
Speaker 3: It's always something of a black box in China. It's
Speaker 3: not easy to know exactly what sorts of controls there are.
Speaker 3: Do we know much about the controls that are already
Speaker 3: in place and what needs to be added?
Speaker 10: Well, we certainly know about the controls where the Food
Speaker 10: and Drug Administration comes in and reviews all of the
Speaker 10: manufacturing that's happening to make sure that it's being done
Speaker 10: on the up and up. So anything that is FDA
Speaker 10: approved manufacturers those companies we know. The problem is is
Speaker 10: that that's not where the issue is. That's not the companies
Speaker 10: normally that are sending out the illicit material, and so
Speaker 10: finding those companies people who are doing things on the side,
Speaker 10: perhaps who have the knowledge, maybe they're getting the access
Speaker 10: to these ingredients for things that aren't actually medicines. They're
Speaker 10: used in many other things, painting and automotive uses, stuff
Speaker 10: like that. These chemicals aren't just medicines. So there's a
Speaker 10: lot of different avenues where you can get into that,
Speaker 10: and we are going to really be relying on the
Speaker 10: Chinese government to buckle down and dig deep to find them.
Speaker 3: Well, let me ask you this, If by chance we
Speaker 3: get serious controls put in place, what's to stop the
Speaker 3: Mexican cartels from accessing this material elsewhere? Is it really
Speaker 3: hard to make? Is it really China that specializes in this.
Speaker 10: Well, we have seen since the crackdown on China in
Speaker 10: about twenty nineteen that a lot of this effort has
Speaker 10: shifted over to China, I mean, has shifted over to India.
Speaker 10: China and India are the two big active pharmaceutical ingredient
Speaker 10: producers for the world, and we have seen that shift.
Speaker 10: It is difficult to make medicines. We see that with
Speaker 10: shortages of generic drugs and many other medicines, you know,
Speaker 10: things for cancer, chemotherapy is really important things. It is
Speaker 10: not easy to just crank something up and start generating
Speaker 10: these medicines and rolling it out. So it would be
Speaker 10: difficult for Mexico to actually start producing it. For these
Speaker 10: crime cartels to be doing it on their own, they
Speaker 10: need to get the access to it from where. But
Speaker 10: whether or not they can shift all of the demand,
Speaker 10: all the supply to India or other manufacturing powerhouses.
Speaker 7: We'll have to watch.
Speaker 3: And Michelle from the medical science standpoint, why is it
Speaker 3: that fentanyl is killing so many people?
Speaker 10: It is all overdose. Fentanyl is a synthetic opioid, an
Speaker 10: incredibly powerful medication. It's one hundred times stronger than morphine,
Speaker 10: for example. And the issue is that when you're talking
Speaker 10: about this illegal production of it, there is just not
Speaker 10: the safety guardrails that are put up. And it is
Speaker 10: so powerful, so potent, and so inexpensive that it's easy
Speaker 10: for these crime syndicates to make their pills and their
Speaker 10: other drugs, slip in a little bit of fentanyl to
Speaker 10: kind of give the other ingredients a boost so that
Speaker 10: you're still getting some kind of a some kind of
Speaker 10: a pain relief, some kind of a you know, a
Speaker 10: drug benefit from it in terms terms of illegal drug benefit,
Speaker 10: but it's much less expensive. The thing is that that
Speaker 10: fentanyl is so powerful that if you don't do it
Speaker 10: in in exactly the right amount, then you can easily
Speaker 10: give somebody an overdose. And it varies, it varies for
Speaker 10: every person. It varies based on how much you weigh
Speaker 10: it varies how much you've been using. It varies what
Speaker 10: you've eaten and done that particular day. So you could
Speaker 10: potentially take a ventanyl pill. You can take an opioid
Speaker 10: you don't even know what it is. You could think
Speaker 10: that you're buying LSD or heroin, and in fact you
Speaker 10: get ventanyl slipped into it, and you get it from
Speaker 10: the same person. You think it's the same batch. One
Speaker 10: day you're fine, the next day you've overdosed.
Speaker 3: In any case, the spotlight has really been shown now
Speaker 3: on this triangle from China to Mexico to the United States.
Speaker 3: And we can all hope for progress on stopping or
Speaker 3: combating some of the distribution, but will there be other
Speaker 3: benefits as well, more like just on educating the public
Speaker 3: about what's really happening here.
Speaker 10: Well, anytime you can educate the public, that's definitely going
Speaker 10: to be a good thing. And absolutely we know that,
Speaker 10: certainly from the US perspective, there's been a lot of
Speaker 10: excitement and celebration around the fact that they have gotten
Speaker 10: some meeting of the minds with China when it comes
Speaker 10: to this, because in the US there has been effort
Speaker 10: made to reducing the supply, to catching it early and
Speaker 10: to trying to reduce demand.
Speaker 4: But that is just so very very.
Speaker 6: Difficult to do.
Speaker 10: And the hope is that by actually hitting some of
Speaker 10: that supply early that you can reduce the demand, you
Speaker 10: can reduce the access, you can reduce the give and
Speaker 10: take on that end. So when we have some positive news,
Speaker 10: that's great, something welcome to tell Americans that something that
Speaker 10: is affecting every single community, every single town, all across
Speaker 10: the country. Everyone knows somebody who has either died from this,
Speaker 10: been exposed to it, maybe had to give a life
Speaker 10: saving narcandos to someone. Some of our colleagues actually carried
Speaker 10: around with them just because they live in big cities
Speaker 10: and have had to use it. So anything that's positive
Speaker 10: definitely will take it.
Speaker 3: Michelle, Thanks so much for your insights. Michelle Cortes from
Speaker 3: Bloomberg's Global Business Asia team. Michelle is a specialist in
Speaker 3: health technology and medical science. I'm Brian Curtis along with
Speaker 3: Doug Krisner. You can catch us every weekday here for
Speaker 3: Bloomberg day Break Asia, beginning at seven am in Hong
Speaker 3: Kong and six pm on Wall Street tom Our.
Speaker 1: Thanks to Bloomberg day Break Asia anchor Brian Curtis and
Speaker 1: coming up here on Bloomberg day Break weekend, the US
Speaker 1: once again averting a government shutdown for now. We head
Speaker 1: to Washington next. I'm Tom Busby, and this is Bloomberg.
Speaker 1: This is Bloomberg day Break Weekend, our global look ahead
Speaker 1: at the top stories for investors in the coming week.
Speaker 1: I'm Tom Busby in New York. Stop gap two tiered
Speaker 1: temporary funding bill, finding a lot of support in the
Speaker 1: House and Senate and helping avert a government shutdown at
Speaker 1: least for now. But Congress will have to do this
Speaker 1: all over again in just a few short months. Can
Speaker 1: they get a resolution done for more? Let's head to
Speaker 1: our Bloomberg ninety nine one newsroom in Washington and Bloomberg
Speaker 1: Sound On. Co host Kaylee Lines.
Speaker 4: Yeah, Tom, a shutdown has been averted. Congress has saved
Speaker 4: the holidays for themselves, and in fact, everyone already left
Speaker 4: town for Thanksgiving this past week. But come the new year,
Speaker 4: there is going to be a reckoning on Capitol Hill.
Speaker 4: The real funding battle still lies ahead. This stop gap
Speaker 4: Continuing Resolution only extends funding for some parts of government
Speaker 4: until January nineteenth, and the other parts until February second,
Speaker 4: and meeting those deadlines is probably going to prove pretty
Speaker 4: challenging here with Mara is Mike Dorning, who helps lead
Speaker 4: our congressional coverage at Bloomberg. So Mike Speaker Mike Johnson
Speaker 4: has already said he does not intend to pursue another
Speaker 4: continuing resolution, no more st gap measures, and it seems
Speaker 4: like hardline conservatives in the House do intend to hold
Speaker 4: him to that. So I kind of see two options here,
Speaker 4: one being do the work finish all the appropriation bills
Speaker 4: in time, the other being shut down. How hard is
Speaker 4: it going to be to go with option one to
Speaker 4: make option one happen and avoid option two.
Speaker 11: Well, actually, I think at the end of the day,
Speaker 11: it'll probably be something in between the two, although it
Speaker 11: may involve a shutdown. They've sort of teed up what
Speaker 11: the conservatives don't like, the omnibuses, but almost like little
Speaker 11: mini buses where you won't do all the twelve appropriations
Speaker 11: bills because it just looks like there's just divisions in
Speaker 11: the Republican Party that are blocking them from even getting
Speaker 11: some of them out of the House with a Republican
Speaker 11: version of them, let alone, you know, actually compromising with
Speaker 11: Democrats and coming up with something. But it does tee
Speaker 11: up like essentially two trashes of global settlements, one for
Speaker 11: part of the government initially and then someone for the
Speaker 11: rest of the government in early February. And I think
Speaker 11: there's a very high risk of a shutdown and at
Speaker 11: least the first instance, and probably maybe both instances, because
Speaker 11: the divisions are just so great well.
Speaker 4: And to your point on division specifically the divisions within
Speaker 4: the Republican Conference. What Mike Johnson just did pass a
Speaker 4: clean continuing resolution with no spending cuts with overwhelming Democratic
Speaker 4: support is exactly what we saw Speaker McCarthy do earlier
Speaker 4: this fall that ultimately led him to be ousted as speaker.
Speaker 4: So I wonder if the question we're dealing with is
Speaker 4: not singularly will the government shut down, but also a
Speaker 4: question of will Mike Johnson keep the speaker's gavel.
Speaker 11: I think that if that becomes a problem, it'll be
Speaker 11: a problem in late January early February, when all of
Speaker 11: this comes to a head and they are teeing it
Speaker 11: up for the sort of grand fight over funding the
Speaker 11: government to be Then you know, he does come into
Speaker 11: this with some credibility, and any reasonable person would say, hey,
Speaker 11: he was barely in the speaker's job three weeks when
Speaker 11: you know he's facing a shutdown, so you got to
Speaker 11: give him some ability to get give an extension. And
Speaker 11: he is really a sort of a core, very credible,
Speaker 11: very conservative guy. I mean, this is a guy who
Speaker 11: basically came up representing the Christian right in lawsuits before
Speaker 11: he ever ran for elective office. So that wasn't some
Speaker 11: opportunistic you know, positioning himself for the Republican primary. This
Speaker 11: appears to be who he is so much like Nancy
Speaker 11: Pelosi was like this incredibly progressive person with this long
Speaker 11: track record, and she was able to have credibility with progressives.
Speaker 11: This is a guy who is a true ultra conservative.
Speaker 11: He called himself an arch conservative and that helps his
Speaker 11: credibility for now until the robber. It's the road the
Speaker 11: end of January, beginning of February.
Speaker 4: So the outlook is murky to see the waste. Mike Dorning,
Speaker 4: one of the leaders of our congressional coverage here at
Speaker 4: Bloomberg in Washington, thank you so much, and Tom the.
Speaker 1: Fight ain't over yet, thank you. Kaylee. That was Bloomberg's
Speaker 1: sound on co host Kaylee Lines, reporting from our Bloomberg
Speaker 1: ninety nine one newsroom in Washington, and you can hear
Speaker 1: sound on weekdays one to three pm Wall Street Time
Speaker 1: on Bloomberg Radio. That does it for this edition of
Speaker 1: Bloomberg day Break Weekend. Join us again Monday morning at
Speaker 1: five am Wall Street Time for the latest on the
Speaker 1: market's overseas and the news you need to start your day.
Speaker 1: I'm Tom Buzzby. Stay with us. Top stories and global
Speaker 1: business headlines are coming up right now.