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Speaker 1: I know Ed Ludlow and Jay Goldberg are watching clear
Speaker 1: screens closely. I want to bring both of them in
Speaker 1: as we do await these earnings. Ed Ludlow is the
Speaker 1: cost of Bloomberg Tech on Bloomberg TV. He joins us
Speaker 1: from the San Francisco Bureau, and Jay Goldberg is with
Speaker 1: us too, senior analyst Semiconductors and Electronics at Seaport Research Partners.
Speaker 1: He's still the only analyst on the Bloomberg terminal who
Speaker 1: has a celerating on Nvidia, Jay, is it lonely in
Speaker 1: that corner.
Speaker 3: Of It's getting left lonely by the day, is it?
Speaker 1: How come?
Speaker 3: I mean in Q four November December, I had a
Speaker 3: lot of newfound friends.
Speaker 1: Okay, right, okay, well we'll see.
Speaker 4: If it was me being right, it was just I
Speaker 4: think the market is sort of rotating out of AI
Speaker 4: or de risking a little bit.
Speaker 1: Yeah, I take it. Okay, we'll see and we'll see
Speaker 1: what the numbers say today. Is there is there a
Speaker 1: chance that And look, I know that I don't want
Speaker 1: you to get in trouble with compliance or anything, but
Speaker 1: I ask you this every quarter, can you hear anything
Speaker 1: from Nvidia today? And I'm gonna have to interrupt you
Speaker 1: if we do get those numbers, are we going to
Speaker 1: Are you going to hear anything from Nvidia today or
Speaker 1: could you hear that would make you change your view
Speaker 1: to at least neutral or buy.
Speaker 5: It?
Speaker 3: It's pretty unlikely.
Speaker 4: My concerns are their capacity constrained, and I think they're
Speaker 4: just going to limit the amount of upside that they
Speaker 4: can deliver to revenue for the next few quarters.
Speaker 6: All right, sit tight, We're going to continue to away.
Speaker 6: Jay Goldberg is with us or Ed Ludlow is with us.
Speaker 6: Keep in mind, Tim you mentioned earlier with we talk
Speaker 6: with Ouroni and King three months ago in Verdia Nvidia
Speaker 6: excuse me, it'd beat the stock went up a little
Speaker 6: bit and then we start go down the next day.
Speaker 6: So you know, high in terms of expectations, although the
Speaker 6: stock has been beaten up here Ed Ludlow, as we
Speaker 6: await those results. Top thing you're watching out for here.
Speaker 7: Well usually hits it exactly twenty minutes the hours. So
Speaker 7: I'm a little bit on edge, and one wonders what's
Speaker 7: behind that. And I just state that as facts because
Speaker 7: I always go back and double check myself on the
Speaker 7: terminal evt go. Your last guest said that, you know,
Speaker 7: for the outlook for the current period April quarter, first
Speaker 7: fiscal quarter, that he was about seventy three to seventy
Speaker 7: four billion dollars in sales overall. That's above consensus, but
Speaker 7: it is not as high as the most bullish estimates, right.
Speaker 7: And so we started this year with Nvidia and Jens
Speaker 7: Mung at cees and there was actually quite a lot
Speaker 7: more update in those on stage and in front of
Speaker 7: camera appearances than perhaps at the time we preciated in
Speaker 7: terms of them going beyond that that original five hundred
Speaker 7: billion dollar forecast for calendar twenty six for example.
Speaker 3: So you know, you guys have done all week.
Speaker 7: I guess this is quite tense for the market because
Speaker 7: even that really good results may not be good enough.
Speaker 1: Yeah, And I Ian made that point on our program
Speaker 1: because we ask you know, and it's different every quarter,
Speaker 1: but in recent quarters this has been such a big event.
Speaker 1: But Ian made the point, Look, there's not you know,
Speaker 1: we've heard a lot from Jensen already about demand and
Speaker 1: so investors have that information. So yes, we will get
Speaker 1: obviously we'll get new information when the company reports its
Speaker 1: results and when we look at the you know, expectations
Speaker 1: and commentary. But like you said, a lots out there already.
Speaker 8: Yeah.
Speaker 7: So basically, this forecast for five hundred billion dollars at
Speaker 7: the time, it was over five fiscal quarters, and it
Speaker 7: was something that he said toward the end of last
Speaker 7: year in Washington, DC's in DC. That was just for
Speaker 7: Blackwell system and then Reubin Systems, but it didn't take
Speaker 7: into account any revenue whatsoever from China. Then what happened
Speaker 7: was Bloombergsine and King asked Jensen at a press conference
Speaker 7: how that number was looking three months on, and what
Speaker 7: he said was, well, we're tracking beyond it and that
Speaker 7: there may be some contribution from China, but right now,
Speaker 7: like until the print hits, those are imponderables. We don't
Speaker 7: know or we are pondering them, I guess, but they're
Speaker 7: not within the forecast, nor are they within what in
Speaker 7: Video has actually stated. So again, I'm just kind of
Speaker 7: noodling here, guys, it's difficult bear with me with the audience.
Speaker 7: I don't think in videos reported late late being later
Speaker 7: than twenty minutes past since like twenty twenty three, So
Speaker 7: I don't know.
Speaker 8: No, I think you're right to go there.
Speaker 6: We're looking at our live blog, which is the whole
Speaker 6: team here at Bloomberg. Number is with us, but Sarah Fryar,
Speaker 6: our big technology team leader, she's like, men, video earnings
Speaker 6: are usually by four to twenty still waiting. I don't
Speaker 6: want to speculate, but it is unusual in.
Speaker 1: I meta a few quarters ago and it was nothing.
Speaker 8: Yeah, it does happen.
Speaker 7: Yeah, can we talk quickly about margins unless the numbers
Speaker 7: like here? Yeah, you know, Like it's interesting that everyone
Speaker 7: discusses margins. This is a company that has seventy five
Speaker 7: percent gross margin, and we know that the economics of
Speaker 7: this industry are brutal. But something interesting has happened in
Speaker 7: recent months, which is that in Video owns more of
Speaker 7: the content of the server design. It's not just the
Speaker 7: GPU anymore. It's the little plugins around the GPU, and
Speaker 7: those may not be major drivers of revenue growth, but
Speaker 7: they have it would appear supported margins. But that creates
Speaker 7: some jeopardy for this print because if you have a
Speaker 7: gross margin of seventy five percent and the street and
Speaker 7: I think your last guest talked about this is the
Speaker 7: profile in terms of their risk tolerance that they like
Speaker 7: of a company like in video, they come to have
Speaker 7: an expectation and so don't just look at the earning statement,
Speaker 7: but when the CFO letter hits, look for the section
Speaker 7: on margins and where that that there's an indication that
Speaker 7: seventy five percent gross margin going forward is the norm,
Speaker 7: the status quoite so to speak.
Speaker 1: I mean, that's an incredible status quo for a company
Speaker 1: in the hardware business. Jay Goldberg, I want to bring
Speaker 1: you in here on the seventy five percent margins. I
Speaker 1: mean we heard this from Ian King earlier. These are
Speaker 1: software margins, not hardware margins.
Speaker 3: Yeah, I mean strong agree with what it was just saying.
Speaker 4: Is I think the bigger risk of my thesis or
Speaker 4: the bigger question mark this supporter is going to be margins.
Speaker 4: Like we have a pretty good fix on where you
Speaker 4: know what their revenue is going to look like he
Speaker 4: puts in takes.
Speaker 3: But the margin question is a big one.
Speaker 4: They make a lot of money money from memory. They
Speaker 4: buy memory from the memory makers then mark it up
Speaker 4: to their full margin. That's a lot of earnings for them.
Speaker 4: Their competitors don't do that. And we all know about
Speaker 4: the memory shortage. Is in Nvidia going to eat it?
Speaker 3: Is they?
Speaker 4: Are they going to be able to pass on the
Speaker 4: memory costs to their customers? I think that's I think
Speaker 4: that's going to be an area that the street's going
Speaker 4: to focus on a lot is how does how does
Speaker 4: their margin the gross margin that look look.
Speaker 6: All right, folks, We are talking with our Ed Ludlow,
Speaker 6: and of course we've also got with s. J. Goldberg
Speaker 6: over at Seaport Research Partners. We expected that in Vidia
Speaker 6: would have had its results at about seven minutes ago.
Speaker 8: We're still waiting two four to twenty.
Speaker 6: As Ed reminds us, this is the time that they
Speaker 6: have reported over the last few years, So we're kind
Speaker 6: of glued to our Bloomberg as we speak, just waiting
Speaker 6: for it to cross. Having said that, as we await,
Speaker 6: the stock is just up about four tenths of a
Speaker 6: percent here in the aftermarket. I'm not going to read
Speaker 6: anything into that, but we did see the stock hire
Speaker 6: also in the regular trade today, Jay.
Speaker 1: I want to go back to you as we do
Speaker 1: await these numbers. You mentioned some investors having AI fatigue,
Speaker 1: and indeed we've seen Nvidia in this narrow range really
Speaker 1: going back to just a few months ago. Explain more
Speaker 1: about how you're interpreting AI fatigue, because there's there are
Speaker 1: different different companies are working in different spaces here and
Speaker 1: in video. I think many would argue stands in a
Speaker 1: league of its own given the demand that it canntinues
Speaker 1: to see from the hyperscalers.
Speaker 4: So I think the issue is there are so many
Speaker 4: constraints across the industry. Right We're short on chip capacity,
Speaker 4: on packaging, on copper, on electricity, on substrates, all these
Speaker 4: things we haven't really thought about in a long time
Speaker 4: are very tight, and so that feels a little precarious.
Speaker 4: And then on top of it, you have a lot
Speaker 4: of questions about how these data center data center financing
Speaker 4: is going to work. There's a whole lot of financial
Speaker 4: engineering taking place on the construction side, and I think
Speaker 4: people look at that and they sort of think back
Speaker 4: to you know, past past periods and economic history of
Speaker 4: financial engineering going crazy, and it just I think in
Speaker 4: late last year it caused people to reassess how much
Speaker 4: exposure they want to AI. Even if you're not owning
Speaker 4: Nvidio stock, you probably have AI exposure in your portfolio
Speaker 4: just because the buildout is so spread.
Speaker 3: Out across the economy.
Speaker 4: Yeah, right, and so you can own you can own
Speaker 4: energy stocks, you can own you know, power plants, chemicals companies,
Speaker 4: all of them have a fair amount of AI exposure
Speaker 4: to growth. And so I think that sort of the
Speaker 4: market repriced that a little bit. And then you have
Speaker 4: in video who, like I said, just is sold out.
Speaker 4: But once you're sold out, there's no upside. And that's
Speaker 4: sort of stocks traded sideways for six months.
Speaker 1: Ed, come on in here, because Jay got me thinking
Speaker 1: about constraints. Go ahead.
Speaker 6: Well, the only thing I wanted to point out is
Speaker 6: that you know, we got salesforce no no salesforce earlier
Speaker 6: right after the market and it's down about four percent,
Speaker 6: and some of it has to do kind of feeding
Speaker 6: into the AI fears that are out there.
Speaker 8: A little bit.
Speaker 6: They gave a lukewarm outlook for sales growth. I mean
Speaker 6: it's in video and then it's the others because it's
Speaker 6: just been an interesting market environment as of late in
Speaker 6: terms of that AI scare, and it's been playing its
Speaker 6: way in a lot of areas, in particular in those
Speaker 6: software companies.
Speaker 3: Yeah.
Speaker 7: Look, the difficult thing with all of this is that
Speaker 7: the data center that gets built tomorrow with the latest
Speaker 7: generation and VideA, g use, the software results of that
Speaker 7: are in the future, right. And the way that Gentamong
Speaker 7: has explained it previously is that imagine if they were
Speaker 7: a handbag company bear with and they said to the market,
Speaker 7: here are next five seasons of bags. We're going to
Speaker 7: tell you in advance, the next five years worth in videos,
Speaker 7: argued for a really long time, it has told the
Speaker 7: market from the supply chain to its customers what it
Speaker 7: is going to do, and to its credit, it has
Speaker 7: delivered those generations of technology annually to a relatively accurate timeline.
Speaker 7: So that's why we track capital expenditures, right. Capital expenditures
Speaker 7: are a commitment for a calendar or a fiscal year
Speaker 7: in most cases in videos. The main beneficiary of that.
Speaker 7: The problem with salesforce and some of the other corners
Speaker 7: of the software market is that they know this is
Speaker 7: them showing the results of investments that they made in
Speaker 7: prior years, and those two timelines don't line up, and
Speaker 7: for investors, like, that's really hard. Again, I'm not an investor.
Speaker 7: This is just how it would be related to me,
Speaker 7: you know, on the show or in the course of
Speaker 7: being out there reporting, and you kind of have to
Speaker 7: sympathize with.
Speaker 1: That, you know, we're I want to remind everybody we
Speaker 1: are waiting for in video earnings usually reporting at twenty past.
Speaker 1: It's four thirty one here in on Wall Street, and
Speaker 1: we're going to be speaking a little later about salesforce
Speaker 1: or maybe even more a little sooner if we don't
Speaker 1: get these in video.
Speaker 8: Here we go.
Speaker 1: There they are, here we go. All right, go ahead, Cheryl.
Speaker 6: Let's go to actually the outlook first quarter revenue forecast,
Speaker 6: beating estimates, the company saying for the first quarter seas
Speaker 6: revenue of seventy six point forty four billion to seventy
Speaker 6: nine point fifty six billion, that is easily above the
Speaker 6: street estimate of seventy two point seventy eight million. Let's
Speaker 6: go back to the fourth quarter data center revenue that
Speaker 6: coming in better than expected sixty two point three billion
Speaker 6: versus the street estimate of sixty point thirty six billion,
Speaker 6: and video saying computing demand is growing exponentially. Fourth quarter
Speaker 6: adjusted gross margin we expected seventy five percent, We got
Speaker 6: seventy five point two percent. Fourth quarter revenue coming in
Speaker 6: overall sixty eight point one billion, better than the street
Speaker 6: estimate of sixty five point ninety one billion. Tim we're
Speaker 6: seeing that stock up now about two point two percent
Speaker 6: in the aftermarket.
Speaker 1: Yeah, just to remind everybody where we are with these numbers.
Speaker 1: The first the company ce's first quarter revenue coming in
Speaker 1: seventy six point four four billion dollars to seventy nine
Speaker 1: point five six billion dollars. That beat estimates handedly handily
Speaker 1: of seventy two point seven eight billion dollars. As Carol
Speaker 1: mentioned in video, CEO Jensen Wong saying in a statement,
Speaker 1: computing demand is growing exponentially. Were also fourth quarter data
Speaker 1: center revenue worth repeating a beat there sixty two point
Speaker 1: three billion dollars the estimers for sixty point three six billion,
Speaker 1: and that gross margin coming in above estimates at seventy
Speaker 1: five point two percent.
Speaker 6: Our Sarah Friar on our live blog saying that chairs
Speaker 6: are growing up on that data center revenue beat. Hey,
Speaker 6: Ed Ludlow, come on in. I know you're looking at
Speaker 6: these numbers. What jumps out for you?
Speaker 7: Yeah, I mean straight to the outlook. And by the way,
Speaker 7: I would have done the same thing. Go right there.
Speaker 7: You know, revenue in the fiscal first quarter seventy eight
Speaker 7: billion dollars plus or minus two percent. You know, a
Speaker 7: consensus was really high. But like going into this, it's
Speaker 7: a very simple equation. There were many names from across
Speaker 7: sell side and buyside that said they wanted to see
Speaker 7: Nvidia beat revenues overall in the current period in by
Speaker 7: the multiple billions of dollars, you know, against consensus. And
Speaker 7: so one thing I would say to confirm something is
Speaker 7: that the fiscal first quarter, which is the April quarter,
Speaker 7: does not assume any compute revenue from China. In the
Speaker 7: outlook does not factor in any compute revenue of China.
Speaker 7: That I guess is something to check off the list.
Speaker 7: It was one of the questions we had.
Speaker 1: I want to bring in Jake Goldberg from Seaport Research
Speaker 1: Partner's senior analysts, your semiconductors and Electronics. He joins us,
Speaker 1: also from San Francisco. Anything in here that confirms your
Speaker 1: thesis or does it sort of go against the celerating
Speaker 1: that you have on Nvidia?
Speaker 4: Yeah, I mean it goes I mean it's a good quarter.
Speaker 4: It's a good quarter and a good guide. It's above
Speaker 4: above consensus, above my expectations, but good for them.
Speaker 3: We're still waiting to see a lot more detail.
Speaker 1: What do you want to see?
Speaker 4: I want to see I want to hear more of
Speaker 4: have to talk about gross margin for next quarter. I
Speaker 4: think that's going to be in the CFO commentary.
Speaker 1: Yeah, Ed jump in.
Speaker 7: Yeah, No, I don't have it yet, but it will
Speaker 7: be in the CFO commentary.
Speaker 1: It's seventy versus seventy five percent expectations. I mean, can
Speaker 1: can Ed? Can you use that as sort of a
Speaker 1: guide for how the company could see.
Speaker 7: First Yeah, I mean on a basis point basis, Yeah,
Speaker 7: it looked like margins are impacted by a number of things.
Speaker 7: It has been a sell side question on prior calls,
Speaker 7: the percentage of a server that in Vidia contributes to.
Speaker 7: And again, what's changed in the period is Nvidia starting
Speaker 7: to sell for example, CPUs as standalone product, and that
Speaker 7: was a part of the meta deal that was included.
Speaker 7: They talked about core Weave being an early user of
Speaker 7: CPU as a standalone product. You know, how does that
Speaker 7: impact the margin profile going forward? But yeah, I mean
Speaker 7: what they do is they own more of the server
Speaker 7: and that has been one of the ways in which
Speaker 7: that they've got margins to where they are, and clearly
Speaker 7: being zero point two percent above you know, where where
Speaker 7: the hopes were is not a bad thing.
Speaker 6: Yeah, I'm looking at that CFO commentary. As we know,
Speaker 6: revenue expected to be seventy eight billion plus or minus
Speaker 6: two percent, and as you correctly pointed out, not assuming
Speaker 6: any data center compute revenue from China in their outlook,
Speaker 6: gap and non gap gross margins expected to be seventy
Speaker 6: four point nine percent and seventy five percent, respectively, plus
Speaker 6: or minus fifty basis point, inclusive of a one tenth
Speaker 6: of one percent impact from stock based compensation expense. Just
Speaker 6: looking at what else we have here, operating expensive gap
Speaker 6: and non gap operating expenses to be approximately seven point
Speaker 6: seven billion, seven and a half billion, respectively, including that's
Speaker 6: inclusive of one point nine billion of stock based compensation expense.
Speaker 1: The headline getting my attention is in Vidia says that
Speaker 1: hyper scalers were just over fifty percent of four Q
Speaker 1: data center revenue. J Goldberg, I want to repeat that
Speaker 1: headline for you hyper scalers, We're just over fifty percent
Speaker 1: of fourth quarter data center revenue. Is that a sign
Speaker 1: that in Vidia is diversifying revenue? Who who made up
Speaker 1: the other half of data center revenue? Is it automakers?
Speaker 1: Like who's buying?
Speaker 9: Well?
Speaker 4: I think that's one of the most interesting things that's
Speaker 4: taking place with in videos is they're not just reshaping
Speaker 4: the semiconductor industry, they're trying to reshape the cloud computing
Speaker 4: industry as well. And that's why you see we see
Speaker 4: all these neo clouds getting investment from or support from Nvidio.
Speaker 4: In Vidia would much rather have one hundred neocloud customers.
Speaker 1: Than three hybrid scale customers, of.
Speaker 4: Course, and they're doing a really good job of creating that,
Speaker 4: willing that into existence.
Speaker 1: So those other customers had come on in here. Those
Speaker 1: other customers are like the core weaves, the other neuroclouds.
Speaker 7: Yeah, I mean, what is still important in this fact
Speaker 7: is that obviously the vast majority has been the hyperscalers
Speaker 7: plus meta, right, And so they've wanted to kind of
Speaker 7: switch between a story what they used to call an
Speaker 7: AI factory. At first, an AI factory was an on
Speaker 7: prem data center that enterprises and maybe some of the
Speaker 7: neoclouds would operate themselves. Now an AI factory is what
Speaker 7: they you define any data center that's running AI workloads
Speaker 7: in so they have chopped and change between that story,
Speaker 7: but its origin was that they wanted to go beyond
Speaker 7: the hyperscalers to have people own their own infrastructure for
Speaker 7: AI workloads, if they were, say a software company or
Speaker 7: an enterprise of a slightly different size.
Speaker 6: You know, it's interesting, I'm looking for supply constraints and
Speaker 6: they seem to say in the CFO commentary, I'm seeing
Speaker 6: it in terms of gaming. They say, we expect supply
Speaker 6: constraints to be a headwind to gaming in the first
Speaker 6: quarter fiscal twenty twenty seven and beyond. But it's so important, right, Ed,
Speaker 6: I mean, we want to really just see if that's
Speaker 6: a problem in the data center area.
Speaker 7: Sadly, you know, my history within video, you know, before
Speaker 7: coming Silicon Valley and covering the data center thing was
Speaker 7: gaming and you know it's now such a small piece
Speaker 7: of revenue. It's I mean, Jay can jump in, but
Speaker 7: really it's not where anyone's looking right now. There is
Speaker 7: some discussion later on as it relates to the balance
Speaker 7: sheet and cash flow on things to do with supply,
Speaker 7: but you're right that what they're basically saying is that
Speaker 7: that was the gaming was the segment that was impacted,
Speaker 7: and I don't know that that is having any effect really,
Speaker 7: And how we see the stock trading in after.
Speaker 1: Hours, so in Video shares up three point four percent
Speaker 1: right now, and in fact we're seeing Broadcom TSMC and
Speaker 1: Micron shares follow in video higher. Jay Goldberg, come on
Speaker 1: in here and talk a little bit about the broader
Speaker 1: repercussions of a print like this outside of in video.
Speaker 1: What's the signal that it sends not just to hardware
Speaker 1: makers but to the entire market.
Speaker 4: I think there are always concerns about how how long
Speaker 4: the spend is going to keep going, and we had
Speaker 4: certainly had some positive data points about that. Two weeks
Speaker 4: ago when hyperscale is reported, Facebook reported they have very
Speaker 4: strong CAPEX numbers. This just continues that trend, and I
Speaker 4: don't want to say it's a rising tide that lifts
Speaker 4: all boats. But it's it is six seven hundred billion
Speaker 4: dollars in CAPEX this year, and that's that's going to
Speaker 4: spread across the entire ecosystem.
Speaker 6: No, and I want to go back to and I
Speaker 6: totally get like gaming non important, but I was like
Speaker 6: looking to see if there was any supply constraints in
Speaker 6: the rest of their universe, and I just thought it
Speaker 6: was kind of interesting that I haven't seen anything along
Speaker 6: those lines.
Speaker 8: It was just in regards to gaming.
Speaker 6: So is that a good sign that we haven't seen
Speaker 6: anything that the company has said so far in terms
Speaker 6: of supply constraints, Yeah, for the rest of the business,
Speaker 6: or I don't know, is it not that important?
Speaker 7: Well, you know, I leave it to the analyst to
Speaker 7: model money left on the table if there were any,
Speaker 7: so to speak. But given the outlook in terms of
Speaker 7: sales and where it came in relative to consensus, you know,
Speaker 7: in Vidia, it's an enviable position to be in right
Speaker 7: where demand exceeds your ability to supply anyway. But going
Speaker 7: back to that five year handbag analogy of a few
Speaker 7: moments ago, you know, the other argument that Jensen Wong
Speaker 7: and Video have made quite consistently is that if you
Speaker 7: tell your suppliers what you plan to do five years
Speaker 7: in advance, then the rest of the supply chain can
Speaker 7: help prepare with you and keep up. And you know
Speaker 7: recently that that's been most difficult in memory. But memory
Speaker 7: shows up in pricing, you know, And if you're Jensen Wong,
Speaker 7: I'm sure you can make a phone call and make
Speaker 7: sure that the corresponding high bandwidth memory that you need
Speaker 7: is there or thereabouts.
Speaker 6: Check on now ZAC one hundred to many futures here
Speaker 6: in the aftermarket, and they're up about one point eight percent,
Speaker 6: So we're certainly seeing a lift to the overall market.
Speaker 6: Jay Gilbert, come on back in what's top of mind
Speaker 6: when we get to this conference call in terms of
Speaker 6: what you want to hear. I know we talked a
Speaker 6: lot about orgins earlier, but.
Speaker 8: What is it?
Speaker 4: Yeah, I mean, I think this this margin stuff is
Speaker 4: important because what I'm sort of reading between the lines
Speaker 4: is they had to negotiate pricing with the memory memory makers,
Speaker 4: and the memory makers have the most leverage they've had
Speaker 4: in a decade, and we don't see any impact on
Speaker 4: in videous numbers. Compare that to pretty much any other
Speaker 4: electronics company out there.
Speaker 3: Today, which is warning about memory.
Speaker 4: I'm sure they're in video is feelings some of that,
Speaker 4: but the fact that their gross margins are guiding to
Speaker 4: at least in line tells me that they're just going
Speaker 4: to price on those memory increases to their customers, which
Speaker 4: is a testament to the to the to their pricing power,
Speaker 4: to their power their market position.
Speaker 1: Jake Oldberg, Jay, we're gonna have to leave it there.
Speaker 1: We're gonna give you time to get ready to jump
Speaker 1: on that call. Jae Goldberger, Senior analyst, Semiconductors and Allow
Speaker 1: Electronics for Seaport Research Partners. Once again, Jay, the only
Speaker 1: analyst tracked by the Bloomberg terminal who has accelerating on
Speaker 1: in video and want to give you the last You've
Speaker 1: spoken to Jensen Wang many many times. What's a question
Speaker 1: that you would have for him on the earnings call tonight?
Speaker 7: Yeah, Like, ultimately, it just always comes down to a
Speaker 7: projection of confidence that all of the stories we've been
Speaker 7: over in more than the last year is still intact.
Speaker 7: You know that the great build out of AI infrastructure
Speaker 7: is early, that they have long horizon visibility into what's
Speaker 7: going on.
Speaker 3: All in video can control.
Speaker 7: I suppose is the roadmap to go from one generation
Speaker 7: of compute to the next. And so they talk about
Speaker 7: in the CFO document margins being supported by the ramp
Speaker 7: up in Blackwell and mix of new products. Well, when
Speaker 7: does that mixed change? When does Vera Rubin really kick
Speaker 7: in and then go beyond that? That's kind of how
Speaker 7: the street would look at it.
Speaker 8: I think, all right, we're going to live with there.
Speaker 9: Ed.
Speaker 6: We know you're busy as well. Ed Lodlo, thank you
Speaker 6: so much as we waited those numbers, then helping us
Speaker 6: break them down. Co host a Bloomberg Tech of Course
Speaker 6: on Bloomberg Television. Catch it at eleven am Wall Street
Speaker 6: Time Monday through Friday.
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Speaker 6: Then VideA shares continuing to trade higher. A couple of
Speaker 6: headlines also crossing that we want to bring to you,
Speaker 6: and Vidia says it's secured supply to meet demand for
Speaker 6: several quarters so we talk about supply constraints often when
Speaker 6: we're talking about Nvidia and the AI demand. Also in VideA, saying,
Speaker 6: the United States granted a license to ship H two
Speaker 6: hundred chips to China based clients. So they've granted a
Speaker 6: license for specific China based customers. The US licenses to
Speaker 6: ship small amounts of the H two hundred to China,
Speaker 6: So we were looking for some clarification on its business
Speaker 6: in China, something that they've certainly been looking for.
Speaker 1: We got a great Bloomberg Intelligence roundtable. May Deeeps saying
Speaker 1: his global head of Technology Research for Bloomberg Intelligence. He
Speaker 1: joins us here in the Bloomberg Interactive Brokers studio. He
Speaker 1: covers in Vidia, he covers Snowflake and more. Also, anurag
Speaker 1: Rana is senior technology analyst for Bloomberg Intelligence. He joins
Speaker 1: us from Chicago and he covers a salesforce. So we're
Speaker 1: going to talk software, We're going to talk hardware, me
Speaker 1: and deep. I want to start with your reaction to
Speaker 1: in video. It was a beat, It was, I mean
Speaker 1: a very good quarter. Your reaction to margin and what
Speaker 1: is actually holding out margins here, because seventy five point
Speaker 1: two percent.
Speaker 9: Yeah, no mention of any impact related to memory costs,
Speaker 9: which is surprising.
Speaker 1: And why is that surprising? I know, my memory costs
Speaker 1: have gone up. But in video is such a big company,
Speaker 1: don't they have pricing power?
Speaker 9: They do, but purchasing power und They clearly did a
Speaker 9: great job in terms of securing that supply and they
Speaker 9: don't have the premium. They don't have to pay the
Speaker 9: premium that everyone else has to pay on the hardware signe.
Speaker 1: They said, secured supply to meet the man for several quarters.
Speaker 1: What's several well, I mean in this at least.
Speaker 8: But they're saying that they've got it. That's a good thing.
Speaker 9: They have got it, and they're guiding to you know,
Speaker 9: mid seventy percent rose margin for next quarter as well.
Speaker 9: So clearly memory not you know, an impact at all
Speaker 9: in terms of the margins. The thing that is clear
Speaker 9: is they are selling you know, to existing customers, not
Speaker 9: just GPUs, but systems. And that's the big difference between
Speaker 9: an Invidia and AMD. AMD wants Meta to use their
Speaker 9: chips and integrate it, right, Nvidia is actually selling their
Speaker 9: custom to their customers entire systems that have higher asps.
Speaker 9: They are helping them reduce the token costs, and that's
Speaker 9: where the customers don't mind paying that extra you know,
Speaker 9: premium that in Vidia is charging because overall the total
Speaker 9: cost of ownership is lower than if you were to
Speaker 9: standardize on any other chips. And that's what's reflected in
Speaker 9: their print is look, their customers see the value.
Speaker 8: So well done in video right by doing the whole thing.
Speaker 9: And the Blackwell architecture, that's really taken off. I mean
Speaker 9: all the concerns around the migration from Harper to Blackwell,
Speaker 9: I mean, they just proved that Blackwell will be probably
Speaker 9: a bigger product in terms of their chip architectures.
Speaker 8: Does this in your mind?
Speaker 6: I mean I always feel like you're like the calmvoice
Speaker 6: of saying, the aarspend is still happening, like everybody relaxed.
Speaker 9: It's accelerating that.
Speaker 8: But it's accelerate. That's what you're getting from this.
Speaker 9: I mean, look at Nvidia's growth in the last fiscal quota,
Speaker 9: it was around mid sixty percent. They're pointing to seventy
Speaker 9: seven percent growth in their fiscal one q so that
Speaker 9: goes to show and the proof point you can see
Speaker 9: in the hyperscalar capex. The hyperscalar capex seems to be
Speaker 9: going up as well, so it's underpinned by healthy fundamentals.
Speaker 9: We know why in Vidius top line is accelerating, right,
Speaker 9: because the kapex seems to be accelerating, and all these
Speaker 9: points towards more inferencing, more demand for AI compute, and
Speaker 9: we are hitting that phase where it's not just you
Speaker 9: know about training or whether it will happen or not.
Speaker 9: It's happening.
Speaker 8: So the ROI the usage, right, we're seeing it.
Speaker 9: The usage is happening, and companies are consuming the compute.
Speaker 9: It's going to get reflected in the cloud revenue next quarter.
Speaker 9: It's going to get reflected in all the possible forms
Speaker 9: of where infriencing will show up.
Speaker 1: We're going to bring on aurag In in a second
Speaker 1: and talk Salesforce because I think that's a good transition
Speaker 1: to talk about what companies are doing with AI and
Speaker 1: the message at least that Salesforce trying to make with
Speaker 1: agentic AI. But before we get there, maybe if I
Speaker 1: do want you to weigh in on what Carol mentioned
Speaker 1: earlier about the China business. H two hundred shipped under
Speaker 1: a new program subject to a twenty five percent tariff.
Speaker 1: Nvidia discloses US government in a ten K filing granted
Speaker 1: license by the US and February of twenty twenty six,
Speaker 1: the US licensed to ship small amounts of H two
Speaker 1: hundred to China for specific China based customer. What does
Speaker 1: our investing audience need to understand about what it can
Speaker 1: sell to China and the impact on that financially.
Speaker 9: I mean it used to be China used to be
Speaker 9: mid single digit percentage of in Vidio's overall data center revenue.
Speaker 9: And Jensen has said China is about a fifty billion
Speaker 9: dollars addressable market when it comes to you know, chips,
Speaker 9: and so the fact that they're allowed to sell something
Speaker 9: now to China doesn't mean it's going to grow at
Speaker 9: the same rate as their overall top line, which is
Speaker 9: you know, seventy seven percent, and that excludes the China number.
Speaker 9: But it's all incremental revenue. And this print shows there
Speaker 9: is just insatiable demand for Invidia's chips and whoever can
Speaker 9: get it well buy it. So it's just a question
Speaker 9: of whether in Vidio is willing to sell it to
Speaker 9: them or not.
Speaker 8: All right, So let's go to salesforce.
Speaker 6: We do want to bring in our anarag Rana, senior
Speaker 6: technology analyst a Bloomberg Intelligence.
Speaker 8: He's in Chicago.
Speaker 6: Shares of Salesforce Anaragor down about four and a half
Speaker 6: percent in the after market. Some of the red headlines
Speaker 6: that we crossed on the Bloomberg company in terms of
Speaker 6: the outlook sees first quote a revenue of eleven point
Speaker 6: zero three to eleven point zero eight billion, that's above
Speaker 6: the street estimate of ten point ninety nine billion. Also
Speaker 6: increasing its share buyback authorization to fifty billion dollars. Walk
Speaker 6: us through because this company has certainly been under a
Speaker 6: lot of pressure. It's down about fifty percent since late
Speaker 6: twenty twenty four.
Speaker 10: So there are two things that are happening right now.
Speaker 10: The first is, given so much spend going into AI,
Speaker 10: the non AI spending is the one that's under pressure,
Speaker 10: and that is hurting companies like Salesforce, workday accenture, and
Speaker 10: so forth, because companies have or the clients don't have
Speaker 10: that much money to spend in terms of how they're
Speaker 10: allocating AI spending versus non AI. The second big piece
Speaker 10: right now is the market's extremely worried about software companies
Speaker 10: getting disrupted by all the model providers and all the
Speaker 10: AI native companies. So Salesforce are getting hit by two
Speaker 10: different ways. But the results, frankly, I mean I wouldn't
Speaker 10: say they were disappointing. I would say they were stay
Speaker 10: able to inline in terms of what they were saying
Speaker 10: they're going to do. So from our side, you know,
Speaker 10: it is just going to take some time to sort out.
Speaker 1: So Anni rog the question. I think a lot of
Speaker 1: people have excuse me about a company like Salesforce, and
Speaker 1: you know, we could go through any other software company,
Speaker 1: not any other, but many other software companies and ask
Speaker 1: you the same question is about the threat from artificial intelligence.
Speaker 1: And Mark Benioff was was very clear in the press
Speaker 1: release to say that this is a company that has
Speaker 1: like relaunched, I don't have the exact wording in front
Speaker 1: of me, but relaunched as an AI and agentic AI company.
Speaker 1: Is is it really under threat? And specifically like, what
Speaker 1: is the threat from Claude, from Anthropic or from open
Speaker 1: AI that investors are so worried about and is it warranted?
Speaker 10: So the question is the answer to the if is
Speaker 10: it warranted? I mean, I think we're going to take
Speaker 10: some time to play out because if the models get
Speaker 10: really smart, then why do you need a manufactured software
Speaker 10: like this? That software can do a lot of what
Speaker 10: you need to do in terms of managing your salesforce
Speaker 10: or customer service. Now, the question is, in our view,
Speaker 10: when a company like Salesforce is there, there are a
Speaker 10: handful of their products that they have, they have that
Speaker 10: they sell into the enterprise, whether it's customer service cloud
Speaker 10: or sales automation cloud. Those are the ones I think
Speaker 10: they have a little bit better position of not being disrupted.
Speaker 10: But they have other visualization tools or some other smaller
Speaker 10: products that you know, may not be the ones where
Speaker 10: anybody would pay for it. So I think there is
Speaker 10: a lot that needs to be done from Salesforce in
Speaker 10: terms of adding more AI capabilities to its core product
Speaker 10: and not be you know, change the narrative around it.
Speaker 6: You know, the narratives have been so interesting on AI
Speaker 6: as you really well know, looking at names like Snowflake
Speaker 6: down about one point three percent here in the aftermarket,
Speaker 6: we're talking about Salesforce, and that's just.
Speaker 8: A real quick rehash.
Speaker 6: Here on the Bloomberg we're seeing that stock still down
Speaker 6: about four and a half percent here in the aftermarket,
Speaker 6: and then of course you've got Nvidia up about two
Speaker 6: point three percent. You put out some great research this week,
Speaker 6: Anaog you and the team about the haves and have
Speaker 6: nots and AI disruption. What do we need to know
Speaker 6: at this point, especially when everyone says, folks, we're still
Speaker 6: early in on this.
Speaker 8: We don't really know how it all plays out.
Speaker 7: You know.
Speaker 10: I think that's the most important thing is we are
Speaker 10: very early in the inning. But at the same time,
Speaker 10: you know, when people are worded daily entirely sell the
Speaker 10: entire sector. We have seen that numerous times. So when
Speaker 10: we looked at this thing, I mean, the entire team
Speaker 10: worked on creating a framework of you know, when we
Speaker 10: see a company, does it have high market share, does
Speaker 10: it sell to very large companies versus smaller companies? Is
Speaker 10: it a platform, is it a system of record? All
Speaker 10: those things takes into account, you know, kind of the
Speaker 10: history of a company. So let's say a company like
Speaker 10: I said, that's been around for fifty years, you you know,
Speaker 10: use it for your code, accounting, reason, supply chain, something
Speaker 10: like that is better entrenched than a very small company
Speaker 10: that's probably doing one particular function or selling only to
Speaker 10: the small and medium customers.
Speaker 6: Hey, final question here on Salesforce. Just going back as
Speaker 6: we watch this stock down four point six percent, top
Speaker 6: of mine. I know I always ask you guys this,
Speaker 6: but when the call starts with the company and the
Speaker 6: C suite and analyston investors, what must be asked?
Speaker 10: I think the biggest thing is going to be like,
Speaker 10: how what are you doing to change the narrative around
Speaker 10: them being disrupted by AI? And how are they adding
Speaker 10: more AI capabilities across their entire suite?
Speaker 3: All right?
Speaker 8: Love it, anarog Thank you so much.
Speaker 6: Anaag Rana, his research certainly on the AI world.
Speaker 8: And also on Salesforce. We'll be looking for that later
Speaker 8: on today.
Speaker 6: Anirag Grana, senior technology analyst at Bloomberg Intelligence out there
Speaker 6: in Chicago.
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Speaker 2: Bloomberg eleven thirty.
Speaker 6: Geopolitics some certainly mentioned in President Trump's speech last night.
Speaker 6: The President, in his State of the Union speech, focused
Speaker 6: on the economy, and his view included statements about what
Speaker 6: we just talked about with our own Mike McKee. Inflation
Speaker 6: is plummeting, he said. He said, incomes are rising fast,
Speaker 6: and he also talked about Friday Supreme Court decision that
Speaker 6: struck down the president's global tariffs.
Speaker 11: So an unfortunate ruling from the United States Supreme Court.
Speaker 11: It just came down.
Speaker 8: It came down very unfortunate ruling.
Speaker 11: But the good news is that almost all countries and
Speaker 11: corporations want to keep the deal that they already made.
Speaker 11: I used these tariffs, took in hundreds of billions of
Speaker 11: dollars to make great deals for our country, both economically
Speaker 11: and on a national security based. I introduced the Great
Speaker 11: Healthcare Plan. I want to stop all payments to big
Speaker 11: insurance companies and instead give that money directly to the people.
Speaker 11: The roaring economy is roaring like never before.
Speaker 9: Our country is winning again. In fact, we're winning so
Speaker 9: much that we really don't know what to do about it.
Speaker 11: People are asking me, please, please, please, miss the president.
Speaker 9: We're winning too much.
Speaker 11: Our nation is back, bigger, better, richer, and stronger than
Speaker 11: ever before.
Speaker 6: All right, everybody, that, of course, was President Trump last
Speaker 6: night at the State of the Union address. We should
Speaker 6: point out his speech was criticized by Democrats, including US
Speaker 6: Senator Elizabeth Warren, who said he had nothing to say
Speaker 6: about issues like having credit card interest rates and making
Speaker 6: childcare more affordable.
Speaker 8: Let's get a policy.
Speaker 6: View of last night's address from President Trump and what
Speaker 6: policies and actions that may still be coming that could
Speaker 6: impact the future outlook for the United States. Great to
Speaker 6: have back with us, Libby Cantrell. She's Managing director, head
Speaker 6: of Public Policy for PIMCO. She joins us from pimco's
Speaker 6: offices right here in New York City. Libby, welcome back.
Speaker 6: Great to have you here. Let's just talk broadly about
Speaker 6: this speech. What stood out for you and what do
Speaker 6: you think should stood out for the investing public, American
Speaker 6: citizens at large, the business community, and I think about
Speaker 6: American citizens who still think about this affordability issue.
Speaker 8: So what stands out on those fronts.
Speaker 12: Yeah, nice to be with you. I mean this was
Speaker 12: you know, there was more performance here than policy. We
Speaker 12: would argue there was a bit of us spiking of
Speaker 12: the football in terms of really sort of reinforcing some
Speaker 12: of what President Trump has perceived as victories the one
Speaker 12: big beautiful bill closing the borders, some of the other
Speaker 12: immigration policies that he has pursued, and also some of
Speaker 12: the foreign policy wins that he is character Zaly says
Speaker 12: as wins. So I think that this was in some
Speaker 12: ways a lot of kind of red meat for his base.
Speaker 12: As as as these addresses, oftentimes our now he did
Speaker 12: talk about tariffs as you as you mentioned, I think that,
Speaker 12: to the relief of many Republicans in that chamber, he
Speaker 12: did not call on Congress to take a vote on tariffs.
Speaker 12: I think that is something that probably would have failed anyway,
Speaker 12: but also would have been politically difficult for Republicans. But
Speaker 12: by and large, this was I think a pretty typical
Speaker 12: State of the Union address In many ways, it was
Speaker 12: again more of a rehashing of sort of the political
Speaker 12: wins and pretty light on policy details and light on
Speaker 12: kind of a roadmap I think for a lot of
Speaker 12: congressional Republicans heading into the midterm.
Speaker 1: Yeah, I'm really glad you went to the midterms, because
Speaker 1: that's that's exactly where I want to go and try
Speaker 1: to understand from you if it actually moved the needle
Speaker 1: on how people could vote come the mid terms, because
Speaker 1: that's that's what Republicans Democrats are focused on right now.
Speaker 12: I think it was a bit surprising that they're probably
Speaker 12: there were not arguably more policies that he'd actually highlighted
Speaker 12: in other speeches and other venues highlighted in last night's speech,
Speaker 12: And he did talk about this ban that he wants
Speaker 12: Congress to codify in terms of institutional investors investing in
Speaker 12: single family homes, but he didn't really talk about some
Speaker 12: of the other proposals. To Senator Warren's criticism, she remarked
Speaker 12: that he did not talk about, you know, capping credit
Speaker 12: cards and what have you. Now, I don't think any
Speaker 12: of those will actually get you know, effectuated into policy.
Speaker 12: Those need Congress anyway. But in terms of really leaning
Speaker 12: into that affordability sort of framework and theme, he didn't
Speaker 12: really give Republicans all that much. Again, I think what
Speaker 12: his hope is, and what a lot of Republicans hope is,
Speaker 12: is that the voters sentiment around the economy will be
Speaker 12: different come this fall, and of course that one big
Speaker 12: beautiful bill. People will be getting refunds on average four
Speaker 12: thousand dollars about one thousand dollars extra in terms of
Speaker 12: a refund relative to last year. So I think the
Speaker 12: hope is that there will be more optimism and that
Speaker 12: folks will have a different perception of affordability, and so
Speaker 12: maybe he won't need to lean into some of those policies.
Speaker 12: I think that was maybe last night was maybe a
Speaker 12: tell of that of that thinking.
Speaker 8: Libby, he did focus on the stock market.
Speaker 6: It's cerainly something we you know, focused on here at Bloomberg,
Speaker 6: but you know, talking about how good that was right
Speaker 6: and wealth created and good for investors. But is that
Speaker 6: always a good read or is that even a good
Speaker 6: read on kind of the state of the US as
Speaker 6: a nation and as an economy.
Speaker 12: Well, I think there are lots of examples where you know,
Speaker 12: voters have one view of things in the stock market
Speaker 12: is doing something different. I think if you talked to
Speaker 12: President Biden, I think that was one of his frustrations,
Speaker 12: his economics advisor's frustrations is that actually the market was
Speaker 12: doing quite well and the economy objectively was doing pretty well,
Speaker 12: but voters just didn't feel it. So perception is reality
Speaker 12: here and going into these midterm elections again, I think
Speaker 12: there is a hope that voters will feel better about
Speaker 12: things and I think, you know, to President Trump's credit
Speaker 12: in terms of the Trump accounts that were codified into
Speaker 12: one big, beautiful bill, this idea of broadening that out
Speaker 12: and giving folks access to retirement accounts who may not
Speaker 12: have access to traditional for one ky. But so I
Speaker 12: think he is trying to tie the stock market performance
Speaker 12: to kind of every day people's lives. However, you know,
Speaker 12: we'll see there's a lot of distance between here and
Speaker 12: there in terms of getting that actually affection into policy.
Speaker 6: I think a lot of folks think, what a great
Speaker 6: idea right to get if we talk about wealth creation,
Speaker 6: this is a great way to do it. But I
Speaker 6: do also think about how do we pay for all
Speaker 6: this stuff? And when do we think about kind of
Speaker 6: the Phisill House and when that's going to matter? I know,
Speaker 6: you know, go back a decade or so, and it
Speaker 6: was in every conversation I talked about here at Bloomberger
Speaker 6: even longer than that. Then it went away and now
Speaker 6: it's back again. So I just think about when do
Speaker 6: we have to kind of when does that all come
Speaker 6: home to roost?
Speaker 8: Or is it already?
Speaker 9: Yes?
Speaker 12: I think of you contrast this speech with the speech
Speaker 12: last February where President Trump was really leaning into this
Speaker 12: idea of doge and cutting federal spending and talking about
Speaker 12: the deficit.
Speaker 8: There was no.
Speaker 12: Mention of the deficit last last night, and in fact,
Speaker 12: he talked about how important Social Security and Medicare were
Speaker 12: and how those would not be touched. As you all know,
Speaker 12: those are important programs a bipartisan you know why bipartisan support. However,
Speaker 12: they're both at their growth very expensive as well. You know,
Speaker 12: our view here is that while there is no kind
Speaker 12: of immediate fiscal reckoning, I mean, the bond markets, as
Speaker 12: you all know, hasn't necessarily the bond vigilantes having to
Speaker 12: come out here and discipline Washington. But there it's probably
Speaker 12: a question of you know, when, not if that there
Speaker 12: will be a an inflection point where members of Congress
Speaker 12: will have to actually do something. In terms of sort
Speaker 12: of the fiscal trajectory, it doesn't look like it's close.
Speaker 12: There's not a lot of political appetite to increase taxes
Speaker 12: or reduce spending. You know, our view is a sort
Speaker 12: of six to seven percent deficits as a percentage of GDP.
Speaker 12: There will be a limit to that, and whether it's
Speaker 12: the bond market that is imposing that discipline, or when
Speaker 12: it's you know, Social Security Trust Fund starting to kind
Speaker 12: of go bankrupt so to speak, which is expected to
Speaker 12: happen in the early twenty thirties. So we do think
Speaker 12: this is a you know, again a question of when,
Speaker 12: not if, But it's just the win is probably not
Speaker 12: you know, under President Trump's term, at least as you know, if, if,
Speaker 12: what what the market signals are saying.
Speaker 6: Now, you know, Libby, you know you've seen different market cycles,
Speaker 6: different economies under different presidents. We've talked about this a
Speaker 6: little bit earlier with our own Mike McKee. How do
Speaker 6: you describe the Trump economy? Is it a good one?
Speaker 9: Well?
Speaker 12: I think that, you know, and again there is a
Speaker 12: limitation to how much a president can actually impact the economy.
Speaker 12: So this is you know, for better or for worse.
Speaker 12: Presidents President Trump included, they like to take you know,
Speaker 12: take sort of credit for when things are going well,
Speaker 12: but also to sort of avoid any of that, you know,
Speaker 12: blame when when they're not. You know, I think we
Speaker 12: would characterize this economy, you know, this sort of you know,
Speaker 12: K shaped two speed economy is quite real. Where are
Speaker 12: you know, if you just look at the components of GDP. Obviously,
Speaker 12: you know, AI related capex fueled a lot of growth
Speaker 12: last year, as did the high end consumer. I think
Speaker 12: there is a hope in twenty twenty six, and again,
Speaker 12: this is what I think Republicans are banking on, that
Speaker 12: the breadth of that economic growth is broader and that
Speaker 12: this sort of the consumer at the kind of middle
Speaker 12: to lower and starts feeling better about things and starts
Speaker 12: participating in the economy. But if you if the economy
Speaker 12: just is predicated on kind of AI related capex and
Speaker 12: the high end consumer, that makes for a relatively fragile economy.
Speaker 12: And if you sort of see any kind of wobbles
Speaker 12: in the labor market for instance, that could you know,
Speaker 12: have maybe a nonlinear impact. So you know, I think
Speaker 12: it's a it's a stronger economy. It's been a resilient
Speaker 12: economy for sure. But again I think Republicans are hoping
Speaker 12: that you can sort of broaden out the source of
Speaker 12: that growth and that they'll actually be rewarded then come November.
Speaker 6: But that AI spend the impact on the market, sending
Speaker 6: it higher, and then you know, the wealth created among
Speaker 6: affluent spenders. That is something that Greg Daco has certainly
Speaker 6: talked about a lot for us from ey Parthenon and
Speaker 6: the importance and that starts to come undone that could
Speaker 6: be problematic.
Speaker 1: Tim Libya, I want to shift gears a little bit
Speaker 1: and talk to your politics because ahead of the speech
Speaker 1: that the president and he's gotten quite a bit criticism
Speaker 1: in recent months, even from within his own party, about
Speaker 1: focusing too much on geopolitics, and well, he didn't talk
Speaker 1: too much about geopolitics. What he did frame last night
Speaker 1: was you know, Venezuela and the oster of Maduro, that
Speaker 1: being a win for oil companies and Americans who are
Speaker 1: getting oil and will get oil from Venezuela. And just
Speaker 1: now we are learning that Cuba has shot for dead
Speaker 1: in a clash with a Florida speedboat. That's just breaking
Speaker 1: news just in the last few minutes. I'm wondering about
Speaker 1: geopolitics though, in the political risk for a president who
Speaker 1: came in and said, you know, no more on a platform,
Speaker 1: no more foreign wars, wants to end wars for focusing
Speaker 1: so much on geopolitics within his first year in office,
Speaker 1: is that alienating some of his base?
Speaker 12: I think, I think, I think it's confused some of
Speaker 12: his base for sure, as you said that there is
Speaker 12: a wing of the sort of Trump base that you
Speaker 12: know is more isolationist. I think those folks thought that
Speaker 12: President Trump would be sharing in that view. He obviously,
Speaker 12: you talked about ending the war in Ukraine that has
Speaker 12: not happened. He's talked about, you know, bringing kind of
Speaker 12: peace globally. I think you could sort of quibble about
Speaker 12: whether that has actually been true or not. And then
Speaker 12: to your point, he has focused on, you know, some
Speaker 12: of these more specific operations.
Speaker 9: Now.
Speaker 12: I think you know Venezuela, the way that they would
Speaker 12: characterize the White House would characterize this as this is
Speaker 12: an extradition, kind of a high profile arrest, if you will,
Speaker 12: that required a lot of resources of the US government,
Speaker 12: but was quite different from regime change. We'll see kind
Speaker 12: of how that how that plays out. But I do
Speaker 12: think to your right to sort of focus on this politically,
Speaker 12: because midterms are all about turnout. It's not about persuasion, right,
Speaker 12: you need to get your base turned out, you need
Speaker 12: them to get excited, whereas a general election it's about
Speaker 12: sort of persuading folks who might be kind of on
Speaker 12: the fence. Again, midterms all about kind of your base turnout,
Speaker 12: and if your base is at all, you know, feeling
Speaker 12: maybe a little little bit less enthusiastic about you, they
Speaker 12: may not turn out. And so I do think this,
Speaker 12: you know, well, we'll sort of see how this kind
Speaker 12: of movie plays out. But you could see President Trump,
Speaker 12: you know, maybe kind of be forced by his own
Speaker 12: party to be less focused on these issues because they
Speaker 12: just doesn't doesn't have sort of the galvanizing effect as
Speaker 12: you know, the kitchen table, gas and grocery issues you
Speaker 12: typically you typically have. The last thing I'll just say though,
Speaker 12: is I think President Trump was quite clear about what
Speaker 12: his framework was he was using yesterday as it relates
Speaker 12: to Iran. He definitely did not close the door on,
Speaker 12: you know, potential intervention. He also didn't necessarily endorse that
Speaker 12: he was going to do this either, So he was
Speaker 12: using sort of this clear framework about you know, about
Speaker 12: Iron's you know, ability to develop a nuclear weapon and
Speaker 12: what have you as kind of a litmus test. So
Speaker 12: I think he's trying to be more clear about what
Speaker 12: it would require to engage. But again, politically, he may
Speaker 12: be forced to back back office as we get closer
Speaker 12: to the midterms.
Speaker 6: Be going back to the affordability issues. We know President
Speaker 6: Trump and Vice President JD. Vance are hitting the road
Speaker 6: tomorrow and I believe on Friday, to kind of test
Speaker 6: their affordability message with voters in Texas and Wisconsin this week.
Speaker 6: So things like, you know, obviously the tax cuts that
Speaker 6: are already part of his big beautiful bill, these new
Speaker 6: savings accounts for kids, maybe banning of institutional investors from
Speaker 6: buying homes.
Speaker 8: You know, although we didn't get anything.
Speaker 6: More on that, are there policies or clarifications of policies
Speaker 6: or imp implementation of policies that are likely to come
Speaker 6: leading up to the midterms that you think kind of
Speaker 6: improve the affordability issues for those who will be voting.
Speaker 12: I think the reality is is that even if President
Speaker 12: Trump wants to see some changes, it's going to be
Speaker 12: very difficult for Congress to get anything done before the summer,
Speaker 12: which is really the de facto end of this Congress.
Speaker 9: That's when they.
Speaker 12: Will adjourn for their sort of summer traditional summer recess
Speaker 12: for them to really go back to their districts and
Speaker 12: to campaign. So in terms of the runway to actually
Speaker 12: effectuate policy, we are talking about a very short one,
Speaker 12: you know, to July. Basically and we don't see Congress moving.
Speaker 12: We don't see them passing another tax bill, another spending bill,
Speaker 12: another bill that prevents you know, institutional investors from buying
Speaker 12: single family homes or what have you. There is a
Speaker 12: housing bill that they may be able to pass both
Speaker 12: chambers and get signed into law, but that is likely
Speaker 12: going to be it. So I think kind of for
Speaker 12: all intents and purposes here Trump will have to lean
Speaker 12: on those policies he can effectuate, you know laterally, which
Speaker 12: is the agency's buying, you know, agency NBS. That's one
Speaker 12: thing that he did not talk about in his speech.
Speaker 12: It's kind of for us, you know, bond nerds over here.
Speaker 12: But but you know, we do think that's actually that
Speaker 12: and deregulation, those are two things that he can and will,
Speaker 12: we think, continue to lean on to help you improve
Speaker 12: at least mortgage rates and sort of you know, the
Speaker 12: rate environment in general, and hope that that will actually
Speaker 12: trickle down to some kind of the perception again of
Speaker 12: affordability among voters. But outside of that, we do not
Speaker 12: expect Congress to move really period before between now and
Speaker 12: the midterms.
Speaker 1: All right, I don't recall seeing mentions of agency NBS
Speaker 1: is on the prediction market.
Speaker 8: Wait, that's what they all stood up.
Speaker 12: Remember they like the exactly the only bipartisan moment we
Speaker 12: saw was at our agency, NBS.
Speaker 8: Bretting the artists together.
Speaker 6: Libby Cantrell, you Rock Managing Director, head of Public Policy over.
Speaker 8: At PIMCO, joining us right here in New York City.
Speaker 1: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 1: up after this.
Speaker 2: You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
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Speaker 1: Kebanvorce has killed four people and wounded six others who
Speaker 1: were traveling in a speedboat with Florida tags after they
Speaker 1: opened fire on the island's border patrol. The government said.
Speaker 1: With us is Dan cansel Ben, Bloomberg News Miami Bureau Chief.
Speaker 1: He joins us from our Miami bureau. Dan, we're trying
Speaker 1: to understand what exactly is going on, who who these
Speaker 1: individuals were, and what they did, and we're hoping you
Speaker 1: can shed some light on it. What do we know
Speaker 1: about the four people who were killed?
Speaker 5: Yeah, very little. You know, the source of the information
Speaker 5: as of now comes from the Cuban military. As you mentioned,
Speaker 5: the Saban dropped about it, you know, an hour or
Speaker 5: so ago, where they you know, mentioned that this boat
Speaker 5: with Florida registration carrying ten passengers ran into this this
Speaker 5: incident conflict with the Coastguard with four dead and six injured.
Speaker 5: They haven't identified the nationality of these individuals are obviously
Speaker 5: really study names. And on the US side, we don't
Speaker 5: have any information, you know, either kind of corroborating that
Speaker 5: information or providing new new details. So as of now,
Speaker 5: it's a bit of a sit and weight to see
Speaker 5: if the Cubans release, you know, additional information. But obviously
Speaker 5: there's a big backdrop here right to what's happening between
Speaker 5: US and Cuba relations.
Speaker 6: Let's talk about that because we did know, I think
Speaker 6: earlier today.
Speaker 8: The US announced that.
Speaker 6: It would ease restrictions on Venezuela and oil exports to
Speaker 6: Cuba's private sector for humanitarian reasons. We know Canada has
Speaker 6: announced an aid package for Cubans because of President Trump's
Speaker 6: oil blockade. So kind of where are we, I mean,
Speaker 6: tensions are high right now between the US and Cuba.
Speaker 5: They are Yeah, I mean since since January third, when
Speaker 5: when Maduro was was captured in Carucas. Obviously, Venezuela was
Speaker 5: the biggest, biggest ally and benefactor for the Cuban regime,
Speaker 5: and so taking taking those oil flows and that support
Speaker 5: away from from the Cubans has created you know, a
Speaker 5: lot of tension and obviously the situation on the ground
Speaker 5: in Cuba has deteriorated in terms of you know, energy
Speaker 5: supplies and other other sorts of supplies. So you know,
Speaker 5: the US has not come out with a real clear
Speaker 5: strategy and what they hope to accomplish in Cuba, but
Speaker 5: clearly there are some new headlines about supplying the private
Speaker 5: sector with fuel versus so trying to kind of go
Speaker 5: around the regime in helping the people and avoid a
Speaker 5: bigger humanitarian crisis.
Speaker 1: Yeah. I mean, again, the information we have Dan on
Speaker 1: this is very limited, and you make a good point
Speaker 1: about the backdrop of this and what it means in
Speaker 1: the context of everything that's happened in twenty twenty six
Speaker 1: thus far. That said, there has been reporting around where
Speaker 1: this boat at least was registered to what can you
Speaker 1: tell us about that and if that offers any indication
Speaker 1: about who was actually in the boat.
Speaker 5: Yeah, listen, so far all we have is that is
Speaker 5: a registration number, which you know, curiously, the Cubans did
Speaker 5: provide in their in their statement. It's not you know,
Speaker 5: it's not returning anything solid as we look into that
Speaker 5: and report on it, you know, so you can, you know,
Speaker 5: you can kind of imagine this could be people that
Speaker 5: for you know, fishing, but you know, apparently they were armed, right,
Speaker 5: so maybe not. We could be talking about people trying
Speaker 5: to bring supplies, uh, you know, to two Cubans, whether
Speaker 5: you know, whether it's food goods, whether it's elicit right
Speaker 5: kind of smuggling operation. So it's really kind of up
Speaker 5: to our imaginations here, you know, and in terms of
Speaker 5: what could have been happening, and and the fact that
Speaker 5: the US Coast Guard has not issued a statement or
Speaker 5: or verified this is something that we're obviously waiting for.
Speaker 6: We do have US Representative Carlos Humanez out on social
Speaker 6: and he's saying Cuba, the Cuban government must go to
Speaker 6: quote the dustbin of history.
Speaker 8: He posts this after Cuba.
Speaker 6: Clashing with the US speedboat, and he calls quote again
Speaker 6: his words, murder Cuba killing of US speedboat but as
Speaker 6: you said, we don't know a lot.
Speaker 8: We have to be very careful.
Speaker 6: The devil is always in the details, and we are
Speaker 6: waiting some kind of statement from the US government.
Speaker 8: Correct.
Speaker 5: Absolutely, he's I'd say he's among the more hardline of
Speaker 5: the of the Cuban Americans in Congress, and so it's
Speaker 5: it's not rare that he'd have that rhetoric today. And again,
Speaker 5: we need to figure out exactly who these people were,
Speaker 5: you know, from the US perspective, are the US citizens?
Speaker 5: You know, are they Cubans? And so we just there's
Speaker 5: so many things that we need to figure out here.
Speaker 5: I think the one thing again is, you know what's
Speaker 5: changed recently is that the private sector in Cuba is
Speaker 5: now authorized to import fuel right for the first time,
Speaker 5: and so you know, could people be running, you know,
Speaker 5: big jugs of gasoline or diesel right across the less
Speaker 5: Thane hundred miles that separate right the two countries. So
Speaker 5: again it's just a theory or one possible scenario, right,
Speaker 5: I just don't know.
Speaker 6: One more line from a Representative Jimenez's statement on social
Speaker 6: he's calling for an investigation of the Cuba incident, But
Speaker 6: we would all concur that we need to know some
Speaker 6: more in terms of the details and find out exactly
Speaker 6: what happened before we can move forward. Danken sal thank
Speaker 6: you so much. He is Bloomberg News Miami Bureau chief.
Speaker 6: Joining us from our bureau in Miami.
Speaker 8: We're going to kind of stay on. I don't know
Speaker 8: whether you want.
Speaker 6: To call this geopolitics or just tensions. Global tensions and
Speaker 6: just finding our way forward when it comes to relationships
Speaker 6: between countries, but also throw things like technology and military
Speaker 6: and it kind of all gets interesting and a little tough.
Speaker 2: This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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