Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is the Blueberg DAYBAQ podcast, available every morning on Apple,
Speaker 2: Spotify or wherever you listen. It's Thursday, the twenty seventh
Speaker 2: of February in London. I'm Caroline Hepka coming up today
Speaker 2: and Video delivers results that underwhelm high expectations after years
Speaker 2: of blowouts. President Trump says the EU was created to
Speaker 2: screw the United States, as he proposes twenty five percent
Speaker 2: tariffs on the block plus doing it for the gram.
Speaker 2: Why more and more central bankers are posting on the
Speaker 2: social media site. Let's start with a roundup of our
Speaker 2: top stories. Shares in Nvidia fell in after hours trading
Speaker 2: as the AI Darling delivered good but not great results
Speaker 2: in Video. Says that quarterly sales will be slightly above
Speaker 2: analyst estimates at about forty three billion dollars, but gross
Speaker 2: profit margins will be tight to than expected. We got
Speaker 2: reaction from Angelo Zeno, vice president of Equity Research at CFRA.
Speaker 3: The gross margin number was probably the one black eye
Speaker 3: as far as where we kind of were looking at
Speaker 3: the guidance side of things. It was definitely a disappointment.
Speaker 3: I think when you kind of especially look at the
Speaker 3: trajectory of gross margins over the last couple of quarters.
Speaker 3: It kind of hit a peak run rate of about
Speaker 3: seventy eight percent in the first half of.
Speaker 1: Calendar twenty twenty four.
Speaker 3: So the margins continue to compress here going into the
Speaker 3: April quarter. The good news is we do expect that
Speaker 3: to essentially be the trough of the cycle here in
Speaker 3: the April quarter.
Speaker 2: Angelo Zino speaking there as concerns about slowing spending have
Speaker 2: continued to weigh on the artificial intelligence industry. Chinese art
Speaker 2: up Deep Seek has also sparked fears that chatbots can
Speaker 2: be developed at a cheaper rate, potentially reducing the need
Speaker 2: for Nvidia's powerful chips for AI. President Donald Trump says
Speaker 2: that tariff's on products from the European Union will be
Speaker 2: twenty five percent, announcing the changes during a cabinet meeting yesterday,
Speaker 2: he went on to use strong language to attack the block.
Speaker 1: It was formed in order to screw the United States.
Speaker 4: I mean, look, let's be honest, the European Union was
Speaker 4: formed in order to screw the United States.
Speaker 1: That's a purpose serve and they've done a good job
Speaker 1: of it. But now I'm.
Speaker 2: President, well, Trump's proposal for a twenty five percent tariff
Speaker 2: on the EU is new officials later clarified that all
Speaker 2: options are being considered on whether those would affect all
Speaker 2: exports from the block or only certain products or sectors.
Speaker 2: An EU commissioned spokesperson said that the block would act
Speaker 2: quote firmly and immediately against unjustified barriers to free and
Speaker 2: fair trade. Bloomberg Economics has calculated that if the EU
Speaker 2: did face a blanket twenty five percent US tariff, the
Speaker 2: hit to GDP could be as much as one and
Speaker 2: a half percent, with Germany most badly hit. Trump's comments
Speaker 2: on the eukme as he gave a series of apparently
Speaker 2: contradictory answers about his plans for tariffs twenty five percent
Speaker 2: tarifs on Canada and Mexico. The US president said that
Speaker 2: he's not stopping the tariffs, due to come into force
Speaker 2: on the fourth of March, but then he later mentioned
Speaker 2: the second of April as the implementation date. White House
Speaker 2: officials were forced to later clarify that deadline is still
Speaker 2: next Tuesday, although Trump is still undecided on granting another extension.
Speaker 2: UK Chancellor Rachel Reeves says that the British government wants
Speaker 2: to boost to trade with the US. Total trading goods
Speaker 2: and services between the two countries was worth two hundred
Speaker 2: and ninety four billion pounds in twenty twenty four, and
Speaker 2: in an exclusive interview with Bloomberg the G twenty meeting
Speaker 2: in Cape Town, Rachel Reeves made the case for even
Speaker 2: closer economic ties with the UK's biggest single country trading partner.
Speaker 5: In terms of the future trading relationship between the UK
Speaker 5: and the US. Last time that President Trump was in
Speaker 5: the White House, trade and investment between our two countries increase,
Speaker 5: and I have every confidence that that can happen.
Speaker 2: Again, Chancellor Rachel Reeves, speaking there as the Bank of
Speaker 2: England policy maker Swati Dingra warned yesterday that world trade
Speaker 2: appears to be heading for an orderly fragmentation. Well, the
Speaker 2: UK Chancellor's call for closer economic ties comes just as
Speaker 2: Prime Minister Kis Starmer heads to Washington as the latest
Speaker 2: anxious ally hoping to sway the US president's stands towards Ukraine.
Speaker 2: It's the first face to face meeting of the two
Speaker 2: leaders since Trump's election. Bloomberg's James Walcock reports, now.
Speaker 6: The UK has always wanted to be seen as the
Speaker 6: bridge between the US and Europe, with leaders scrambling to
Speaker 6: change Ukraine's fate. Kiss Starma is stressing that's so called
Speaker 6: a special relationship.
Speaker 4: We share fundamental values of openness, of democracy, freedom of speech,
Speaker 4: a freedom which this week we've shown our willingness to
Speaker 4: defend with the biggest sustained increase in our defense spending
Speaker 4: since the Cold War.
Speaker 6: The UK Prime Minister faces a potentially career defining test.
Speaker 6: Will you have any purchase on a US president who
Speaker 6: has been willing to upend transatlantic relations. Starmer's aids tell
Speaker 6: Bloomberg they would be delighted if they can get through
Speaker 6: the week without any public disagreement with Trump in London.
Speaker 6: James Wilcock Bloomberg Radio.
Speaker 2: Now to another story of interest. The US Director of
Speaker 2: National Intelligence Tarlsi Gabbard has called for an investigation into
Speaker 2: the UK ordering Apple to give access for the global
Speaker 2: data of its customers. Gabbart said that the decision could
Speaker 2: leave American encrypted data at risk of being exposed. So far,
Speaker 2: instead of complying with the UK, Apple has removed its
Speaker 2: most advanced encrypted security features in Britain that will potentially
Speaker 2: make it easier for the government or outside hackers to
Speaker 2: obtain UK user data. Months after Chancellor h Vve's crackdown
Speaker 2: on the UK's so called non dom tax regime, wealthy
Speaker 2: foreigners are making their concerns known more now from Bloomberg's
Speaker 2: team at Adebayo.
Speaker 7: The UK government is having open conversations with wealthy overseas
Speaker 7: nationals about tax that's according to Investment Minister Poppy Gustafferson,
Speaker 7: who says there's a collaborative dialogue between the two groups
Speaker 7: as the Treasury tries to troubleshoot issues. The news comes
Speaker 7: after a decision to scrap a preferential tax scheme which
Speaker 7: allowed foreign residents to avoid levies on UK earnings for
Speaker 7: up to fifteen years, a move which provoked the ayre
Speaker 7: of the ultra rich. Now, Gustafferson says the Chancellor is
Speaker 7: trying to create a tax structure which will be viewed
Speaker 7: as fair by the general public but prevents talented foreigners
Speaker 7: from shunning the UK in London. To you at a
Speaker 7: Bayo Bloomberg Radio.
Speaker 2: And those stories, Let's get to the markets this hour.
Speaker 2: Europeans stop future sinking half of one percent. This morning
Speaker 2: they dropped one percent yesterday after President Trump's threat of
Speaker 2: twenty five percent tariffs against the EU. So interesting the
Speaker 2: impact via stocks. The Euros also weaker this morning in
Speaker 2: terms of the trade. Now we're down two tens of
Speaker 2: one percent one spot zero four six seven. US stop
Speaker 2: futures are high for the S and P five hundred
Speaker 2: up by three tenths of one percent. We saw Nvidia
Speaker 2: shares falling one and a half percent in ex traded
Speaker 2: in extended trading yesterday. The stock did rise though before
Speaker 2: the earnings release, up three point seven percent, sort of
Speaker 2: ahead of the release. Asian stocks though, did fall because
Speaker 2: of the underwhelming seen as underwhelming results from en Video
Speaker 2: or not quite as as amazing as people had been
Speaker 2: hoping for. So you've got the MSCI Aged Pacific Index
Speaker 2: down by three tents of one percent, Hank saying Tech
Speaker 2: index dropping two percent. Tenny US treasury yield so yesterday
Speaker 2: dropped four basis points. They're up to basis points this morning.
Speaker 2: So we're trading at four twenty seven on that ten
Speaker 2: year yield. In a moment, we are going to bring
Speaker 2: you more details in fact, on Nvidia's first set of
Speaker 2: earning since the emergence of deep seek But first, more
Speaker 2: on this story that's come high today. Recruitment firms are
Speaker 2: noticing that junior bankers are using AI to draft their resumes,
Speaker 2: but beware if you don't properly proofread the application and
Speaker 2: errors creep in. It's raising red flags for potential investment
Speaker 2: banking employers. Of course, they are focused on the detail
Speaker 2: that apparently you need in those junior banking jobs. Bloomberg's
Speaker 2: Georgia Hill has the story and the details on this
Speaker 2: about the proliferation of AI assisted resumes. Her point essentially
Speaker 2: is that it is slowing the hiring process down because
Speaker 2: everybody has to actually spend more time thinking about whether
Speaker 2: the applicant is really as amazing as the AI. You know,
Speaker 2: maybe AI assisted a CV might demonstrate, which is interesting
Speaker 2: and also a bit ironic given that some recruiters are
Speaker 2: also using AI to help filter applicants. Anyway, we could
Speaker 2: all see the kind of arms race in terms of
Speaker 2: AI generated cvs and AI generated readers of cvs. But
Speaker 2: it's a really nice piece on the Blueberg terminal. I
Speaker 2: think if you're out there looking for a job, one
Speaker 2: to think about now. In Nvidia reported results which were
Speaker 2: tinged with a touch of disappointment yesterday after two years
Speaker 2: of blockbuster results and stratospheric stock price gains in twenty
Speaker 2: twenty three and twenty twenty four. Joining us this morning,
Speaker 2: it's been big intelligence. Is senior analyst Robert Lee to
Speaker 2: discuss this. Robert, great to have you with us this morning.
Speaker 2: A lot has been written on the Bloomberg terminal, on
Speaker 2: the website about the Nvidia results. Everybody's got a view
Speaker 2: because this company is so important. It's been the dominant
Speaker 2: seller of processes that create and run AI software. Just firstly,
Speaker 2: on the out for the first quarter, what have they said.
Speaker 8: Okay, thanks very much for having me on. I guess
Speaker 8: investors have become used to, or you know, being fed
Speaker 8: a diet of continual Beaten rays with the company, and
Speaker 8: you know it's got a long track record of doing that,
Speaker 8: running over multiple quarters. So I think, first of all,
Speaker 8: the stop price reaction, you saw the rate of incremental
Speaker 8: beaten raises diminishing. Maybe part of that reflects the higher base,
Speaker 8: but also reflects, I think a change in narrative with
Speaker 8: investors focusing more on the potential risks that in video
Speaker 8: faces in the short to medium term and not just
Speaker 8: the positive you know underlying story which is very well known.
Speaker 8: So the Q one guidance to answer your question came.
Speaker 8: There's something referred to with in markets as whisper numbers.
Speaker 8: I mean, there are official consensus numbers, but there is
Speaker 8: always a view that, you know, a company may beat
Speaker 8: or or miss those. So I think there was some
Speaker 8: disappointment and there was a hope within some sections of
Speaker 8: investors that the company's revenue and gross margin guidance could
Speaker 8: come in a little bit better than it actually did.
Speaker 8: So I think that's one short term trigger. But as
Speaker 8: I said, I think the narrative is changing. One of
Speaker 8: the major focuses on the risk front is obviously the
Speaker 8: scope for further tariffs.
Speaker 1: So obviously with.
Speaker 8: A new administration in place, that remains a very real
Speaker 8: threat to them because China is still a very material
Speaker 8: part of their business.
Speaker 2: So that just unpacked. You talk about beaten rays, explain
Speaker 2: that to the audience.
Speaker 8: Well, I guess stock market's run and many different things,
Speaker 8: but in short term, it's all about expectations and about
Speaker 8: the incremental performance or it's you know, for a stop
Speaker 8: price to go up in the near term. Then the
Speaker 8: guidance that a company sets and the numbers they report
Speaker 8: on their earning state ideally would need to come ahead
Speaker 8: of what was expt So there's an incremental positive surprise
Speaker 8: and obviously the reverse you know, disappointment if as we've
Speaker 8: seen with in video on the Q four numbers. So
Speaker 8: in absolute terms, these are still good numbers, but they
Speaker 8: beat the actual reported numbers, and more importantly, the guidance
Speaker 8: didn't quite meet the very highest of expectations, So there
Speaker 8: was incremental disappointment even though the numbers themselves were good.
Speaker 2: Yeah, understood good. In terms of the CEO, Jensen Wang,
Speaker 2: he talked about demand for Blackwell is amazing. Now of
Speaker 2: course there's a new model deep Seek. How did the
Speaker 2: CEO's have come across given that there is this new
Speaker 2: competitive landscape, as you say, you know, it does look
Speaker 2: like things are quite different now for in video.
Speaker 8: Yeah, well, Jensen Wang is not just a CEO, and
Speaker 8: you know and played an instrumental role in the you know,
Speaker 8: the humongous growth that this company has seen in recent years.
Speaker 8: He's their chief farc detect, their chief evangelist, their chief cheerleader.
Speaker 8: So you know, he's very good at setting out the
Speaker 8: stall and giving the sels pitch, which is what he
Speaker 8: continues to do. Again, I think the narrative is changing
Speaker 8: and more with a focus on these software companies and
Speaker 8: big tech platforms that are ultimately buying these chips, are
Speaker 8: installing it in the data centers. You know, a point
Speaker 8: I've tried to repeatedly make, but both in our little
Speaker 8: chats and then the publish research we have in the terminal.
Speaker 8: It's monetization because again, if we did a straw pole
Speaker 8: of listeners on this call at the moment, how many
Speaker 8: of us are actually putting our hand in our pocket
Speaker 8: and paying.
Speaker 1: For these services?
Speaker 8: And if we did, probably the chances we just switched
Speaker 8: to another service because there are many, many alternative supplies
Speaker 8: out the moment. The majority of AI bots or AI
Speaker 8: tools are available for free. There is a low level
Speaker 8: of product differentiation, you know, in many respects, or you
Speaker 8: go back to textbook definitions, it is a commoditize sector.
Speaker 8: So again I'm not referring to the hardware side. Obviously
Speaker 8: in Nvidia is the global leader and what they do,
Speaker 8: they're effectively and monopoly at the moment, But the monetization
Speaker 8: of the software companies, you know, the US tech platforms
Speaker 8: due to spend around three hundred and fifty billion US
Speaker 8: dollars this year, So I would argue that the rate
Speaker 8: of monetization is not coming through anywhere fast enough to
Speaker 8: justify these very high levels of CAPEX.
Speaker 2: Right, Robert, thank you so much for your time this morning.
Speaker 2: This is such an interesting space. Bloombig Intelligence is senior
Speaker 2: analyst Robert Lee.
Speaker 4: Thank you.
Speaker 2: Okay, let's dive into another interesting story. So central bankers
Speaker 2: are trying their hand at marketing and influencing on social media.
Speaker 2: This is in order to reach gen z and millennials
Speaker 2: in the wake of an inflation crisis in many countries
Speaker 2: and also the surprising issue of conspiracy theories around policy making.
Speaker 2: Joining us now is our UK economy reporter, Arena and
Speaker 2: girl who's been writing about why something like one hundred
Speaker 2: central banks have actually established a presence on Instagram. Arena.
Speaker 2: It's a great story, great tale. What are central banks
Speaker 2: doing with their Insta accounts?
Speaker 1: Hi, Caroline? Well, you know they're trying to meet.
Speaker 9: Gen zs where they are, and that is on social media.
Speaker 9: So most gen zs get their news on social media,
Speaker 9: and central banks are trying to go there speak in
Speaker 9: their language, so trying to keep the talk of basis
Speaker 9: points down to regain their trust, counter misinformation and educate.
Speaker 9: And what does that look like, Well, you know those
Speaker 9: videos of celebrities showing a day in their life on
Speaker 9: social media, So for example, some central bankers are trying
Speaker 9: to do that as well, and you know, you can
Speaker 9: imagine with various degrees of success.
Speaker 1: And I think the Bank of Canada its own videos are.
Speaker 9: Seemingly ai narrated, so they can look clumsy sometimes.
Speaker 1: And then there are all sorts of funny posts.
Speaker 9: D e c B has young people explaining it's decisions,
Speaker 9: it's industrate decisions. And for Valentine's Day they had this
Speaker 9: photo of the eurosymbol made of chocolate hearts captioned with
Speaker 9: roses are red, violets are blue inflations on track to
Speaker 9: settle around too, and.
Speaker 2: So that's it's also very cheesy then as well, exactly
Speaker 2: exactly and a.
Speaker 9: Bit you know, poking fun at themselves as well. And
Speaker 9: I mean maybe the most striking for me was the
Speaker 9: Bank of Jamaica. And the Bank of Jamaica has this
Speaker 9: lunchtime concerts at the Central Bank, these reggae concerts, and
Speaker 9: on its Instagram account you can find videos of people
Speaker 9: in the central bank, just random people dancing to the
Speaker 9: reggae music. So yeah, that's that was the funniest example
Speaker 9: and probably the most successful. You know.
Speaker 2: Yeah, So this the central bankers sort of needing to
Speaker 2: reach out to the public is very interesting obviously because
Speaker 2: you know, they're officials with such importance, but they're not elected,
Speaker 2: so you know, they're kind of interactions with the public.
Speaker 2: It's quite interesting. What do you think of the aim
Speaker 2: of all of this is then? And also, I guess
Speaker 2: what does success look like? I mean, some of what
Speaker 2: you outlined, yes is perhaps sounds a bit a bit
Speaker 2: cheesy or not as glamorous as the successful Instagram posts
Speaker 2: that you might expect. But what are what is the aim?
Speaker 9: That's a great question, and I think many people are
Speaker 9: still trying to answer the questions. So the big aim is,
Speaker 9: you know, to to engage to educate the public, because
Speaker 9: central banker's decisions on interest rate policies they affect everyone.
Speaker 9: You know, we can just think of mortgage rates as
Speaker 9: the main example, but most people don't understand how it
Speaker 9: works or how it affects them. So central bankers have
Speaker 9: to be out there and they have to set the
Speaker 9: narrative and often they have to be a bit cheat
Speaker 9: because that's what people consume on social media, or that's
Speaker 9: what central bankers think people consume on social media. But
Speaker 9: I think there is a limit to how successful they
Speaker 9: can be. As someone put it to me, central bankers
Speaker 9: have to be on Instagram, but they won't be effective.
Speaker 1: But they still have to be there, and.
Speaker 9: That's because there's this trade off between precision and accessibility
Speaker 9: that they have and politicians, for example, don't have this.
Speaker 1: So central bankers are technocrats.
Speaker 9: They are precise, and this is what makes them good
Speaker 9: at their job to set interest rates, but that is
Speaker 9: also what makes them a bit less accessible to the
Speaker 9: general public, a bit clumsier when trying to explain interest
Speaker 9: rates to an average person.
Speaker 2: I also thought it was interesting that it's the central
Speaker 2: banks that you pick out, as you know, having an
Speaker 2: Instagram feed. There aren't that many individual policy makers who do.
Speaker 2: But there is a big exception of course, that's the
Speaker 2: ECB's Christine Legarde. What is she using her Instagram feed for?
Speaker 9: Well, that's right, and you know, Christine la guard ironically
Speaker 9: has twice as many Instagram followers as the as the ECB.
Speaker 9: And you know, I should add that the ECB is
Speaker 9: one of the most active central banks on Instagram, So
Speaker 9: you know the fact that Christine la Guard is more
Speaker 9: successful than her own bank is quite telling. You know,
Speaker 9: she's one of those rare central bankers that commands attention
Speaker 9: to herself. She's not camera shy. She invites the camera.
Speaker 9: So she has all these videos where she talks to
Speaker 9: the camera and she, you know, says I met with
Speaker 9: this friend and colleague of mine, or you know, I'm
Speaker 9: in Lithuania right now for x or for for y,
Speaker 9: and she you know, sometimes she would also post stuff
Speaker 9: like a photo of the Notre Dame after the reopening,
Speaker 9: so trying to give a bit of a glimpse into
Speaker 9: her life as well. And I think that one of
Speaker 9: the more telling examples of Christine La Guard's sort of
Speaker 9: social media presence and relateationship with the media and with
Speaker 9: the public is when she decided when the ECB decided
Speaker 9: to cut interest rates for the first time in the
Speaker 9: cycle last summer, and she wore a golden necklace saying
Speaker 9: in spelling out in charge at the press conference when
Speaker 9: she was announcing this decision, which obviously attracted lots of
Speaker 9: cameras and a lot of people were speaking about this afterwards,
Speaker 9: so I guess that was a successful, successful attempt to
Speaker 9: reach the public.
Speaker 10: This is Bloomberg Daybreak Europe, your morning brief on the
Speaker 10: stories making news from London to Wall Street and beyond.
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Speaker 10: I'm Caroline Hepca and I'm Stephen Carroll. Join us again
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Speaker 1: Mm hmm