1 00:00:02,880 --> 00:00:05,080 Speaker 1: Thank you so much for joining us on this special 2 00:00:05,240 --> 00:00:08,800 Speaker 1: edition of Bloomberg Daybreak. US markets are closed for the 3 00:00:08,840 --> 00:00:12,520 Speaker 1: Memorial Day holiday. I'm Nathan Hager, and coming up this hour, 4 00:00:12,600 --> 00:00:14,520 Speaker 1: we'll look ahead to earnings from one of the so 5 00:00:14,600 --> 00:00:18,160 Speaker 1: called Magnificent Seven in videos out with its quarterly report 6 00:00:18,200 --> 00:00:20,759 Speaker 1: on Wednesday, we get a preview with Ban Deep Saying, 7 00:00:20,800 --> 00:00:24,919 Speaker 1: Global head of Tech research at Bloomberg Intelligence. Plus bitcoins 8 00:00:25,000 --> 00:00:28,480 Speaker 1: back at record levels. We'll ask Bloomberg Intelligence Senior commodity 9 00:00:28,560 --> 00:00:32,600 Speaker 1: strategist Mike mcgloon where he thinks the crypto currency is headed, 10 00:00:32,880 --> 00:00:36,520 Speaker 1: and p JIM Fixed Income Chief US economist Tom Porcelli 11 00:00:36,560 --> 00:00:38,640 Speaker 1: will join us with his thoughts on how long the 12 00:00:38,720 --> 00:00:41,680 Speaker 1: FED can stay on hold. But we want to begin 13 00:00:41,880 --> 00:00:44,760 Speaker 1: with a look at the stock market. After a turbulent 14 00:00:44,960 --> 00:00:48,760 Speaker 1: few months, stocks have basically recovered their losses since President 15 00:00:48,760 --> 00:00:52,280 Speaker 1: Trump's Liberation Day tariff announcement in early April. So we 16 00:00:52,320 --> 00:00:53,920 Speaker 1: thought now would be a good time to bring you 17 00:00:53,960 --> 00:00:57,760 Speaker 1: a special roundtable on equities, and for that we're pleased 18 00:00:57,760 --> 00:01:01,600 Speaker 1: to welcome Invesco Global Markets strat just Brian Levitt and 19 00:01:01,680 --> 00:01:05,000 Speaker 1: Barry Ritholts, the founder of ritt Holt's Wealth management and 20 00:01:05,120 --> 00:01:08,600 Speaker 1: host of Bloomberg's Masters in Business podcast. It is great 21 00:01:08,640 --> 00:01:11,240 Speaker 1: to have the both of you with us. Barry, I'll 22 00:01:11,240 --> 00:01:11,920 Speaker 1: start with you. 23 00:01:12,319 --> 00:01:13,080 Speaker 2: Is this just. 24 00:01:13,160 --> 00:01:17,679 Speaker 1: A Washington dependent equity market at this point? 25 00:01:18,760 --> 00:01:23,000 Speaker 3: Well, no doubt, Washington policy decisions are having an big 26 00:01:23,120 --> 00:01:29,200 Speaker 3: impact on the market's expectations for the economy and corporate 27 00:01:29,240 --> 00:01:34,280 Speaker 3: revenue and profit. Look, the President calls himself tariff man, 28 00:01:34,360 --> 00:01:37,000 Speaker 3: says tariff's are the most beautiful word in the dictionary. 29 00:01:37,720 --> 00:01:41,000 Speaker 3: We know what he did in the first term, and 30 00:01:41,080 --> 00:01:45,520 Speaker 3: so the consensus seem to have been pre April, Hey, 31 00:01:45,600 --> 00:01:48,800 Speaker 3: we'll get some ten percent tariffs here and there, and 32 00:01:49,480 --> 00:01:53,559 Speaker 3: that's already built into our models. But when you suddenly 33 00:01:53,720 --> 00:01:58,120 Speaker 3: and unexpectedly drop one hundred percent tariffs on one hundred 34 00:01:58,160 --> 00:02:03,000 Speaker 3: and eighty two countries plus penguins in the Antarctica, the 35 00:02:03,080 --> 00:02:06,680 Speaker 3: market has to stop and say, oh, we failed. You know, 36 00:02:06,760 --> 00:02:09,400 Speaker 3: this is a failure of our imagination. We did not 37 00:02:09,560 --> 00:02:13,959 Speaker 3: anticipate tariffs this large. This is going to take ten 38 00:02:14,040 --> 00:02:17,919 Speaker 3: twenty percent off of corporate revenues. And profits always fall 39 00:02:17,960 --> 00:02:21,600 Speaker 3: faster than revues. Maybe this is twenty thirty percent off 40 00:02:21,639 --> 00:02:24,960 Speaker 3: of corporate profits four quarters from now. We have to 41 00:02:25,040 --> 00:02:29,640 Speaker 3: adjust our prices down and what will you off like 42 00:02:29,760 --> 00:02:33,200 Speaker 3: fourteen percent twelve percent? When the ninety day pause came in, 43 00:02:34,000 --> 00:02:37,040 Speaker 3: that was on the way to going much lower as 44 00:02:37,120 --> 00:02:42,280 Speaker 3: a discounting mechanism. The pause gave everybody some help that 45 00:02:42,680 --> 00:02:46,639 Speaker 3: all right, maybe our original assessment was correct, but it's 46 00:02:46,680 --> 00:02:48,440 Speaker 3: still very much up in the air. 47 00:02:49,520 --> 00:02:52,440 Speaker 1: Brian, I'll turn it over to you. Has the market 48 00:02:52,520 --> 00:02:58,200 Speaker 1: sort of shaken out where the policy direction is going now? 49 00:02:58,240 --> 00:03:02,360 Speaker 1: Have we adjusted to the second term of President Trump? 50 00:03:03,680 --> 00:03:06,040 Speaker 4: Not entirely. Barry makes a great point about it. 51 00:03:06,080 --> 00:03:08,400 Speaker 5: I mean, we remember we had a tarif rate that 52 00:03:08,639 --> 00:03:12,440 Speaker 5: was quite low a year ago, and now we're talking 53 00:03:12,480 --> 00:03:17,040 Speaker 5: about fifteen eighteen percent average effective rates. So, yes, we've 54 00:03:17,080 --> 00:03:21,839 Speaker 5: had a pause. Yes we've seen tower freights come down 55 00:03:21,880 --> 00:03:25,880 Speaker 5: on countries such as China, but it's still not entirely 56 00:03:26,040 --> 00:03:28,840 Speaker 5: clear where this is ultimately heading. Now, what's good for 57 00:03:28,919 --> 00:03:31,919 Speaker 5: the market, or what the market is at least expecting, 58 00:03:32,639 --> 00:03:35,720 Speaker 5: is that things are going to get incrementally better from 59 00:03:35,760 --> 00:03:39,440 Speaker 5: here on the policy front. There's no guarantee, but that 60 00:03:39,520 --> 00:03:42,240 Speaker 5: seems to be the market's expectation and does seem to 61 00:03:42,280 --> 00:03:46,800 Speaker 5: be the modus operandi of President Trump. I look back 62 00:03:46,840 --> 00:03:49,560 Speaker 5: to the twenty eighteen environment. If you remember the fourth 63 00:03:49,640 --> 00:03:53,520 Speaker 5: quarter of twenty eighteen, stocksfell twenty percent during the US 64 00:03:53,640 --> 00:03:56,600 Speaker 5: China trade war, you got a ninety to eight pause. 65 00:03:57,000 --> 00:03:59,920 Speaker 5: You did not get a Phase one China trade deal 66 00:04:00,440 --> 00:04:04,480 Speaker 5: for really another year, but the markets continued to perform 67 00:04:04,640 --> 00:04:08,480 Speaker 5: well amid expectations that policy was going to get better. 68 00:04:09,440 --> 00:04:11,800 Speaker 1: We are under a ninety day pause, as you mentioned, 69 00:04:12,040 --> 00:04:15,880 Speaker 1: we're heading toward what I think a lot of lawmakers 70 00:04:15,920 --> 00:04:18,360 Speaker 1: in Washington are hoping to be a big tax and 71 00:04:18,400 --> 00:04:22,159 Speaker 1: spending cut bill around ninety days or so from now. 72 00:04:22,720 --> 00:04:26,480 Speaker 1: Is July turning into a pivot point for the equity market? 73 00:04:26,480 --> 00:04:26,760 Speaker 4: Berry? 74 00:04:28,320 --> 00:04:30,960 Speaker 3: Maybe you know I love to do the compare and 75 00:04:31,040 --> 00:04:36,279 Speaker 3: contrast with how the FED communicates changes in policy with 76 00:04:36,400 --> 00:04:39,560 Speaker 3: how this White House does. You know, before the Fed 77 00:04:39,600 --> 00:04:41,840 Speaker 3: says we're going to shift our regime, and now we're 78 00:04:42,120 --> 00:04:45,279 Speaker 3: either raising rates or cutting rates. You get to notice 79 00:04:46,040 --> 00:04:49,719 Speaker 3: six meetings in advance, three meetings in advance. Hey, we're 80 00:04:49,760 --> 00:04:54,360 Speaker 3: tracking PCE and CPI. The month before the meeting, all 81 00:04:54,400 --> 00:04:57,480 Speaker 3: the FED governors and presidents fan out and they speak 82 00:04:57,520 --> 00:05:00,120 Speaker 3: at the Petroleum Club of Houston and the Economic a 83 00:05:00,200 --> 00:05:03,200 Speaker 3: Club of New York and everywhere else, and so when 84 00:05:03,279 --> 00:05:07,320 Speaker 3: the change happens, it's not a shock. You don't surprise 85 00:05:07,480 --> 00:05:10,880 Speaker 3: the markets. I think part of the problem here is 86 00:05:11,040 --> 00:05:17,760 Speaker 3: not just the policy itself, but how completely shocking and 87 00:05:17,800 --> 00:05:21,320 Speaker 3: surprising it was to markets. As it turns out, mister 88 00:05:21,440 --> 00:05:26,920 Speaker 3: market doesn't care for surprises, and that's something that I 89 00:05:27,080 --> 00:05:29,479 Speaker 3: wish the White House would take a page from the 90 00:05:29,480 --> 00:05:32,160 Speaker 3: Federal Reserve's communication strategy. 91 00:05:32,880 --> 00:05:36,280 Speaker 4: Yeah. Look, the S and P five hundred, as everyone knows, 92 00:05:36,400 --> 00:05:40,200 Speaker 4: is overvalue compared to its long term average, driven primarily 93 00:05:40,240 --> 00:05:44,120 Speaker 4: by a handful of names. Other markets are not as overvalued, 94 00:05:44,200 --> 00:05:49,560 Speaker 4: particularly non US markets obviously value in disease MidCap stock. 95 00:05:49,720 --> 00:05:53,560 Speaker 4: So it's one of these times where it may make sense. 96 00:05:53,640 --> 00:05:58,080 Speaker 4: It probably does make sense to lower the valuation of 97 00:05:58,080 --> 00:06:01,480 Speaker 4: the portfolio as we nab gate this period of policy 98 00:06:01,560 --> 00:06:04,520 Speaker 4: uncertainty and as we grapple with higher interest rates. 99 00:06:05,040 --> 00:06:09,000 Speaker 1: We're speaking with Brian Levitt. He is the global market 100 00:06:09,080 --> 00:06:12,600 Speaker 1: strategist at Invesco, and Barry Ridtholtz is with us as well, 101 00:06:12,640 --> 00:06:16,039 Speaker 1: founder of Ridolts Wealth Management, host of Bloomberg's Master's in 102 00:06:16,160 --> 00:06:20,200 Speaker 1: Business podcast. Barry, we have had a lot of attention 103 00:06:20,760 --> 00:06:25,360 Speaker 1: on the bond market particularly with the yields going up 104 00:06:25,960 --> 00:06:28,880 Speaker 1: in response to what's happening out of Washington, d C. 105 00:06:29,520 --> 00:06:32,200 Speaker 1: Where do you see the bond market going and could 106 00:06:32,200 --> 00:06:35,320 Speaker 1: it potentially pose a headwind for equities going forward? 107 00:06:36,560 --> 00:06:40,280 Speaker 3: Sure, always the bond markets are the adult in the room. 108 00:06:40,640 --> 00:06:42,840 Speaker 3: But let me throw a little bit of a curve 109 00:06:42,880 --> 00:06:45,680 Speaker 3: ball at you. I think Carvel was right in the 110 00:06:45,760 --> 00:06:51,000 Speaker 3: nineteen eighties and the nineteen nineties. Once the new millennium started, 111 00:06:52,400 --> 00:06:57,520 Speaker 3: it seemed like leadership in terms of influencing DC policy 112 00:06:58,600 --> 00:07:01,240 Speaker 3: moved to the equity mark mart So let me give 113 00:07:01,279 --> 00:07:04,600 Speaker 3: you just three quick examples. I have a vivid recollection 114 00:07:04,680 --> 00:07:09,720 Speaker 3: of FED Chairman Ben Bernanke testifying in October eight to Congress, 115 00:07:10,240 --> 00:07:13,360 Speaker 3: and after a few fiery speeches, they voted down money 116 00:07:13,400 --> 00:07:17,400 Speaker 3: and authority to the FED. Market sold off really hard. 117 00:07:18,280 --> 00:07:22,920 Speaker 3: By that Friday, everybody reconvened and they gave the Fed 118 00:07:22,920 --> 00:07:28,360 Speaker 3: everything they wanted. So ten twelve thirteen percent gets DC's attention. 119 00:07:29,320 --> 00:07:33,880 Speaker 3: I love what happened in March twenty twenty during the pandemic. 120 00:07:34,520 --> 00:07:41,160 Speaker 3: Republicans and Democrats couldn't agree on renaming a library in Washington, DC. 121 00:07:41,680 --> 00:07:47,840 Speaker 3: Talk about something with so minor Then the NBA canceled 122 00:07:48,480 --> 00:07:52,240 Speaker 3: the schedule after a thunder Jazz game where the center 123 00:07:52,480 --> 00:07:56,440 Speaker 3: tested positive for COVID. Once the NBA canceled their season, 124 00:07:56,840 --> 00:08:00,360 Speaker 3: the dominos all began to fall. And it was a 125 00:08:00,400 --> 00:08:03,600 Speaker 3: week or two later we passed the single biggest fiscal 126 00:08:03,640 --> 00:08:07,880 Speaker 3: stimulus as a percentage of GDP since World War Two, 127 00:08:08,040 --> 00:08:11,400 Speaker 3: the Cares Act. And now we see the same thing 128 00:08:11,480 --> 00:08:15,680 Speaker 3: that took place in April twenty twenty. The bond market 129 00:08:15,760 --> 00:08:21,040 Speaker 3: has certainly been driving the debate about the dollar and 130 00:08:22,280 --> 00:08:26,960 Speaker 3: fiscal policy and deficits, But it was the stock market 131 00:08:27,080 --> 00:08:30,080 Speaker 3: sell off hey down five percent, down five percent, down 132 00:08:30,120 --> 00:08:33,200 Speaker 3: five percent, three days in a row that got the 133 00:08:33,200 --> 00:08:37,480 Speaker 3: White House's attention. And that's when the President called uncle, 134 00:08:38,000 --> 00:08:42,319 Speaker 3: not rising yields, but falling equity prices. I want to 135 00:08:42,360 --> 00:08:46,120 Speaker 3: be reincarnated as the stock market, not the bond market. 136 00:08:46,400 --> 00:08:46,600 Speaker 4: Yeah. 137 00:08:46,640 --> 00:08:49,520 Speaker 1: I mean that raises the question the whole idea that 138 00:08:50,480 --> 00:08:54,440 Speaker 1: the president uses the stock market as a scorecard for 139 00:08:54,600 --> 00:08:57,880 Speaker 1: how his policies are going. So, Brian, as we head 140 00:08:57,880 --> 00:09:01,440 Speaker 1: into the second half, where do you see things going 141 00:09:01,440 --> 00:09:06,280 Speaker 1: for the stock market? Could it sway what happens in Washington, DC. 142 00:09:07,920 --> 00:09:12,640 Speaker 6: Yeah. Our leading indicators of the economy are still pointing 143 00:09:12,679 --> 00:09:15,840 Speaker 6: to below trend and lower growth, and the inflation momentum 144 00:09:15,920 --> 00:09:18,200 Speaker 6: is picking up, So that's a little bit of a 145 00:09:18,240 --> 00:09:19,480 Speaker 6: more challenged environment. 146 00:09:19,520 --> 00:09:23,199 Speaker 4: You're not there that often. Most of the time. You're 147 00:09:23,240 --> 00:09:25,920 Speaker 4: more in a recovery expansion or slow down field in 148 00:09:25,960 --> 00:09:29,760 Speaker 4: which stocks can do quite well. So in an environment 149 00:09:29,800 --> 00:09:32,480 Speaker 4: where leading indicators are pointing lower, you tend to want 150 00:09:32,480 --> 00:09:36,640 Speaker 4: to be a little bit more defensive, expect more volatility 151 00:09:37,080 --> 00:09:39,160 Speaker 4: in the markets. I think you're right, and I think 152 00:09:39,200 --> 00:09:43,400 Speaker 4: Barries right that ultimately we will get a better policy response. 153 00:09:43,640 --> 00:09:48,160 Speaker 4: Ultimately as the economy weakends, Federal Reserve will be able 154 00:09:48,200 --> 00:09:52,040 Speaker 4: to lower interest rates. When that happens is probably not 155 00:09:52,120 --> 00:09:55,080 Speaker 4: as soon as people think, and the administration will likely 156 00:09:55,160 --> 00:09:58,160 Speaker 4: continue to move away from its worst impulses on trades. 157 00:09:58,240 --> 00:10:01,360 Speaker 4: So you could be in a channel lenging short term 158 00:10:01,400 --> 00:10:06,920 Speaker 4: period here, because typically when you're leading indicators are rolling over, 159 00:10:07,000 --> 00:10:10,040 Speaker 4: you need a policy response, and for the first time 160 00:10:10,080 --> 00:10:12,920 Speaker 4: in a very long time, it's going to be a 161 00:10:13,040 --> 00:10:16,440 Speaker 4: challenge in the United States to get that policy response. 162 00:10:16,480 --> 00:10:19,920 Speaker 4: On the other side, in Europe, China, the UK, you 163 00:10:20,040 --> 00:10:22,719 Speaker 4: will be getting that policy response, which is why you're 164 00:10:22,760 --> 00:10:25,679 Speaker 4: starting to see or you have been seeing momentum pick 165 00:10:25,760 --> 00:10:28,080 Speaker 4: up in non US assets. 166 00:10:27,920 --> 00:10:31,080 Speaker 1: And Barry, are you looking for a challenging environment as well. 167 00:10:31,120 --> 00:10:33,520 Speaker 1: I mean, we've heard from the likes of Jamie Diamond 168 00:10:33,559 --> 00:10:36,640 Speaker 1: and JP Morgan Chase saying he can't take stagflation off 169 00:10:36,640 --> 00:10:38,760 Speaker 1: his table into the second half. 170 00:10:39,480 --> 00:10:42,439 Speaker 3: Well, well, Jamie reversed his views. Not too long ago. 171 00:10:42,559 --> 00:10:45,000 Speaker 3: He had said, Eh, you know, tas will be fine, 172 00:10:45,040 --> 00:10:47,520 Speaker 3: We'll work a way through it, before we had that 173 00:10:47,600 --> 00:10:54,120 Speaker 3: big surprise. My expectations really are dependent on who is 174 00:10:54,320 --> 00:10:58,840 Speaker 3: the potus whisperer, Who is the last person that the 175 00:10:58,960 --> 00:11:03,680 Speaker 3: president here before he goes into making a key decision. 176 00:11:04,440 --> 00:11:07,720 Speaker 3: If it turns out that the majority of the times, 177 00:11:08,200 --> 00:11:13,120 Speaker 3: the last person to influence President Trump is Treasury Secretary 178 00:11:13,240 --> 00:11:17,320 Speaker 3: Scott Besson, well we'll be fine. He's a Wall Street guy. 179 00:11:17,760 --> 00:11:23,960 Speaker 3: He understands how markets, dollars, bonds work. I'm comfortable with 180 00:11:24,200 --> 00:11:29,000 Speaker 3: him as the potus whisperer. If, on the other hand, 181 00:11:29,040 --> 00:11:33,600 Speaker 3: it's Peter Navarro, who is you know, one and only 182 00:11:33,679 --> 00:11:37,560 Speaker 3: one economist who seems to think that tariffs are a 183 00:11:37,600 --> 00:11:41,040 Speaker 3: fantastic idea. Hey, that little smooth holy thing, all right, 184 00:11:41,120 --> 00:11:43,200 Speaker 3: that was a one off. That didn't work, but we 185 00:11:43,240 --> 00:11:46,760 Speaker 3: should try it now. If he's the most influential advisor 186 00:11:47,360 --> 00:11:51,839 Speaker 3: that the president listens to, well, then you know the 187 00:11:51,880 --> 00:11:55,720 Speaker 3: worst case scenario is, yeah, we're gonna get rate cuts, 188 00:11:55,760 --> 00:11:59,720 Speaker 3: but it's going to be in response to a stagflationary 189 00:12:00,000 --> 00:12:02,720 Speaker 3: maybe even a recessionary environment. 190 00:12:04,040 --> 00:12:06,240 Speaker 1: To be a fly on the wall in Washington, d C. 191 00:12:06,840 --> 00:12:08,560 Speaker 1: Thank you for this to the both of you, Berry 192 00:12:08,640 --> 00:12:12,600 Speaker 1: Ridtholtz of Ridtholtz Wealth Management in Bloomberg's Master's and Business podcast, 193 00:12:12,880 --> 00:12:17,000 Speaker 1: and thanks as well to Investco Global market strategist Brian Levitt. 194 00:12:17,200 --> 00:12:19,840 Speaker 1: Up next, we're going to preview earnings this week from Nvidia. 195 00:12:19,920 --> 00:12:23,240 Speaker 1: Bloomberg Intelligence Global head of Tech Research Mandeep Sing will 196 00:12:23,320 --> 00:12:26,440 Speaker 1: join us as the special Memorial Day edition of Bloomberg 197 00:12:26,520 --> 00:12:30,480 Speaker 1: Daybreak continues. It's twenty minutes past the hour. I'm Nathan Hager. 198 00:12:31,080 --> 00:12:45,040 Speaker 1: This is Bloomberg. Welcome back to this special edition of 199 00:12:45,080 --> 00:12:48,520 Speaker 1: Bloomberg day Break. US markets are closed for the Memorial 200 00:12:48,600 --> 00:12:51,480 Speaker 1: Day holiday. I'm Nathan Hager. Wall Street gets back to 201 00:12:51,520 --> 00:12:54,760 Speaker 1: work this week with a key earnings report on the docket. 202 00:12:54,800 --> 00:12:57,520 Speaker 1: On Wednesday, after the close of trading, we get the 203 00:12:57,600 --> 00:13:01,600 Speaker 1: latest quarterly numbers from Nvidia, So what should we expect 204 00:13:01,600 --> 00:13:05,040 Speaker 1: from the AI chip giant. Let's bring in man Deep 205 00:13:05,080 --> 00:13:07,280 Speaker 1: Singh for se mencers in that regard. Mandeep of course, 206 00:13:07,320 --> 00:13:11,280 Speaker 1: as the global head of Tech research at Bloomberg Intelligence. 207 00:13:11,559 --> 00:13:13,560 Speaker 1: Man Deep, it's great to have you on with us. 208 00:13:13,640 --> 00:13:16,440 Speaker 1: And you know, Nvidia investors have kind of gotten used 209 00:13:16,440 --> 00:13:20,480 Speaker 1: to blowout results quarter after quarter, So is that the 210 00:13:20,559 --> 00:13:22,240 Speaker 1: expectation this time around? 211 00:13:23,080 --> 00:13:25,680 Speaker 2: I think there are a few variables to keep in mind. 212 00:13:25,760 --> 00:13:29,880 Speaker 2: So the first one is on the demand side. Everything 213 00:13:30,160 --> 00:13:34,199 Speaker 2: really looks strong when it comes to the commentary from 214 00:13:34,320 --> 00:13:38,800 Speaker 2: hyperscalers that we've heard around CAPEX. I mean pretty much 215 00:13:38,880 --> 00:13:44,680 Speaker 2: everyone raised their CAPEX slightly. They had positive outlook on 216 00:13:45,480 --> 00:13:49,440 Speaker 2: even the early twenty twenty six view. So the US 217 00:13:49,520 --> 00:13:54,880 Speaker 2: hyperscaler spin really strong. The one area that obviously will 218 00:13:54,880 --> 00:13:57,679 Speaker 2: be a slight head wind is the China exposure. And 219 00:13:57,720 --> 00:14:03,160 Speaker 2: we know in Nvidia wrote down about fifteen billion dollars 220 00:14:03,200 --> 00:14:07,359 Speaker 2: of their inventory of H twenties because of the restrictions. 221 00:14:07,440 --> 00:14:12,520 Speaker 2: So the most likely scenario right now is they may 222 00:14:12,559 --> 00:14:16,680 Speaker 2: not be able to sell to China anytime soon, even 223 00:14:16,720 --> 00:14:20,320 Speaker 2: if they come up with a different variant. I think 224 00:14:20,440 --> 00:14:25,280 Speaker 2: chances are they'll find it hard to overcome the restrictions, 225 00:14:25,360 --> 00:14:28,880 Speaker 2: so that's a negative. At the same time, they had 226 00:14:29,960 --> 00:14:32,800 Speaker 2: new sovereign deals in the Middle East a couple of 227 00:14:32,800 --> 00:14:39,560 Speaker 2: weeks back, UAE and I think Qatar, and just overall, 228 00:14:39,680 --> 00:14:42,480 Speaker 2: the sentiments seems to be improving when it comes to 229 00:14:42,600 --> 00:14:48,320 Speaker 2: sovereign demand outside of China. So there are different sort 230 00:14:48,360 --> 00:14:52,600 Speaker 2: of variables driving the demand side, but overall, look, the 231 00:14:52,600 --> 00:14:57,840 Speaker 2: market is still undersupplied and in video chips are still 232 00:14:57,880 --> 00:15:01,200 Speaker 2: the most performant when it comes to accelerators that you 233 00:15:01,320 --> 00:15:04,600 Speaker 2: need for AI. So from that perspective, I mean in 234 00:15:04,680 --> 00:15:08,640 Speaker 2: Nvidia still has that mode when it comes to the 235 00:15:08,760 --> 00:15:10,160 Speaker 2: AI accelerator market. 236 00:15:10,280 --> 00:15:12,480 Speaker 1: Yeah, to your point, it really has been a busy 237 00:15:12,600 --> 00:15:16,040 Speaker 1: quarter leading up to these results from Nvidia, a lot 238 00:15:16,040 --> 00:15:19,360 Speaker 1: of headlines coming out for the AI chip company, and 239 00:15:19,560 --> 00:15:23,360 Speaker 1: including some headlines from the CEO himself, Jensen Wong. He 240 00:15:23,440 --> 00:15:27,960 Speaker 1: was at the computechs AI event in Taipei last week 241 00:15:28,080 --> 00:15:32,440 Speaker 1: unveiling his latest raft of technologies aimed at keeping the 242 00:15:32,480 --> 00:15:35,520 Speaker 1: AI demand boom going. Here he is talking about the 243 00:15:35,600 --> 00:15:38,240 Speaker 1: latest in Vidia accelerator chips. Let's listen. 244 00:15:38,240 --> 00:15:42,480 Speaker 7: In this year in Q three will upgrade to Grace 245 00:15:42,520 --> 00:15:47,200 Speaker 7: Blackwell GB three hundred. The GB three hundred will increase. 246 00:15:47,640 --> 00:15:53,479 Speaker 7: Is the same architecture, same physical footprint, same electrical mechanicals, 247 00:15:54,040 --> 00:15:56,320 Speaker 7: but the chips inside have been upgraded. 248 00:15:57,200 --> 00:15:59,960 Speaker 1: So what kind of further commentary could we get from 249 00:16:00,000 --> 00:16:03,760 Speaker 1: from Jensen Wong on the GB three hundred when we 250 00:16:03,800 --> 00:16:05,080 Speaker 1: get these earnings this week. 251 00:16:05,400 --> 00:16:08,160 Speaker 2: Yeah, the big thing that the street is focused on 252 00:16:08,440 --> 00:16:11,920 Speaker 2: is what does the GB three hundred do in terms 253 00:16:12,120 --> 00:16:16,240 Speaker 2: of the gross margins, because remember in Vidia's gross margins 254 00:16:16,760 --> 00:16:20,760 Speaker 2: have come down slightly with this Blackwell launch compared to 255 00:16:20,840 --> 00:16:24,800 Speaker 2: the Hopper architecture, which was the prior architecture, and the 256 00:16:24,880 --> 00:16:28,960 Speaker 2: expectation is that gross margins go back to mid seventy percent. 257 00:16:29,040 --> 00:16:32,200 Speaker 2: This quarter there'll be more like seventy one seventy two percent, 258 00:16:32,680 --> 00:16:36,200 Speaker 2: but in the second half everyone is expecting those gross 259 00:16:36,200 --> 00:16:40,720 Speaker 2: margins to go up, primarily diriven in by GB three hundred. 260 00:16:40,960 --> 00:16:46,760 Speaker 2: Ass your clip just noted so clearly. You know they 261 00:16:46,760 --> 00:16:53,080 Speaker 2: are talking about bigger scale of these compute architectures that 262 00:16:53,520 --> 00:16:57,840 Speaker 2: all the hyperscalers are looking to use, and the reasoning models, 263 00:16:57,880 --> 00:17:01,360 Speaker 2: which really I think took off post Deep Seek earlier 264 00:17:01,360 --> 00:17:05,640 Speaker 2: in the year, do require much more compute than the 265 00:17:06,160 --> 00:17:09,679 Speaker 2: you know, the previous sort of way of using AI 266 00:17:09,880 --> 00:17:12,600 Speaker 2: when it comes to just giving in your prompt in 267 00:17:12,680 --> 00:17:16,119 Speaker 2: chatbot and getting a response. So the reasoning models have 268 00:17:16,320 --> 00:17:19,359 Speaker 2: driven up the consumption of compute and that will be 269 00:17:19,640 --> 00:17:24,399 Speaker 2: a key driver of the outlook that Nvidia is going 270 00:17:24,480 --> 00:17:26,560 Speaker 2: to give in their earnings report. 271 00:17:26,880 --> 00:17:29,960 Speaker 1: And we're speaking with man Deep Singhy's the global head 272 00:17:29,960 --> 00:17:33,320 Speaker 1: of Tech research at Bloomberg Intelligence as we look ahead 273 00:17:33,880 --> 00:17:37,240 Speaker 1: to in Vidia's latest earnings report coming up later this week. 274 00:17:37,880 --> 00:17:43,359 Speaker 1: You mentioned the importance of Nvidia broadening its market beyond 275 00:17:43,359 --> 00:17:46,400 Speaker 1: the hyperscalers, these deals that we saw in the Gulf 276 00:17:46,560 --> 00:17:50,560 Speaker 1: in recent weeks in Saudi Arabia, the United Arab Emirates. 277 00:17:50,960 --> 00:17:55,600 Speaker 1: How important is it for Nvidia to capture that market 278 00:17:55,640 --> 00:18:01,040 Speaker 1: those sovereign investors into the A boom. 279 00:18:01,480 --> 00:18:03,280 Speaker 2: Yeah, I mean, I look at it this way. When 280 00:18:03,280 --> 00:18:06,920 Speaker 2: you look at the five hyperscalers here in the US, 281 00:18:08,000 --> 00:18:11,240 Speaker 2: they are growing their capex by about forty to forty 282 00:18:11,240 --> 00:18:16,199 Speaker 2: five percent this year, and Nvidia's data center revenue is 283 00:18:16,280 --> 00:18:20,400 Speaker 2: expected to grow about fifty five percent this year. So 284 00:18:20,480 --> 00:18:25,720 Speaker 2: you can see how Nvidia is still so much exposed 285 00:18:25,760 --> 00:18:28,000 Speaker 2: to the hyperscale capex growth. 286 00:18:28,400 --> 00:18:28,760 Speaker 1: Now. 287 00:18:29,320 --> 00:18:33,880 Speaker 2: You know, there are obviously buyers of Nvidia chips outside 288 00:18:33,960 --> 00:18:38,480 Speaker 2: of hyperscale, the US hyperscalers, but you know, you need 289 00:18:38,520 --> 00:18:43,000 Speaker 2: bigger entities. We're talking about a company that is almost 290 00:18:43,000 --> 00:18:46,480 Speaker 2: going to do two hundred billion dollars in revenue this year, 291 00:18:46,640 --> 00:18:50,080 Speaker 2: and for that number to keep growing even at a 292 00:18:50,160 --> 00:18:53,600 Speaker 2: twenty five to thirty percent clip, you need to find 293 00:18:53,680 --> 00:18:57,159 Speaker 2: those large incremental buyers. You can't just have, you know, 294 00:18:57,320 --> 00:19:01,280 Speaker 2: enterprises with five to ten million dollars of IT budgets 295 00:19:01,280 --> 00:19:05,320 Speaker 2: spending on GPU compute. You need much bigger because we're 296 00:19:05,359 --> 00:19:10,000 Speaker 2: talking much bigger numbers now, and so sovereigns do kind 297 00:19:10,080 --> 00:19:13,719 Speaker 2: of come across as entities that can spend big on 298 00:19:13,840 --> 00:19:16,760 Speaker 2: capex and they can spend for a few years. It 299 00:19:16,840 --> 00:19:19,360 Speaker 2: won't be just a one and done sort of thing. 300 00:19:19,680 --> 00:19:22,439 Speaker 2: And so from that perspective, it's huge that you know, 301 00:19:22,680 --> 00:19:26,600 Speaker 2: Nvidia is exposed to these sovereign buyers. I'm more curious 302 00:19:26,600 --> 00:19:31,720 Speaker 2: to see what sort of llms or products come out 303 00:19:31,720 --> 00:19:34,879 Speaker 2: of the spend from the likes of Saudi Arabia or 304 00:19:35,040 --> 00:19:39,720 Speaker 2: UAE who plan to spend big on Nvidia accelerators, because 305 00:19:39,720 --> 00:19:41,679 Speaker 2: at the end of the day, you have to have 306 00:19:41,800 --> 00:19:45,960 Speaker 2: something unique then what OpenAI or Gemini is offering in 307 00:19:46,040 --> 00:19:47,600 Speaker 2: terms of chatblock functionality. 308 00:19:47,800 --> 00:19:49,600 Speaker 1: Yeah, and I guess you have to wonder as well 309 00:19:49,680 --> 00:19:53,399 Speaker 1: whether those sovereigns can come through on some of the 310 00:19:53,440 --> 00:19:56,560 Speaker 1: pledges they've made around the deals that were announced in 311 00:19:56,600 --> 00:20:00,000 Speaker 1: recent days. I mean, we've been talking about multi hundreds 312 00:20:00,080 --> 00:20:04,320 Speaker 1: of billions, if not multiple trillions of dollars in announcements 313 00:20:04,359 --> 00:20:05,359 Speaker 1: coming out of that event. 314 00:20:06,040 --> 00:20:09,640 Speaker 2: Yeah. Absolutely, I mean the numbers are big, and these 315 00:20:09,680 --> 00:20:13,120 Speaker 2: are multi year commitments, as has been the case even 316 00:20:13,160 --> 00:20:16,720 Speaker 2: in the US. We know about the project's target. You know, 317 00:20:16,800 --> 00:20:20,080 Speaker 2: even Apple has talked about investing up to five hundred 318 00:20:20,119 --> 00:20:22,720 Speaker 2: billion dollars here in the US. I'll be curious to 319 00:20:23,320 --> 00:20:26,440 Speaker 2: kind of learn more about what Apple plans to invest 320 00:20:26,520 --> 00:20:30,000 Speaker 2: on because so far, Apple has been the one large 321 00:20:30,040 --> 00:20:33,680 Speaker 2: tech company that has not invested big when it comes 322 00:20:33,720 --> 00:20:37,920 Speaker 2: to the GPU and the accelerated compute infrastructure. So that 323 00:20:38,000 --> 00:20:41,240 Speaker 2: could be a positive for Nvidia if Apple comes in 324 00:20:41,400 --> 00:20:45,199 Speaker 2: as another hyperscaler who wants to stand you know, this 325 00:20:45,400 --> 00:20:50,359 Speaker 2: big GPU infrastructure. But clearly that hasn't happened, and that's why, 326 00:20:50,400 --> 00:20:54,840 Speaker 2: you know, you need the bigger entities like the four 327 00:20:54,920 --> 00:20:59,000 Speaker 2: or five existing hyperscalers to come in to sustain this 328 00:20:59,560 --> 00:21:02,440 Speaker 2: revenue growth that we've seen out of Nvidia. 329 00:21:03,040 --> 00:21:06,680 Speaker 1: Do you see Nvidia sustaining the growth of its valuation 330 00:21:07,560 --> 00:21:10,880 Speaker 1: given the news that's come out in recent months, We've 331 00:21:10,880 --> 00:21:14,119 Speaker 1: been talking about the deep Seek breakthrough in China, so 332 00:21:14,280 --> 00:21:18,320 Speaker 1: much competition in the space. Now, can investors continue to 333 00:21:18,400 --> 00:21:23,320 Speaker 1: drive up the value of this company into the next 334 00:21:23,320 --> 00:21:23,960 Speaker 1: few quarters. 335 00:21:24,359 --> 00:21:26,840 Speaker 2: I Mean, the good thing for Innvidia is it's been 336 00:21:26,960 --> 00:21:31,560 Speaker 2: growing nicely into its multiple, so it's never really traded 337 00:21:31,720 --> 00:21:35,280 Speaker 2: at a crazy multiple. And that's still the case because 338 00:21:35,320 --> 00:21:38,000 Speaker 2: you know when a company is growing over fifty percent, 339 00:21:38,480 --> 00:21:42,040 Speaker 2: I mean you know, it's almost doubling its revenue in 340 00:21:42,680 --> 00:21:46,480 Speaker 2: less than two years, So clearly you know it's growing 341 00:21:46,560 --> 00:21:51,360 Speaker 2: nicely into the valuation. And look, when it comes to Nvidia, 342 00:21:51,800 --> 00:21:56,359 Speaker 2: like they have a very successful mode in terms of 343 00:21:56,480 --> 00:22:00,199 Speaker 2: having the most performant chip, they have the scale, they have, 344 00:22:00,280 --> 00:22:03,480 Speaker 2: the high margins, I mean gross margins in excess of 345 00:22:03,520 --> 00:22:08,639 Speaker 2: seventy percent is something desirable for any company, and they're 346 00:22:08,640 --> 00:22:10,800 Speaker 2: doing it as a semiconductor company. So there are a 347 00:22:10,840 --> 00:22:13,680 Speaker 2: lot of things that are working well for them. And 348 00:22:14,359 --> 00:22:18,200 Speaker 2: if AI is this secular trend and I think everyone 349 00:22:18,320 --> 00:22:21,159 Speaker 2: sort of agrees on that this is a you know, 350 00:22:21,200 --> 00:22:24,879 Speaker 2: a fifteen to twenty year trend and videos is still 351 00:22:25,080 --> 00:22:29,600 Speaker 2: most exposed to kind of growth in that AI infrastructure. 352 00:22:29,720 --> 00:22:33,199 Speaker 2: Is just a question of can it happen in a sustainable, 353 00:22:33,640 --> 00:22:36,399 Speaker 2: you know, twenty five to thirty percent every year growth 354 00:22:36,440 --> 00:22:39,440 Speaker 2: type of scenario from here on or will there be 355 00:22:39,720 --> 00:22:43,480 Speaker 2: you know, peaks and troughs in terms of a capeic 356 00:22:43,600 --> 00:22:48,439 Speaker 2: digestion period and then you know, things picking back. So 357 00:22:48,920 --> 00:22:51,960 Speaker 2: that's the sort of question that everyone is trying to 358 00:22:51,960 --> 00:22:55,480 Speaker 2: grapple with. But there is no doubt that Nvidia has 359 00:22:55,640 --> 00:22:58,800 Speaker 2: almost got a monopoly when it comes to training work cloths, 360 00:22:58,880 --> 00:23:02,240 Speaker 2: and even on the inference side, they continue to have 361 00:23:02,960 --> 00:23:04,280 Speaker 2: a dominant chare right now. 362 00:23:04,520 --> 00:23:06,480 Speaker 1: Yeah, and I wanted to ask you if you think 363 00:23:06,600 --> 00:23:11,800 Speaker 1: Nvidia maintains that monopolistic position that mote when you know 364 00:23:11,920 --> 00:23:15,840 Speaker 1: it's facing competition from the likes of Advanced micro Devices 365 00:23:15,880 --> 00:23:18,040 Speaker 1: and you know so many other competitors that want to 366 00:23:18,119 --> 00:23:20,359 Speaker 1: chip away at this chip giant. 367 00:23:20,880 --> 00:23:26,080 Speaker 2: Yeah, look, there is competition from AMD or Google's TPUs 368 00:23:26,200 --> 00:23:30,359 Speaker 2: or even now we've started hearing Huawei being a potential competitor. 369 00:23:30,760 --> 00:23:36,000 Speaker 2: But when it comes to price, you know, performance as 370 00:23:36,040 --> 00:23:39,720 Speaker 2: well as you know the power aspect of their chips. 371 00:23:40,119 --> 00:23:43,800 Speaker 2: They are still way above everyone else, and that's why 372 00:23:43,840 --> 00:23:47,600 Speaker 2: you know, these AI workloads are pretty demanding when it 373 00:23:47,640 --> 00:23:51,439 Speaker 2: comes to the floating point operations that are required and 374 00:23:51,520 --> 00:23:55,800 Speaker 2: the power efficiency that's required. Nvidia has so far managed 375 00:23:55,840 --> 00:23:58,280 Speaker 2: to say at least you know, a year or two 376 00:23:58,320 --> 00:24:00,800 Speaker 2: ahead of everyone else in terms of what they are 377 00:24:00,840 --> 00:24:04,399 Speaker 2: able to offer versus the competition. And then they also 378 00:24:04,520 --> 00:24:08,520 Speaker 2: have this software mode that others are still developing when 379 00:24:08,560 --> 00:24:12,399 Speaker 2: it comes to their chips. So I do think their mode, 380 00:24:12,720 --> 00:24:15,920 Speaker 2: at least for now, seems sustainable. But you know, we're 381 00:24:15,960 --> 00:24:20,320 Speaker 2: talking big numbers, and when everyone is fixated on this 382 00:24:20,560 --> 00:24:25,120 Speaker 2: multi year opportunity, there will be workarounds. And their customers 383 00:24:25,440 --> 00:24:28,640 Speaker 2: are also potential competitors. When you think about the likes 384 00:24:28,640 --> 00:24:31,440 Speaker 2: of Google and Amazon. I mean, these are the biggest 385 00:24:31,520 --> 00:24:35,320 Speaker 2: customers of Invidia chips, but they're also developing their own chips. 386 00:24:35,320 --> 00:24:38,959 Speaker 2: So clearly there is that threat that over time they'll 387 00:24:39,080 --> 00:24:42,800 Speaker 2: try to reduce their dependency on Nvidia, and I think 388 00:24:42,840 --> 00:24:46,200 Speaker 2: it will happen. It's just a question of how long 389 00:24:46,240 --> 00:24:48,639 Speaker 2: will it take them to develop their own chips so 390 00:24:48,680 --> 00:24:51,520 Speaker 2: that you know they can completely move out of that 391 00:24:51,680 --> 00:24:52,840 Speaker 2: Nvidia dependency. 392 00:24:53,320 --> 00:24:55,000 Speaker 1: Well, we don't have too long to wait for those 393 00:24:55,080 --> 00:24:58,359 Speaker 1: latest numbers on in Vidia's latest quarter. We get the 394 00:24:58,400 --> 00:25:02,840 Speaker 1: results Wednesday after the close. Thanks for the preview ahead 395 00:25:02,840 --> 00:25:05,840 Speaker 1: of it, Man Deep Saying, the global head of Tech 396 00:25:05,920 --> 00:25:09,879 Speaker 1: research at Bloomberg Intelligence. Up next, the big move to 397 00:25:09,880 --> 00:25:12,320 Speaker 1: the upside for bitcoin. We look ahead at what's a 398 00:25:12,359 --> 00:25:17,480 Speaker 1: head for crypto with Bloomberg Intelligence Senior Commodity strategist Mike mcgloone. 399 00:25:17,640 --> 00:25:20,439 Speaker 1: It's thirty seven minutes past the hour. I'm Nathan Hager, 400 00:25:20,840 --> 00:25:34,600 Speaker 1: and this is Bloomberg. Welcome back to the special edition 401 00:25:34,640 --> 00:25:37,879 Speaker 1: of Bloomberg Daybreak. I'm Nathan Hager. The US stock market 402 00:25:37,960 --> 00:25:41,000 Speaker 1: course is closed for the Memorial Day holiday, and much 403 00:25:41,119 --> 00:25:44,960 Speaker 1: like the stock market, the trajectory of bitcoin has reversed 404 00:25:45,000 --> 00:25:48,320 Speaker 1: over the past couple months and taken off. It was 405 00:25:48,400 --> 00:25:50,840 Speaker 1: just over a month ago the crypto currency was trading 406 00:25:50,920 --> 00:25:54,520 Speaker 1: under seventy seven thousand. Last week it surged to a 407 00:25:54,680 --> 00:25:58,280 Speaker 1: record well into six figures. For more on where the 408 00:25:58,320 --> 00:26:01,480 Speaker 1: original digital token go from here, we are pleased to 409 00:26:01,480 --> 00:26:06,760 Speaker 1: welcome Blueberg Intelligence Senior Commodity strategist Mike mcgloon Mike, it's 410 00:26:06,760 --> 00:26:08,280 Speaker 1: good to have you with us. I mean, we've had 411 00:26:08,320 --> 00:26:12,760 Speaker 1: some bullish crypto investors talking about lots more upside from here. 412 00:26:13,400 --> 00:26:15,120 Speaker 1: Where do you see bitcoin going? 413 00:26:15,200 --> 00:26:17,879 Speaker 8: I guess that's part of the problem, Nathan. It's had 414 00:26:17,920 --> 00:26:19,919 Speaker 8: a very good run, but now it seems like the 415 00:26:19,960 --> 00:26:24,000 Speaker 8: consensus for bullishness to be complete. Certainty is what really 416 00:26:24,080 --> 00:26:28,359 Speaker 8: scares me. So that you know, so bitcoin's a new record, 417 00:26:28,359 --> 00:26:32,680 Speaker 8: that's a wonderful thing. It's very impressive, but it has 418 00:26:32,880 --> 00:26:36,760 Speaker 8: basically Pilon effect kicking in now, and I'm concerned that 419 00:26:36,920 --> 00:26:39,600 Speaker 8: one thing it did prove in Q one certainly to 420 00:26:39,640 --> 00:26:42,960 Speaker 8: that bottom in April when the stock market went down, 421 00:26:43,040 --> 00:26:45,200 Speaker 8: it went down with it what it knows it neally does. 422 00:26:45,240 --> 00:26:46,919 Speaker 8: It went down a lot harder. Now we're at the 423 00:26:46,960 --> 00:26:49,800 Speaker 8: situation a lot of people says it's people say it's 424 00:26:49,840 --> 00:26:53,320 Speaker 8: not as highly correlated to the stock market, it's an alternative, 425 00:26:53,640 --> 00:26:56,119 Speaker 8: but it's proving it actually is more correlated to the 426 00:26:56,119 --> 00:26:58,360 Speaker 8: stock market than things like gold. So for on the year, 427 00:26:59,080 --> 00:27:02,440 Speaker 8: gold is still way up performing bitcoin. Questions can Bitcoin 428 00:27:02,520 --> 00:27:04,680 Speaker 8: catch up? And I think a key pre vacuu is 429 00:27:05,160 --> 00:27:09,800 Speaker 8: requisite for bitcoin to outperform gold this year. The old 430 00:27:09,880 --> 00:27:13,280 Speaker 8: rock is US stock market properly probably has to go higher. 431 00:27:13,320 --> 00:27:17,119 Speaker 8: So at this point, from the last sixteen quarters, the 432 00:27:17,160 --> 00:27:19,760 Speaker 8: correlation with bitcoin the S and P five hundred I 433 00:27:19,840 --> 00:27:22,679 Speaker 8: use sixteen quarters because bitcoin works in a four year cycle, 434 00:27:23,080 --> 00:27:25,760 Speaker 8: is about point seven. That's almost the highest ever. Yet 435 00:27:25,800 --> 00:27:28,919 Speaker 8: the correlation of bitcoin to gold is about zero. So 436 00:27:28,960 --> 00:27:32,320 Speaker 8: I like to say some points bitcoin is digital gold 437 00:27:32,359 --> 00:27:35,280 Speaker 8: and some kins it's leverage beta, And so far this 438 00:27:35,359 --> 00:27:37,440 Speaker 8: year is proving its leverage beta. But the good news 439 00:27:37,520 --> 00:27:39,440 Speaker 8: is so far it's way out perform a stock market 440 00:27:40,040 --> 00:27:41,639 Speaker 8: in just sense. I have a sense that there's just 441 00:27:41,680 --> 00:27:45,080 Speaker 8: so much just complete certainty it's going to go higher. 442 00:27:45,080 --> 00:27:46,639 Speaker 8: This one I have to pull back into a bit 443 00:27:46,640 --> 00:27:47,720 Speaker 8: of a contrarian. 444 00:27:47,520 --> 00:27:51,199 Speaker 1: So are you thinking then that bitcoin isn't quite the 445 00:27:51,640 --> 00:27:55,720 Speaker 1: mature asset that some might think it's at least trying 446 00:27:55,760 --> 00:28:00,760 Speaker 1: to be now with so much more institutional interest in cryptocurrency. 447 00:28:00,119 --> 00:28:03,480 Speaker 8: It's actually more the latter it's become. It's gained so 448 00:28:03,600 --> 00:28:08,280 Speaker 8: much maturity. Last year was a benchmark year for bitcoin. 449 00:28:08,640 --> 00:28:10,399 Speaker 8: The ETFs and those of us who were in the 450 00:28:10,440 --> 00:28:12,480 Speaker 8: space were a long time waited for for ten years 451 00:28:12,520 --> 00:28:14,560 Speaker 8: finally launch, so that brought in you know a lot 452 00:28:14,640 --> 00:28:17,320 Speaker 8: of those type of investors we had the having and 453 00:28:17,359 --> 00:28:21,400 Speaker 8: the major, most significant pivot was the Trump and mistation 454 00:28:21,800 --> 00:28:25,320 Speaker 8: President candidate Trump at the time switching over his narrative 455 00:28:25,400 --> 00:28:26,919 Speaker 8: to being favorable. 456 00:28:27,240 --> 00:28:28,000 Speaker 1: I really liked. 457 00:28:27,880 --> 00:28:30,040 Speaker 8: Writing bulls things about it when most of the masses 458 00:28:30,040 --> 00:28:32,720 Speaker 8: hated it like a first Trump administration. They were not 459 00:28:32,720 --> 00:28:35,720 Speaker 8: noticing what was happening in crypto dours and the base 460 00:28:35,800 --> 00:28:39,320 Speaker 8: layer being the door and a lot of crypto stable 461 00:28:39,320 --> 00:28:42,600 Speaker 8: coins investing in US trasure traasies. Now they do. And 462 00:28:42,720 --> 00:28:46,160 Speaker 8: here's one big problem, Nathan, is the animal spirits are 463 00:28:46,200 --> 00:28:48,320 Speaker 8: in the space. In the past, there was maybe a 464 00:28:48,320 --> 00:28:51,720 Speaker 8: couple thousand, couple up to a million cryptocurrencies. Now on 465 00:28:51,800 --> 00:28:58,400 Speaker 8: coin marketcap dot com there's sixteen million cryptocurrencies listed and 466 00:28:58,400 --> 00:29:01,360 Speaker 8: that can be traded for me. It's the example of 467 00:29:01,480 --> 00:29:04,800 Speaker 8: the broomsticks that Scott Present uses from the Fantasia where 468 00:29:04,880 --> 00:29:07,520 Speaker 8: Mickey Mouse creates the spell and then you can't stop it, 469 00:29:07,840 --> 00:29:10,600 Speaker 8: you know, the Sorcerer's Apprentice. This is the situation now. 470 00:29:10,640 --> 00:29:13,000 Speaker 8: I see in cryptos we have an unlimited supply of 471 00:29:13,120 --> 00:29:17,680 Speaker 8: dependence on bitcoin going higher. So bitcoin, yes, it has 472 00:29:17,720 --> 00:29:19,840 Speaker 8: that limited supply factor, but now we have so much 473 00:29:20,000 --> 00:29:23,000 Speaker 8: leverage in this space. There's a story on the Bloomberg 474 00:29:23,120 --> 00:29:25,640 Speaker 8: terminal on this week that sat and pointed out that 475 00:29:25,680 --> 00:29:28,760 Speaker 8: we have people leveraging forty to one to get long 476 00:29:28,960 --> 00:29:30,840 Speaker 8: and they put in stops. And the unique thing about 477 00:29:30,840 --> 00:29:32,440 Speaker 8: the space is those of us who've traded in the 478 00:29:32,440 --> 00:29:33,920 Speaker 8: past is a lot of times you can run through 479 00:29:33,920 --> 00:29:36,880 Speaker 8: stops on gaps, meaning when markets are closed when they're open, 480 00:29:36,880 --> 00:29:39,400 Speaker 8: but bitcoin never closes. So I think what that does 481 00:29:39,480 --> 00:29:42,560 Speaker 8: is incentive ives is as sentitizes many people to use 482 00:29:42,600 --> 00:29:44,600 Speaker 8: a lot x of a lot more risk than they 483 00:29:44,600 --> 00:29:46,680 Speaker 8: should be. So I'm very concerned at these levels. I'm 484 00:29:46,720 --> 00:29:48,600 Speaker 8: concerned that the US stock markets are going to roll 485 00:29:48,640 --> 00:29:50,640 Speaker 8: over for that recession we didn't have in two thousand 486 00:29:50,680 --> 00:29:53,720 Speaker 8: and twenty three. And that's somewhat that can the views 487 00:29:53,760 --> 00:29:56,400 Speaker 8: of Ona Wong or chief economists in Jena, Martin Adams, 488 00:29:56,520 --> 00:30:00,320 Speaker 8: or senior equity strategist. And the key thing I'm pointed 489 00:30:00,360 --> 00:30:02,240 Speaker 8: out for a while is that bitcoin to gold ratio, 490 00:30:02,240 --> 00:30:06,880 Speaker 8: the amount of gold ounces equal to one bitcoin right 491 00:30:06,920 --> 00:30:10,000 Speaker 8: now is about thirty three now that was first traded 492 00:30:10,000 --> 00:30:14,240 Speaker 8: in twenty twenty one. So I'm really concerned that you 493 00:30:14,280 --> 00:30:17,320 Speaker 8: know this, this space has got to become very mature. 494 00:30:17,560 --> 00:30:20,080 Speaker 8: It's got the masses in it. And now we have 495 00:30:20,160 --> 00:30:21,880 Speaker 8: a lot of lambs. Look at me. I can make 496 00:30:21,920 --> 00:30:25,720 Speaker 8: money too. Who are doing things that I've heard about 497 00:30:25,880 --> 00:30:27,800 Speaker 8: in nineteen twenty nine in the stock market, and I 498 00:30:27,840 --> 00:30:30,160 Speaker 8: remember in nineteen eighty nine in Japan, in nineteen nine, 499 00:30:30,560 --> 00:30:33,080 Speaker 8: in ninety nine US And I'll just mention that unlimited 500 00:30:33,120 --> 00:30:35,080 Speaker 8: supply and then a lot of these things, like the 501 00:30:35,120 --> 00:30:38,400 Speaker 8: eighth largest cryptocurrency is dogecoin. It's worth only thirty six 502 00:30:38,800 --> 00:30:41,600 Speaker 8: billion dollars and it's basically a joke, attracts nothing. Some 503 00:30:41,640 --> 00:30:43,400 Speaker 8: of that stuff I'm just waiting to get purged out 504 00:30:43,400 --> 00:30:45,080 Speaker 8: and then I can get really bullish again. 505 00:30:45,400 --> 00:30:49,200 Speaker 1: So are you concerned? Does your concern build when we're seeing, 506 00:30:49,400 --> 00:30:51,960 Speaker 1: you know, some of these regulations looking like they're going 507 00:30:51,960 --> 00:30:54,680 Speaker 1: to be loose, and particularly around the stable coin legislation 508 00:30:54,760 --> 00:30:59,520 Speaker 1: that was just move forward in Washington, d C. You know, 509 00:31:00,120 --> 00:31:02,120 Speaker 1: feeding into some of those animal spirits. 510 00:31:02,160 --> 00:31:04,280 Speaker 8: Well, there you go, exactly. That's the key phrase. I 511 00:31:04,320 --> 00:31:07,320 Speaker 8: think the key nomenclature animal spirits have been released. The 512 00:31:07,400 --> 00:31:09,560 Speaker 8: key thing I find about stable coins is number one, 513 00:31:09,600 --> 00:31:12,920 Speaker 8: the technology is awesome. The ability that's The most enduring 514 00:31:12,920 --> 00:31:16,040 Speaker 8: bull market I like pointing out in twenty eighteen when 515 00:31:16,040 --> 00:31:18,240 Speaker 8: it was quite the bare market, was the increasing market 516 00:31:18,240 --> 00:31:20,800 Speaker 8: campalisation of stable coins. At that time, it was only tether, 517 00:31:21,120 --> 00:31:23,360 Speaker 8: it's only about two billion. Now Tether is about one 518 00:31:23,440 --> 00:31:25,840 Speaker 8: hundred and fifty billion, and there's about two hundred and 519 00:31:25,840 --> 00:31:28,720 Speaker 8: fifty billion tracking stable coins and they're all invested in treasuries. 520 00:31:28,720 --> 00:31:31,280 Speaker 8: This is good for the US. The thing about that 521 00:31:31,440 --> 00:31:34,800 Speaker 8: I think that's disconcerning for me is it's that tokenization process. 522 00:31:34,840 --> 00:31:39,120 Speaker 8: Once we begin to extract or expand this tokenization, we 523 00:31:39,200 --> 00:31:44,720 Speaker 8: can tokenize and trade assets on chain like treasuries and stocks. 524 00:31:45,200 --> 00:31:47,920 Speaker 8: I think that's going to put things like dosee coin 525 00:31:48,200 --> 00:31:53,240 Speaker 8: that are just silly, expensive speculative excesses as shortbait. So 526 00:31:53,800 --> 00:31:58,000 Speaker 8: right now, overall the government's going to finally figure this out. 527 00:31:58,000 --> 00:32:01,400 Speaker 8: But just that we realize the technology that uses a 528 00:32:01,520 --> 00:32:04,320 Speaker 8: US dollars a base layer and track things like stable 529 00:32:04,360 --> 00:32:05,120 Speaker 8: claims is awesome. 530 00:32:05,880 --> 00:32:08,120 Speaker 1: It's quite the market to watch and really good to 531 00:32:08,120 --> 00:32:10,200 Speaker 1: get your insights on it. Mike, thank you for this. 532 00:32:10,440 --> 00:32:15,040 Speaker 1: That's Mike mcglohon, senior commodity strategist at Bloomberg Intelligence. We 533 00:32:15,120 --> 00:32:18,160 Speaker 1: now turn our attention to the economy. We're just over 534 00:32:18,200 --> 00:32:21,120 Speaker 1: three weeks away from the next FED decision. What will 535 00:32:21,240 --> 00:32:24,080 Speaker 1: j Powell and company do in June? In light of 536 00:32:24,320 --> 00:32:28,160 Speaker 1: uncertainty over tariffs? Let's ask p Jim Fixed income chief 537 00:32:28,320 --> 00:32:32,800 Speaker 1: US economist Tom Porcelli, Tom, what will the FED do? 538 00:32:33,160 --> 00:32:34,400 Speaker 1: They haven't done much this year. 539 00:32:35,480 --> 00:32:37,880 Speaker 9: I think they're going to do much of what they've done, 540 00:32:38,560 --> 00:32:41,600 Speaker 9: but wish just to say not much. Yeah, I just 541 00:32:41,720 --> 00:32:44,320 Speaker 9: you know, I see, I see very limited scope for 542 00:32:44,480 --> 00:32:46,719 Speaker 9: the FED to really do much at this juncture. I mean, 543 00:32:46,840 --> 00:32:49,960 Speaker 9: I think that there are a couple of challenges sort 544 00:32:49,960 --> 00:32:52,719 Speaker 9: of lingering in the air for them. So one is 545 00:32:53,480 --> 00:32:56,719 Speaker 9: that inflation is still above target. Two is that inflation 546 00:32:56,800 --> 00:33:01,560 Speaker 9: expectations are starting the process of becoming unanchored. In three, 547 00:33:02,040 --> 00:33:06,360 Speaker 9: we're waiting for the the you know, the the inflation 548 00:33:06,480 --> 00:33:10,400 Speaker 9: related to tariffs to kick in. So so all of 549 00:33:10,400 --> 00:33:12,680 Speaker 9: that means that the Feed is on the sidelines now. 550 00:33:13,000 --> 00:33:15,440 Speaker 9: We don't think that they will be on the sidelines 551 00:33:15,760 --> 00:33:18,040 Speaker 9: the entire year. We do think that they will cut rates, 552 00:33:18,560 --> 00:33:20,880 Speaker 9: but I think for at least the next you know, 553 00:33:20,960 --> 00:33:23,160 Speaker 9: call it two or three meetings, I think it's going 554 00:33:23,240 --> 00:33:25,480 Speaker 9: to be incredibly challenging for them to do much. 555 00:33:26,240 --> 00:33:29,120 Speaker 1: Where do you see inflation expectations going? As you mentioned, 556 00:33:29,160 --> 00:33:32,920 Speaker 1: they do look like they're starting to become unanchored. Do 557 00:33:32,960 --> 00:33:34,400 Speaker 1: they become fully unanchored? 558 00:33:35,160 --> 00:33:37,640 Speaker 9: So here here's the Here's I guess the thing that 559 00:33:37,640 --> 00:33:39,400 Speaker 9: we all need to keep in mind. It's it's not 560 00:33:39,440 --> 00:33:42,040 Speaker 9: that what the consumer says is going to happen to 561 00:33:42,080 --> 00:33:44,840 Speaker 9: inflation ever really materializes, right, I mean, I think that's 562 00:33:44,880 --> 00:33:48,040 Speaker 9: an important idea. But but but I think you know, 563 00:33:48,080 --> 00:33:51,040 Speaker 9: the sort of the rhythm of what's happening matters. You know, 564 00:33:51,280 --> 00:33:54,440 Speaker 9: they're braced for higher prices, So I don't think that 565 00:33:54,520 --> 00:33:56,680 Speaker 9: you know them looking for you know, four or five 566 00:33:56,720 --> 00:34:01,040 Speaker 9: percent inflation, which you know, depending which measure of inflation 567 00:34:01,120 --> 00:34:04,640 Speaker 9: expectations you're looking at. You know, that's what some consumers 568 00:34:04,640 --> 00:34:07,840 Speaker 9: are thinking. We don't think it gets even remotely close 569 00:34:07,880 --> 00:34:09,600 Speaker 9: to that high. I mean, we think you could drift, 570 00:34:09,640 --> 00:34:11,400 Speaker 9: you know, sort of closer to three percent, which in 571 00:34:11,440 --> 00:34:14,120 Speaker 9: fairness is not far from where we are now. But 572 00:34:14,640 --> 00:34:18,560 Speaker 9: having said that, the reality for the consumer is if 573 00:34:18,560 --> 00:34:22,440 Speaker 9: the consumer is already being pinched right by already higher prices, 574 00:34:22,480 --> 00:34:24,640 Speaker 9: and you're going to layer on higher prices on top 575 00:34:24,680 --> 00:34:28,280 Speaker 9: of these already higher prices, and you have real incomes 576 00:34:28,320 --> 00:34:31,400 Speaker 9: that are starting the process of slowing down, especially relative 577 00:34:31,480 --> 00:34:34,920 Speaker 9: to real consumption. You know, that for us really suggests that, 578 00:34:35,719 --> 00:34:39,080 Speaker 9: you know, economic activity is going to continue the process 579 00:34:39,120 --> 00:34:41,520 Speaker 9: of slowing as the year progresses. I mean, I think 580 00:34:41,560 --> 00:34:44,399 Speaker 9: that to me is the right sort of channel through 581 00:34:44,400 --> 00:34:46,160 Speaker 9: which you need to think about higher prices. 582 00:34:46,520 --> 00:34:49,880 Speaker 1: We've heard the FED thinking about waiting for clarity around 583 00:34:50,080 --> 00:34:53,520 Speaker 1: where trade policy is going to go before they act. 584 00:34:53,640 --> 00:34:57,680 Speaker 1: But can we paid out a scenario where the Fed 585 00:34:57,920 --> 00:35:01,680 Speaker 1: could at least game out something of an impact from 586 00:35:01,719 --> 00:35:04,719 Speaker 1: tariffs based on the idea that they're not going to 587 00:35:04,760 --> 00:35:07,080 Speaker 1: be at the same levels that they have been in 588 00:35:07,120 --> 00:35:07,640 Speaker 1: the past. 589 00:35:08,520 --> 00:35:11,440 Speaker 9: Yeah, Nathan, I think we have to consider that we 590 00:35:11,480 --> 00:35:14,160 Speaker 9: may never have a period of total certainty as it 591 00:35:14,160 --> 00:35:16,960 Speaker 9: relates to trade. I mean, we you know, we keep 592 00:35:16,960 --> 00:35:19,040 Speaker 9: on moving the goalposts, we keep on kicking the can 593 00:35:19,080 --> 00:35:21,120 Speaker 9: down the road, and I think even when we finally 594 00:35:21,120 --> 00:35:23,520 Speaker 9: do get to the goalpost, I can see the threat 595 00:35:23,600 --> 00:35:26,840 Speaker 9: of terraffs remaining in place. And if that is true, 596 00:35:27,480 --> 00:35:29,600 Speaker 9: then the uncertainty, right, I mean, how many times it 597 00:35:29,600 --> 00:35:31,640 Speaker 9: will we all use the word uncertainty. Then I think 598 00:35:31,640 --> 00:35:34,960 Speaker 9: that then I think the uncertainty sort of dynamic will 599 00:35:34,960 --> 00:35:37,360 Speaker 9: also remain in place, you know. So so let's just 600 00:35:37,400 --> 00:35:39,160 Speaker 9: you know, let me paint a very quick scenario. Let's 601 00:35:39,160 --> 00:35:41,320 Speaker 9: say that, you know, we settle on ten percent you know, 602 00:35:41,360 --> 00:35:43,960 Speaker 9: across the board baseline tarrafs. Right, let's just say we 603 00:35:44,000 --> 00:35:47,280 Speaker 9: settle on that. But if the threat of tariff remains 604 00:35:48,000 --> 00:35:49,759 Speaker 9: over then, you know, called the next three and a 605 00:35:49,800 --> 00:35:52,880 Speaker 9: half years, then I think what that does is it 606 00:35:52,920 --> 00:35:56,400 Speaker 9: pushes corporations to the sidelines as it relates to capex, 607 00:35:56,600 --> 00:35:58,920 Speaker 9: and it pushes the consumers to the sidelines as it 608 00:35:58,960 --> 00:36:03,560 Speaker 9: relates to going out and spending. And I think that's 609 00:36:03,600 --> 00:36:05,719 Speaker 9: the real risk. And I would I would add this 610 00:36:05,840 --> 00:36:08,839 Speaker 9: very quick idea for anyone thinking, oh, well, you know 611 00:36:09,200 --> 00:36:11,720 Speaker 9: that that's like a you know, that's a theoretical idea, 612 00:36:11,960 --> 00:36:15,319 Speaker 9: it's actually not. It's entirely practical. Just look back at 613 00:36:15,360 --> 00:36:18,439 Speaker 9: what happened during Trump one point zero, when we had 614 00:36:18,480 --> 00:36:22,800 Speaker 9: tariffs put on, even in the face of corporate tax 615 00:36:22,880 --> 00:36:25,560 Speaker 9: cuts that were also put on right around the same time, 616 00:36:25,840 --> 00:36:31,160 Speaker 9: KAPEC slowed down. I mean, companies like certainty and uncertainty 617 00:36:31,239 --> 00:36:34,000 Speaker 9: is sort of you know, gonna gonna thrust them to 618 00:36:34,040 --> 00:36:34,719 Speaker 9: the sidelines. 619 00:36:34,880 --> 00:36:38,160 Speaker 1: And as far as the t tariff impact, do you 620 00:36:38,239 --> 00:36:41,120 Speaker 1: see tariffs as sort of a one off in terms 621 00:36:41,120 --> 00:36:43,080 Speaker 1: of what they do for inflation or could they have 622 00:36:43,320 --> 00:36:45,200 Speaker 1: more of a longer term inflationary impact. 623 00:36:45,920 --> 00:36:48,439 Speaker 9: It does tend to represent a one time shift tire 624 00:36:48,440 --> 00:36:50,880 Speaker 9: in the price level. That's a that's an important idea 625 00:36:51,640 --> 00:36:55,719 Speaker 9: now again for you know, an economist lingo, you know 626 00:36:55,840 --> 00:36:59,239 Speaker 9: that one time shift tire means that you'll get you know, 627 00:36:59,280 --> 00:37:01,680 Speaker 9: the sort of the acceleration in the in the inflation 628 00:37:01,920 --> 00:37:06,000 Speaker 9: rate will we'll linger for about a year. Once you 629 00:37:06,080 --> 00:37:08,799 Speaker 9: get beyond that year point, then the inflation rate will 630 00:37:08,800 --> 00:37:12,480 Speaker 9: fall back to where it was. But in main street parlance, 631 00:37:12,800 --> 00:37:16,960 Speaker 9: it doesn't matter. Prices will be higher. You'll have that 632 00:37:16,960 --> 00:37:19,359 Speaker 9: that that that permanent shift higher in the price level. 633 00:37:19,360 --> 00:37:21,600 Speaker 9: And that's what matters to most most of main street, 634 00:37:21,680 --> 00:37:22,280 Speaker 9: most of everyone. 635 00:37:22,760 --> 00:37:26,360 Speaker 1: So as we get to this next FED meeting, what 636 00:37:26,440 --> 00:37:28,319 Speaker 1: would you say, just to button this up, are your 637 00:37:28,360 --> 00:37:30,000 Speaker 1: expectations for June? 638 00:37:30,920 --> 00:37:33,239 Speaker 9: I think very similar to what you know you heard 639 00:37:33,239 --> 00:37:36,000 Speaker 9: from him, what you heard from Powelling company at the 640 00:37:36,040 --> 00:37:37,880 Speaker 9: main meeting. I think it's you know, they're in this 641 00:37:38,000 --> 00:37:39,879 Speaker 9: wait and see mode. They want to see how things 642 00:37:39,880 --> 00:37:42,319 Speaker 9: are going to unfold, and that you know they're not 643 00:37:42,400 --> 00:37:46,360 Speaker 9: going to be you know, in a rush to engage 644 00:37:46,360 --> 00:37:49,680 Speaker 9: in any policy action until it's necessary. 645 00:37:50,200 --> 00:37:52,200 Speaker 1: Always good to get your thoughts Tom again, thanks for 646 00:37:52,239 --> 00:37:55,719 Speaker 1: being with us on this holiday. That's Tom Porcelly, chief 647 00:37:55,800 --> 00:37:59,040 Speaker 1: US economist at p JIM Fixed Income. Thanks as well, 648 00:37:59,160 --> 00:38:02,760 Speaker 1: Mike mcglohon and the sing of Bloomberg Intelligence, Brian Levitt 649 00:38:02,760 --> 00:38:06,759 Speaker 1: and Invesco Barry Ridtholtz of Ridtholts Wealth Management in Bloomberg's 650 00:38:06,800 --> 00:38:09,560 Speaker 1: Masters in Business, And thanks to you as well for 651 00:38:09,600 --> 00:38:12,600 Speaker 1: taking time out to join us on this Memorial Day. 652 00:38:12,719 --> 00:38:13,560 Speaker 1: I'm Nathan Hager. 653 00:38:13,680 --> 00:38:14,319 Speaker 6: Stay with us. 654 00:38:14,560 --> 00:38:17,680 Speaker 1: Today's top stories and global business headlines are coming up 655 00:38:18,239 --> 00:38:18,759 Speaker 1: right now