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Speaker 2: Well, let's get to one of our most read stories
Speaker 2: on the Bloomberg Today.
Speaker 3: Jpust Cross.
Speaker 4: Last night.
Speaker 2: First of all, we were on air actually when headlines started,
Speaker 2: oh really in terms of some financial message.
Speaker 3: I saw this late yesterday and then you know, three
Speaker 3: minutes later, Talia sends the email too, because she's on
Speaker 3: top of it.
Speaker 2: Because she I don't know how she does it. I
Speaker 2: feel like Bloomberg goes right to her brain.
Speaker 3: It's wired in, it is wired in.
Speaker 2: It is one of our most read stories. Though on
Speaker 2: this Tuesday, JP Morgan Chase CEO Jamie Diamond, we're talking
Speaker 2: about him fierce competition across the financial industry. He said
Speaker 2: he's starting to see parallels to the era before the
Speaker 2: two thousand and eight financial crisis, when a rush, as
Speaker 2: you know, to make loans ended disastrously. We don't need
Speaker 2: to remind you how rough that was. Jamie Diamond made
Speaker 2: the comments yesterday at JP Morgan's investor Day right here
Speaker 2: in New York City.
Speaker 5: Unfortunately, we did see this in five and six and seven,
Speaker 5: almost the same thing, the rising tires lifts in all boats.
Speaker 5: Everyone was making a lot of money. I don't know
Speaker 5: how long it's going to be great for everybody. I
Speaker 5: see a couple of people doing some dumb things. You know,
Speaker 5: they're just doing dumb things to create ANII or or
Speaker 5: say they're you know, winning in the markets business or
Speaker 5: something like that.
Speaker 2: All right, that of course JP Morgan Chase CEO, Jamie Diamond,
Speaker 2: yesterday's investor Day here in New York City. Look in
Speaker 2: Rev Cash.
Speaker 3: I was going to say, a little different look than
Speaker 3: we usually see. Yeah, but you know what, it was
Speaker 3: a lot of snow yesterday.
Speaker 2: Yeah. I don't know everybody like I felt like we
Speaker 2: all had our bootstools.
Speaker 3: We did Investor Day though.
Speaker 2: Yeah, they did, they did. They carried through all right.
Speaker 2: This comment's definitely getting our attention to get even Tim
Speaker 2: who was home getting locked into what he had to say.
Speaker 2: Let's get more though on it. Kat Dougherty's with us.
Speaker 2: She's Blomberg News finance reporter right here in studio Kat.
Speaker 2: Whether it's cockroaches or he's making a weather forecast. When
Speaker 2: Jamie says something, it gets our attention. Tell us about
Speaker 2: the meeting and some of the things that stand out.
Speaker 6: You're right, but this stood out more so than the
Speaker 6: cockroaches comments. He's made those types of jabs at the
Speaker 6: private credit industry specifically before, and yes it's gotten attention,
Speaker 6: but not in the same way that Tim's right. When
Speaker 6: this headline crossed last night, I think a lot of
Speaker 6: folks were clicking through, and you can see in the
Speaker 6: interest even today, it's just continuing on and it's generating
Speaker 6: a lot of talk amongst banking colleagues that are really
Speaker 6: kind of diving into the parallels that Diamond is drawing today.
Speaker 6: And he's saying that he's seen a lot of his words,
Speaker 6: dumb things going on from his competitors across the street.
Speaker 6: He's not necessarily calling out the other banks, He's calling
Speaker 6: out the Apollos, the Blue Owls, these firms that have
Speaker 6: really generated and not just attention, but the money that
Speaker 6: they are handling that is outside of the banks. That
Speaker 6: is what Diamond is drawing attention to, saying that a
Speaker 6: lot of what you saw with the two thousand and
Speaker 6: eight financial crisis was the money that was being handled
Speaker 6: that at the end of the day, that was with
Speaker 6: the banks. So now that the money has moved away
Speaker 6: from the banks, it's behind the scenes. He's saying that
Speaker 6: if the cracks start to emerge and you have the
Speaker 6: cockroaches that again he has called out before, that's not
Speaker 6: a new comment, but he's saying that that's where the
Speaker 6: underlying stresses and he doesn't know when he didn't make
Speaker 6: a call yesterday. I think that's important to note yea
Speaker 6: of when this might actually come through. But he's saying
Speaker 6: it's a matter of the question being the timing, but
Speaker 6: he's thinking that it's going to happen at some point.
Speaker 3: I know, you want to talk a little bit about
Speaker 3: the history and what JP Morgan and what Jamie Diamond
Speaker 3: has seen because he's, you know, one of the people
Speaker 3: who was there through the financial crisis at the helm
Speaker 3: of the big bank.
Speaker 2: He's the only one that's the only point is the
Speaker 2: o man standing right among those big banks that.
Speaker 3: Said, and you touched on this a little bit Kat
Speaker 3: with what you said about you mentioned Apoulo for example,
Speaker 3: what are the specific that, if any, that he called
Speaker 3: out or that we can infer from the quote unquote
Speaker 3: dumb things like what is he seeing.
Speaker 6: He's referencing lending lending practices that if you are going
Speaker 6: to affirm, let's keep with Apolo. But there's so many
Speaker 6: others that we could use as examples. The pricing on
Speaker 6: these loans is so much different than let's say, how
Speaker 6: you price Apple's stock. It's not as liquid and so
Speaker 6: there might be underlying stress, but the price doesn't reflect that.
Speaker 6: But if there gets to a point like we seen
Speaker 6: with some of the cockroach examples, where at the end
Speaker 6: of the day there's massive selling and then the price
Speaker 6: does have to reflect the underlying stresses. That's when if
Speaker 6: those things start to pile up, you could it's a
Speaker 6: snowball effect. And you had boas Weinstein today, he's down
Speaker 6: in Miami and he made very similar comments. He was
Speaker 6: saying that it is something that builds on itself, and
Speaker 6: you don't need too much of these specific instances that
Speaker 6: some are calling just one offs and saying that it's
Speaker 6: not representative of the entire industry. But if you start
Speaker 6: to see those one offs become two, three, four, and
Speaker 6: all of a sudden, it does be building and the
Speaker 6: stress can turn into something much bigger. That's what Diamond
Speaker 6: is calling out.
Speaker 2: Bo As Weinstein say, a capital management founder, you're right
Speaker 2: saying all you need is a snowball to start going
Speaker 2: down the hill, and it started blue ouls right in
Speaker 2: the middle of that. I think we are in the
Speaker 2: super early innings of the wheels coming off the car.
Speaker 2: I mean, this cat. This gets to the lack of transparency,
Speaker 2: especially when it comes to the private markets. We keep
Speaker 2: talking about this, and so I'm not going to ask
Speaker 2: you Essa go into a premo on the private markets world,
Speaker 2: but that's part of what we're getting to. The banks
Speaker 2: are highly regulated, A lot of investment firms are highly regulated, right,
Speaker 2: oversight and transparency in what is kind of on their
Speaker 2: balance sheet.
Speaker 7: That's right.
Speaker 6: But when we're talking about these loans that are outside
Speaker 6: of the banks, the mark to market. You might be
Speaker 6: able to hold a loan and say that it is
Speaker 6: worth let's say, ninety cents on the dollar, but the
Speaker 6: stress that's underlying might if it does eventually trade trade
Speaker 6: down to sixty. Now that's going to be a lot
Speaker 6: different in the private credit market than it is with
Speaker 6: the banks, especially if the banks are the ones that
Speaker 6: are holding these loans. They have to disclose and the
Speaker 6: pricing is a little bit more transparent.
Speaker 2: But there are parallels.
Speaker 8: And what's also.
Speaker 6: Interesting is that the banks too are getting into private credit.
Speaker 6: They're setting aside their own balance sheet for some of
Speaker 6: these deals. So it's an interesting dichotomy when this is
Speaker 6: business for them and they're losing some of the business
Speaker 6: if it is going to firms outside of the banking system.
Speaker 6: So they want to be in the game. They want
Speaker 6: to put their money towards some of these lending opportunities,
Speaker 6: but that competition might end up growing the market even
Speaker 6: more because you have the firms that want to get
Speaker 6: in and they want to really put their money to work.
Speaker 2: Yeah, and like there's been such a push right when
Speaker 2: it comes to the private market world to get into
Speaker 2: things like for a one ks and so on and
Speaker 2: so forth, And this is why stuff like this has
Speaker 2: even more important.
Speaker 3: Sure should they Yeah, I'm not even gonna ask not ask.
Speaker 8: Not, but we should.
Speaker 2: But I'm just saying, you know, full disclosure. You need
Speaker 2: to know, right, especially when you're talking about people's retirements
Speaker 2: and all that good stuff. God, thank you so much. Kat.
Speaker 2: Already she's Bloomberg News Finance reporter joining us right here
Speaker 2: in studio, and as we've met, this is one of
Speaker 2: the most read stories. I feel like it's already a
Speaker 2: very big theme and big story this year. It is
Speaker 2: blue owl, one canary in the private market coal mine?
Speaker 2: Or is it the beginning like boas Weinstein seems to say,
Speaker 2: the beginning of an undoing.
Speaker 3: And I think fair to put Jamie Diamond in the
Speaker 3: category of concern.
Speaker 2: Yeah, exactly right. It's a big, big thing, all right.
Speaker 2: Our thanks to Kat once more, stay with us.
Speaker 3: More from Bloomberg Business Week Daily coming up after this.
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch
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Speaker 2: Now we want to get to some of today's trade
Speaker 2: economic fundamentals behind it all. There's a lot going on,
Speaker 2: you know, things like that little thing called inflation.
Speaker 3: I think it will be addressed tonight in the State
Speaker 3: of the Union.
Speaker 2: It will right now, affordability at large.
Speaker 3: Oh, no question. I think many people argue though it's
Speaker 3: still a problem. The FED largely reminds us, yes, it is,
Speaker 3: and yet there are those that are concerned about the
Speaker 3: slowing US labor market. Earlier today, at the twenty twenty
Speaker 3: six National Association of Business Economics Policy meeting underway in Washington, DC,
Speaker 3: Bloomberg's Mike McKee caught up with Fed Bank Reserve President
Speaker 3: of Chicago Austin Goolsby to talk about the Supreme Court's
Speaker 3: ruling and how it could impact US inflation.
Speaker 9: When the part of inflation that has come from tariffs
Speaker 9: is supposed to go away, is supposed to be transittory,
Speaker 9: and when you see things like the forecasts say inflation's
Speaker 9: going to peak out and then start falling by the
Speaker 9: end of twenty twenty five, and then that moves the goalpost,
Speaker 9: well maybe it'll be the first quarter of twenty six,
Speaker 9: and now they're saying, well, maybe it will be the
Speaker 9: second quarter of twenty six. That's not a great sign.
Speaker 9: We need to see what we should see, especially on
Speaker 9: the good side. If the tariff inflation is transitory, it's
Speaker 9: supposed to start going away.
Speaker 3: That's what we were Mike McKee cott it catching up with
Speaker 3: the feder Reserve Bank of Chicago. President Austin Goulesby a
Speaker 3: little earlier today.
Speaker 2: Well, and this is kind of the predicament we are
Speaker 2: when we see that Friday decision, Supreme Court decision when
Speaker 2: it comes to tariffs, what does that mean do we
Speaker 2: take away inflationary pressures?
Speaker 4: Right?
Speaker 2: When it comes to costs? This is something we've talked
Speaker 2: about that ultimately the consumer is going to pay a
Speaker 2: higher cost. Some companies have been eating that higher cost
Speaker 2: because of tariffs, but eventually, you know, we're seeing things
Speaker 2: already being passed on to consumers. And Austin Goolsby kind
Speaker 2: of getting to this point like where are we Like
Speaker 2: it's a kind of a moving goalpost, Like, all right,
Speaker 2: a big decision on Friday, but then we have the
Speaker 2: president over the weekend, and we talked about this a
Speaker 2: lot yesterday of imposing his own kind of across the
Speaker 2: board tariffs, and so we're trying to figure out if
Speaker 2: tariff inflation is transitory. He said, you know, it's supposed
Speaker 2: to start going away. And that's kind of like the
Speaker 2: question in predicament we're in.
Speaker 3: Well, let's get that question over to Lauren Goodwin. She's
Speaker 3: economist and chief market Strategies at New York Life Investments.
Speaker 3: She joins us here in the studio. So, following that
Speaker 3: Supreme Court decision, do we have a clear view on
Speaker 3: where inflation goes from here?
Speaker 8: I don't think we were ever going to be super
Speaker 8: clear on the impact that tariffs have directly to inflation.
Speaker 8: When you're looking at an inflation forecast, you can certainly
Speaker 8: look at which types of goods are receiving tariffs how
Speaker 8: that might roll into the total number. But keep in
Speaker 8: mind there is a bigger geopolitical context that's changing as
Speaker 8: well with respect to how goods are sourced, where supply
Speaker 8: chains are moving. That started during the pandemic, if not before.
Speaker 8: And so I think the conversation around tariff's and uncertainty
Speaker 8: and what it means certainly for the deficit is very reasonable.
Speaker 8: But the specific pass through to consumers, I don't know
Speaker 8: that we were ever really going to have a great
Speaker 8: number on that.
Speaker 2: So in terms of the deficit, you're saying, this is
Speaker 2: revenue that maybe is going away could have helped to
Speaker 2: cut back the US deficit.
Speaker 8: That's no or yes, that's well, that's the concern over
Speaker 8: the last couple of days. To be honest with ourselves
Speaker 8: and really any investor that I've been speaking to, most
Speaker 8: folks range of average effective tariff rate was somewhere between
Speaker 8: between ten and twelve and fifteen and sixteen percent, And
Speaker 8: it looks like that's where we're likely to net out,
Speaker 8: regardless of the authority used for those tariffs. And so
Speaker 8: that likely means we don't have a huge change in
Speaker 8: deficit assumptions really, and the activity we've seen on the
Speaker 8: curve I think suggests that the market agrees with that.
Speaker 2: What about other inflationary pressures in terms of the president's
Speaker 2: big spending bill that he sent, you know, that was
Speaker 2: passed last year. So is that kind of tailwind for
Speaker 2: the economy and that's inflationary you know, in the long
Speaker 2: reul tell us about kind of how you're gaming out
Speaker 2: inflation for this year.
Speaker 8: Yeah, that's really where the rub is. As if you
Speaker 8: look at the broader economy picture, you have, of course
Speaker 8: tariffs and that tax on the concer again difficult to handicap,
Speaker 8: but we know it's there. Same is true of global
Speaker 8: supply chains and geopolitical challenges, and certainly these fiscal tailwinds
Speaker 8: that we see supporting the consumer likely mean that prices
Speaker 8: are going to continue moving higher. Now, it's my view,
Speaker 8: and we've talked about this a bit before, that a
Speaker 8: strong inflation print a couple times in a row is
Speaker 8: probably one of the more disruptive events for this market
Speaker 8: pricing that we could see. However, it's not clear to
Speaker 8: me that that's going to be the mechanism that disrupts
Speaker 8: the market here in the next couple of months. I'm
Speaker 8: watching for it, but it's not in our base case.
Speaker 8: What I think though, that that affordability challenge creates talk
Speaker 8: a lot about how we don't really see that in
Speaker 8: the market. I don't know that I agree because a
Speaker 8: lot of the spending and more i'll call it populist
Speaker 8: leaning policies from both sides of the aisle that we
Speaker 8: see are a reflection of knowing that the average American
Speaker 8: is struggling with affordability.
Speaker 3: What I just we only have a minute, I know,
Speaker 3: two minutes left, and there's a lot that we want
Speaker 3: to get to. Yeah, okay, so I want to get
Speaker 3: to a little bit of your view on AI and productivity.
Speaker 3: We don't have time to play the sound, but there's
Speaker 3: a lot of people talking about this right now, and
Speaker 3: I mean yesterday IBM was the latest example of what
Speaker 3: happens to a stock that people think is under threat
Speaker 3: from AI. The productivity side of this, how do we
Speaker 3: look at that?
Speaker 8: So here's here's the real answer. None of us know, certainly,
Speaker 8: none of.
Speaker 2: Us, none of us in Max World Company saying.
Speaker 8: Certainly, none of us in macro world.
Speaker 9: Note.
Speaker 8: Look, the way that productivity will be garnered from this
Speaker 8: technology is much more closely in the hands of the
Speaker 8: technology actors than in the macro and investment space. And
Speaker 8: so what we're all doing is crafting our scenarios. And
Speaker 8: one thing I'll say about our high uptake, medium, uptake,
Speaker 8: low and take scenarios. They're all disruptive. And so I
Speaker 8: think what we need to focus on instead of the
Speaker 8: specific winners and losers, which I think are too early
Speaker 8: to identify, it's how do you get more accust them
Speaker 8: to that disruptive market where leadership is changing the way
Speaker 8: it has been pretty regularly.
Speaker 2: It's I think it's tough, and I think you know
Speaker 2: the caveat is and you are not alone, you know, Lauren.
Speaker 2: Everybody says it's early on. We don't really know, and
Speaker 2: that even the report, the research report that came out yesterday,
Speaker 2: that it's just too soon to kind of figure out
Speaker 2: winners and losers and the impact. I mean, we did
Speaker 2: FED Governor Chris Waller talking today about the US Central
Speaker 2: Bank moving towards a system wide deployment of AI across
Speaker 2: regional banks and it's DC headquarters. But that's again, it's
Speaker 2: a tool that everybody's playing with.
Speaker 8: Yeah, we should. We should hope that they are right. Everyone.
Speaker 8: The more we use AI, the more unfireable.
Speaker 10: I watch that.
Speaker 8: But the matter it is for us.
Speaker 3: Your job is safe for today.
Speaker 2: Someone in the world said, if you're not using it,
Speaker 2: you've just got to start otherwise you're behind already. Lauren Goodwin,
Speaker 2: you rock. Thank you so much.
Speaker 3: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 3: up after this.
Speaker 1: Listening to the Bloomberg Business Week Daily podcast. Catch us
Speaker 1: live weekday afternoons from two to five e's during this
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Speaker 2: So among our most read stories on the Bloomberg Today,
Speaker 2: Charlie just mentioned it has to do with meta platforms
Speaker 2: doing a mega deal with advanced micro devices. It's a
Speaker 2: blockbuster one that marks a win for chip maker's attempts
Speaker 2: to catch up and video. So let's get right to
Speaker 2: it with us his Bloomberg Tech co host ed Ludlow,
Speaker 2: airing every Monday through Friday eleven am Wall Street Time
Speaker 2: on Bloomberg Television. Ed out there in our San Francisco
Speaker 2: News bureau ed walk us through the particulars of I'm
Speaker 2: not sure what to call it, arrangement, partnership, deal, what
Speaker 2: do you want to call it?
Speaker 10: Well, it's a deal, for sure, it's a deal, and
Speaker 10: I'm sure the inkstra on it. But you know, it's
Speaker 10: six gigawats of capacity. That's like the equivalent of the
Speaker 10: output of six nuclear reactors power millions and millions of homes.
Speaker 3: With that, because I want to see the power head.
Speaker 10: Well, it's you know, people have been posing really good questions,
Speaker 10: which is like a very simple question is why do
Speaker 10: we talk about data cent capacity in terms of gigawatts
Speaker 10: and not like in dollars or a.
Speaker 3: Number of chips?
Speaker 10: And the reality is like at a base level, data
Speaker 10: is transferred within the server inside the data center using
Speaker 10: electrons and it requires electricity to power it, you know,
Speaker 10: and that that's why we measure it that way. But
Speaker 10: for AMD it's important, right because it represents tens of
Speaker 10: billions of dollars of revenue over that period, and it's
Speaker 10: a kind of vote of confidence from a very large
Speaker 10: data center operator on their latest technology, which starts with
Speaker 10: four fifty and then the roadmap goes from that.
Speaker 2: So much more powerful to say how much power will
Speaker 2: be created or how much data center capacity versus saying
Speaker 2: we're going to buy a jillion chips from you.
Speaker 1: Yeah.
Speaker 10: Well, there are loads of reasons for that, in part
Speaker 10: because like AMD's story is now mirroring what Nvidia when through,
Speaker 10: which is we used to talk about in video is
Speaker 10: just having a great chip single GPU, as if it
Speaker 10: was something you could sort of hold up in your hand,
Speaker 10: and it doesn't really work like that, you know. AMD
Speaker 10: does the whole design of the server, and the server
Speaker 10: is power hungry, you know, and it puts a burden
Speaker 10: on the grid. But that's why we talk about it
Speaker 10: in those terms in common pilance in gigawatts because it
Speaker 10: explains the scale of the compute, right and this is massive,
Speaker 10: massive scale. The average size of a data center right now,
Speaker 10: is like three hundred to five hundred megawatts. So the
Speaker 10: fact that these two are committing to six gigawats over time,
Speaker 10: it is really big. But note that, like metas talked
Speaker 10: about all of this, you know, by the end of
Speaker 10: this decade having tens of gigawatts online and beyond that
Speaker 10: hundreds of gigawatts you know, for what they want to
Speaker 10: achieve in AI.
Speaker 3: So ed, let's talk about the financing of this, and yes,
Speaker 3: and whether or not they're like, explain the equity involvement,
Speaker 3: because as part of the arrangement, Meta will receive warrants
Speaker 3: to buy one hundred and sixty million AMD shares in stag.
Speaker 3: Does that mean that, yeah, that let's say AMD's price
Speaker 3: doesn't go up to you know, six hundred dollars per share,
Speaker 3: which is in the agreement. Does does that mean that
Speaker 3: Meta won't own that that portion of AMD stock. Yeah.
Speaker 10: So they are mandatory and they are operational and financial goals.
Speaker 10: So in one scenario, which I think is the final
Speaker 10: tranch of how it's structured, AMD share price would need
Speaker 10: to hit six hundred dollars a share. And let me
Speaker 10: just look down on my screen. Two thirty now two thirteen, Well,
Speaker 10: there's some way to go right and so, but it
Speaker 10: works in both directions. This in terms of what AMD gets.
Speaker 10: AMD will book revenue on this, Meta will pay AMD
Speaker 10: for the server designs and computers, and so there are
Speaker 10: operational milestones. In other words, Meta has the right to
Speaker 10: act on those warrants if it actually builds these data
Speaker 10: centers and actually you know, deploys.
Speaker 3: Them as of now and in the near future, Meta
Speaker 3: won't necessarily be a shareholder of AMD as a result.
Speaker 10: Yeah, this deal, Yeah, it is structured at different prices,
Speaker 10: and you know what's interesting about it is like it's
Speaker 10: almost identical to what AMD did with open Ai. Open
Speaker 10: ai was also offered warrants for one hundred and sixty
Speaker 10: million dollars one hundred and sixty million shares apologies, but
Speaker 10: they were set against very clearly structured operational goals. In
Speaker 10: other words, until somebody has dug up the ground, put
Speaker 10: the data center in, and switched on the computer, nothing happens.
Speaker 10: And you know, open ai is still a little ways
Speaker 10: off from that happening too.
Speaker 2: Okay, is anyone getting pushed out or left out in
Speaker 2: the AI race by this deal being done? Like, is
Speaker 2: anybody like saying wait a minute, what are they doing.
Speaker 10: The other way to look at it is like through
Speaker 10: metas lens, Like Meta literally just did a similar deal
Speaker 10: with Nvidia. And what's so interesting, right, is that they
Speaker 10: framed that deal in the millions of chips and you know,
Speaker 10: going back to what I was saying about a moment
Speaker 10: ago about gigawatts, but it's a similar arrangement. And so
Speaker 10: Meta is doing three things. It is a massive buyer
Speaker 10: of Nvidia Gear, it's a massive buyer of AMD gear.
Speaker 10: But it also deploys like a lot of resources internally
Speaker 10: to develop its own custom accelerators. And you know, you
Speaker 10: either accept or don't the base position that all of
Speaker 10: these companies that are working on AIA supply constrained. In
Speaker 10: other words, they don't have access currently to enough compute
Speaker 10: to achieve the things that they want to do, and
Speaker 10: so to de risk that they are diversifying the sources
Speaker 10: of that compute in different ways. You know.
Speaker 2: Listening to that a and it makes me think about
Speaker 2: talking to people in the world of power generation and
Speaker 2: just saying how a lot of the hyperscalers were doing
Speaker 2: deals with a lot of different utilities just to make
Speaker 2: sure that they're covered and that all those contracts or
Speaker 2: initial maybe conversations weren't going to all pan out. And
Speaker 2: I guess that's what I'm trying to when I hear this.
Speaker 2: You know, it sounds like Meta being smart, making sure
Speaker 2: it's supply chain is robust internally externally as much as
Speaker 2: it can. But it also makes me think a lot
Speaker 2: of this sounds like insurance policies, and if the demand
Speaker 2: ultimately isn't there, or it doesn't the ROI isn't there,
Speaker 2: this starts to come undone, right, is that the big question?
Speaker 10: There's an element of future proofing. So the way that
Speaker 10: Mark Zuckerberg explains it is, remember he sat next to
Speaker 10: the president and promised to invest six hundred billion dollars,
Speaker 10: and more recently he's talked about the risk of miss
Speaker 10: spending about two hundred billion dollars. And to Mark Zuckerberg,
Speaker 10: the greater risk is to not spend it, because then
Speaker 10: you won't know if you'll have the tools available to
Speaker 10: you to develop the AI models that you think are
Speaker 10: unnecessary at the time. It's also another reason why we
Speaker 10: track that PGM data. I think we've on Business Sweet
Speaker 10: talks about this before. So PGM is like the biggest
Speaker 10: utility basically on the Eastern seaboard, and they actually revised
Speaker 10: down their peak demand on forecast because to your point,
Speaker 10: lots of things get announced on paper, they sit on
Speaker 10: electricity demands, they never build the things, and so we
Speaker 10: try to understand what's really being built on the ground.
Speaker 3: And I guess too, like if we think about how
Speaker 3: fast this stuff has just accelerated in recent years, ED,
Speaker 3: you know, maybe things could get more efficient, maybe not
Speaker 3: as much electricity will be in demand, as some analysts
Speaker 3: have said, I don't know, I want to. We are
Speaker 3: speaking with that lud though he's the coast of Bloomberg
Speaker 3: Tech on Bloomberg TV. He joins us from our San
Speaker 3: Francisco bureau. Ed a real feather in the cap for AMD,
Speaker 3: and Lisa sue, right.
Speaker 10: Yeah, you know, they have tried to differentiate themselves in
Speaker 10: any given quarter. At the moment, AMD will book ten
Speaker 10: billion dollars of revenue for absolutely everything it does. In
Speaker 10: Nvidia's just data center business is fifty billion dollars a quarter,
Speaker 10: and so you know that shows you where they are
Speaker 10: right now.
Speaker 7: Now.
Speaker 10: Their pitch has been an engineering focus pitch, where particularly
Speaker 10: in inference, in other words, running them mode, not training them,
Speaker 10: is where that their technology performs best, and like that
Speaker 10: was a big part of this to say, like, one
Speaker 10: of the reasons Meta is doing this with us is
Speaker 10: that they will co engineer those later generations of data
Speaker 10: center to use AMD's technology. Right, They'll work together the
Speaker 10: different engineering teams to make them work as efficiently as
Speaker 10: possible in a world where right now, like in Vidia
Speaker 10: dominates largely for training but dominates generally in data center,
Speaker 10: and then you have Google's TPU, its own custom chip,
Speaker 10: which is good at both training and inference, and so
Speaker 10: like again this is about Meta saying like what are
Speaker 10: our options here? AMD is a good option for that bucket,
Speaker 10: which is like specialized inference as far as we can tell.
Speaker 2: Yeah, And it's also just kind of interesting looking at
Speaker 2: it from a stock perspective perspective. I mean, AMD is
Speaker 2: storing in today's session, you know that, you know, we're
Speaker 2: not up about nine percent, but AMD is little change
Speaker 2: down the year, and videos little change down the year
Speaker 2: after you know, strong runs last year. I mean investors,
Speaker 2: are you know, still being kind of cautious right when
Speaker 2: it comes to this group.
Speaker 10: Ed Yeah, I mean I think back to October, Yeah,
Speaker 10: when AMD did the deal with open Ai and the
Speaker 10: stock jump twenty five percent or whatever it was. So
Speaker 10: people have short memories, like your partnerships are relative in
Speaker 10: the eyes of the market. This was a multi year
Speaker 10: thing going into the start twenty twenty six, right, So yeah,
Speaker 10: like in videos up modestly, but it had grown triple
Speaker 10: digits in the past whatever years, and you know it's
Speaker 10: now trading it relatively low multiple based on its forward earnings.
Speaker 10: So people kind of like, Okay, let's cool it a bit.
Speaker 2: Hey, we've got about a couple of minutes left. I
Speaker 2: want to ask you about Anthropic also on our radar stocks. Actually,
Speaker 2: the market overall kind of rebounding, as they said it
Speaker 2: was expanding the reach of its Claude Chapbot to build
Speaker 2: partnerships in the software and services sectors. And we know
Speaker 2: this has been a space that keeps getting beat up
Speaker 2: by the AI scare that AI is going to kind
Speaker 2: of take away all their business. I'm trying to underst
Speaker 2: stand AI working with software firms, or AI a threat,
Speaker 2: or we don't really know yet.
Speaker 10: So I'll try and summarize all of it. Because there
Speaker 10: are several, say a dozen stocks that moved through the
Speaker 10: upside based on this partnership with Anthropic. Athropic has a
Speaker 10: very competent model. Claud Historically it is focused on coding
Speaker 10: and making coding more efficient and getting rid of backlogs.
Speaker 10: All it's basically now saying is that they have an
Speaker 10: agentic platform that is a platform instead of being a
Speaker 10: standalone tool. You basically go to any given software company,
Speaker 10: look at the thing they already do, and say, wouldn't
Speaker 10: it be great if Claude just worked within that. Into
Speaker 10: It is a good example. People will use into it
Speaker 10: for their tax returns as consumers and small medium businesses
Speaker 10: will as well. Imagine if you actually went onto that
Speaker 10: platform and there was an agent, and by agent we
Speaker 10: mean you know, an AI that's authorized to do something.
Speaker 10: That's what they came out and said today.
Speaker 2: Ed Ludlove, of course, co host a Bloomberg Tech on
Speaker 2: Bloomberg TV Ketch at eleven am Wall Street Time on
Speaker 2: Bloomberg Television.
Speaker 3: Stay with us US more from Bloomberg Business Week Daily
Speaker 3: coming up after this.
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Speaker 3: Well, President Trump's efforts to end Russia's invasion of Ukraine
Speaker 3: are stalling, with peace talks deadlocked and the fighting large.
Speaker 3: They had a stealemate after four years of war.
Speaker 2: It's like, it's hard to get my head around because
Speaker 2: I remember our first conversations when this broke out, and
Speaker 2: it was like, can this end within the year, And
Speaker 2: it's like, well.
Speaker 3: The first conversations, well, correctly, everybody thought Ukraine would fall
Speaker 3: within three or four days.
Speaker 2: And look at like, here we are and the fighting continues.
Speaker 2: But it's not without its costs on so many different levels,
Speaker 2: in first and format, most of course the loss of
Speaker 2: just human lives. But there's just so much that has
Speaker 2: really hurt, certainly Ukraine in a big way at least.
Speaker 3: Giuliano is Senior Lecture and Political Science. It's at Columbia University.
Speaker 3: She's also director of graduate Studies at Columbia's harrim An
Speaker 3: Institute for Russian, Eurasian and East European Study. She's also
Speaker 3: director the Program on US Russian Relation. She joins US
Speaker 3: from New York. Professor always good to have you on
Speaker 3: the program. If we think back to just four years ago,
Speaker 3: and I mean, it seems it's just remarkable to realize
Speaker 3: that that time has passed and what people thought in
Speaker 3: the beginning of what people are thinking right now. President
Speaker 3: Trump making it a priority at least during the election
Speaker 3: in his first year in office to end the war
Speaker 3: in your view, is the end of the war in site.
Speaker 7: The end of the war unfortunately is not in sight.
Speaker 4: And I think the most sober minded view about this
Speaker 4: is the view of Ukrainians who understand that at this
Speaker 4: point President Trump thought he could. I think he said,
Speaker 4: end the war in a few days, and he thought
Speaker 4: it would be a simple task. But the youth sides
Speaker 4: remained very far apart. And the reason for this really
Speaker 4: is the intransigence of the Russian side of Putin, who
Speaker 4: really has not moved off of his initial goals in
Speaker 4: undertaking the invasion four years ago.
Speaker 2: Yeah, that's where I wanted to go. I mean, this
Speaker 2: is really I feel like the ball is in his
Speaker 2: court and unless he gives up the land grab and
Speaker 2: some other condition, I mean, what do we need to
Speaker 2: see from President Putin for this to happen.
Speaker 4: Well, the negotiations that are ongoing are really focusing and
Speaker 4: talking about Territoryeh, but this just makes it sound like
Speaker 4: a big game of risk. But what Putin wanted when
Speaker 4: he went into Ukraine four years ago was to have
Speaker 4: Ukraine in Russia's orbit in a kind of nineteenth century
Speaker 4: great powers way where a great power has should believe
Speaker 4: that it has sovereignty or control over its neighbors. So
Speaker 4: I don't think he's moved off of that goal. If
Speaker 4: you remember, the initial invasion was to directly toward Kiev,
Speaker 4: to overthrow the government of you and to put in
Speaker 4: place a puppet or kind of pro Russian puppet regime.
Speaker 7: That was a huge failure.
Speaker 4: And so now we're talking about territory and there's a
Speaker 4: stalemate on the line of contact in the east and south. However,
Speaker 4: Putin does not seem to and the negotiations do not
Speaker 4: really seem to meet in the middle, because this is
Speaker 4: not about territory for Russia, at least for Putin and
Speaker 4: for Ukraine, this is about the viability, the sovereignty, the
Speaker 4: very existence of their state.
Speaker 3: If it's not about territory for Vladimir Putin, what is
Speaker 3: it about.
Speaker 4: It's about having Ukraine in Russian's orbit. So whether that
Speaker 4: means keeping Ukraine out of Europe, out of NATO, out
Speaker 4: of an alliance with the West, with the US, that's
Speaker 4: what it's about. So if you know, if they do
Speaker 4: come to a ceasefire and they settle this kind of
Speaker 4: sticky point about territory, the problem is that what the
Speaker 4: Russian side is asking for is that Ukraine cannot give,
Speaker 4: which is one territory all of don boss including territory
Speaker 4: that Russia does not control right terrily. And if they
Speaker 4: if they win that, if they get that, then they
Speaker 4: could be well positioned to mount another invasion or.
Speaker 7: Another war in a short period of time.
Speaker 4: Whereas Ukraine wants security guarantees, and it wants those security
Speaker 4: guarantees from the West and from Europe, and that is
Speaker 4: exactly what Russia does not want.
Speaker 7: It does not want Europe involved.
Speaker 4: So there you see the kind of fundamental conflict between
Speaker 4: the two sides.
Speaker 2: Yeah, you know, European Commissioned President Ursula vonder Lyon said
Speaker 2: that the BLOCK will deliver on it's one hundred and
Speaker 2: six billion dollar loan package to Ukraine one way or another.
Speaker 2: Her words, As you know, we continue to see this
Speaker 2: go on and we're looking at Ukraine maybe running out
Speaker 2: of funds in just a matter of weeks. Why can't
Speaker 2: we have more of a packing for Ukraine? Or is
Speaker 2: that then a major shift in geopolitical alliances? Why not
Speaker 2: can't the world the United States get more? Why can't
Speaker 2: Ukraine be in NATO? Like, what message would that send
Speaker 2: to the rest of the world. It certainly would send
Speaker 2: a strong message to Russia, but it would also mean
Speaker 2: the potential for everybody else to get involved in that conflict, right,
Speaker 2: NATO allies?
Speaker 7: Okay, well, there's a few things there, I mean Ukraine.
Speaker 4: The hesitance of the US and Europe to place Ukraine
Speaker 4: and NATO is because NATO is a military alliance and
Speaker 4: then Europe and the US might possibly be engaged in
Speaker 4: war with the nuclear power Russia. So that's been the
Speaker 4: kind of hesitancy on the part of both Biden and
Speaker 4: Trump administration welcoming Ukraine into NATO. However, that doesn't mean
Speaker 4: that once the ceasefire is achieved that Europe cannot help
Speaker 4: to secure the point of contact and provides security guarantees
Speaker 4: to Ukraine something short of NATO membership, And that's what
Speaker 4: they're kind of working on and that's the direction that
Speaker 4: the EU is moving in. But in terms of the
Speaker 4: short term kinds of problems, you have Hungary very much
Speaker 4: of Russian puppet well not fully of puppet state, but
Speaker 4: aligned with Russia, kind of acting as a spoiler within
Speaker 4: the EU. So the EU is a complicated actor in
Speaker 4: and of itself.
Speaker 3: At least over the last four years, there have been
Speaker 3: different moments where we've learned about what's happening inside of Russia,
Speaker 3: what's happening inside of Ukraine, especially with regard to people
Speaker 3: who've lost their lives as a result of this conflict.
Speaker 3: On the Russian side, I'm curious about support for the
Speaker 3: war and where Vladimir Putin finds the people to do
Speaker 3: the fighting, because that was a concern a couple of
Speaker 3: years ago.
Speaker 4: Yeah, certainly we do not see Russians signing up in
Speaker 4: droves to fight this war. There isn't even a kind
Speaker 4: of understanding among many Russians of why Russia is fighting
Speaker 4: this war, and so where Putin finds the Russians willing
Speaker 4: to fight is in mainly the rural areas of Russia,
Speaker 4: the very poor areas of Russia, and they are paid
Speaker 4: huge amounts to go to the front, and these amounts
Speaker 4: are life changing for some of the families in these
Speaker 4: rural areas. And so you know, basically a lot of
Speaker 4: people are calling Russian army a mercenary army.
Speaker 7: At this point.
Speaker 4: And that's an important point because if Russia's economy is
Speaker 4: doing so poorly, which it is especially lately, is it
Speaker 4: going to have enough money to continue essentially hiring its
Speaker 4: own citizens, paying them these high salaries and payouts and
Speaker 4: death payouts. If the economy is really suffering.
Speaker 2: Alice, if there's an agreement where Ukraine gives up territory,
Speaker 2: then what's to stop Russia in Putin from doing this again?
Speaker 2: He's already this is his second would be his second
Speaker 2: land grab, certainly when it comes to Ukraine. If he
Speaker 2: if he does walk away with land, if there is
Speaker 2: some kind of resolution, I mean, does it then kind
Speaker 2: of just say to him, well, keep going, like should
Speaker 2: we assume that he will keep going? Like is that
Speaker 2: crucial that he gets no land out of this? Right?
Speaker 4: So that's the fear of Ukraine, and that's the fear
Speaker 4: of the EU. And you know many European states and
Speaker 4: formerly under the previous administration, is it a.
Speaker 2: Right fear though, is it accurate? Is it the right
Speaker 2: fear to have?
Speaker 4: You know, so, you know, if Pujin is in power,
Speaker 4: it to me, as long as he remains in power,
Speaker 4: and as long as he has this kind of obsession
Speaker 4: with Ukraine and with the kind of ideas that he's
Speaker 4: been articulating all along since you know, the past four years,
Speaker 4: then it seems to me that he will not give
Speaker 4: up on the goal of, as I said at the beginning,
Speaker 4: taking control of Ukraine, and how in Ukraine as as
Speaker 4: a neighboring state that's basically under the sovereignty of Russia.
Speaker 7: And so yeah, this is the this is the fear.
Speaker 4: You have Russian troops positioned very much inside some of
Speaker 4: the areas of Ukraine that would allow them if there
Speaker 4: were eastfire, that would allow them to restart the war again,
Speaker 4: you know, in six months, in a year, in a
Speaker 4: few years.
Speaker 3: Is there anything in your view that the US could
Speaker 3: or should be doing in order to hasten an end
Speaker 3: to the conflict?
Speaker 4: H well, sure, I mean, the US has a lot
Speaker 4: of the strong is the strongest state in the world.
Speaker 4: It has a lot of tools, you could say, it's
Speaker 4: tools of state craft that it could use, and is
Speaker 4: not using. First of all, let's be aware of the
Speaker 4: fact that the US has cut off aid, military aid,
Speaker 4: and assistance to Ukraine under the Trump administration.
Speaker 7: Cut off right, So now.
Speaker 4: The the it's the europe who purchases bins from the
Speaker 4: US and provides aid and assistance to Ukraine. So financially,
Speaker 4: that's one thing, but especially you know, there could be
Speaker 4: further sanctions, there could be better enforcement of sanctions, and
Speaker 4: there could be threats of military force by sending those
Speaker 4: weapons to Ukraine, so there could be much stronger military
Speaker 4: support for Ukraine is a threat. Look, the US is
Speaker 4: doing it right now with Iran, with the traditional tools
Speaker 4: of diplomacy, the threat of the use of force to
Speaker 4: compel another state to engage in the policy or political
Speaker 4: outcome that the US wants. And the US is not
Speaker 4: doing this.
Speaker 7: It's just taking a backseat.
Speaker 4: And it's really not clear that the negotiations are bringing
Speaker 4: the great power to bear on Russia that that we
Speaker 4: could be bringing.
Speaker 7: All right, we're going.
Speaker 2: To leave it there, but Alice, always appreciate your insight
Speaker 2: and thoughts on all of this as this war between
Speaker 2: the two entering its fifth year. Thanks to Alish, Juliana
Speaker 2: She's a senior lecturer in political science at Columbia University,
Speaker 2: also Director of Graduate Studies at Columbias Herriman Institute for Russian,
Speaker 2: Eurasian and East European Studies, Director Program on US Russian Relations.
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