Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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Speaker 2: We have the voice of an expert on geopolitics.
Speaker 3: We're balancing the economy and geopolitics, just like the White
Speaker 3: House is today. Agar Shamali has actually been their former
Speaker 3: National Security Council official now Greenwich Media Strategies. Great to
Speaker 3: see you back, Garth, Thanks for joining. I wonder if
Speaker 3: this is a productive meeting or not that's underway in
Speaker 3: the Oval right now. Cure Starmer wants security guarantees just
Speaker 3: like Europeans. Donald Trump says they're not going to get them.
Speaker 4: Well, this certainly that with the coming of the Trump administration,
Speaker 4: it's rattled Europe's security and they're feeling of security. They've
Speaker 4: got a war in their backyard and they're really concerned
Speaker 4: about what the means. I was in at the Munich
Speaker 4: Security conference just a week ago or two weeks ago now,
Speaker 4: where this was the theme that really overtook the conference.
Speaker 4: Everybody was talking about it, but in my experience, they
Speaker 4: weren't panicking as much as everybody was saying. A lot
Speaker 4: of the sentiment was we have to invest in our
Speaker 4: defense intotelligence. We haven't invested enough over the last several decades.
Speaker 4: We've relied on the United States, and now is the
Speaker 4: time to step it up and to do so incrementally.
Speaker 5: And that's the view of the NATO Secretary General as well.
Speaker 4: So I do think it makes sense for the UK
Speaker 4: to come to the United States.
Speaker 5: We are we have a very close alliance.
Speaker 4: They have been there for US with Iraq, with Afghanistan,
Speaker 4: with series of security issues and wars and conflict, and
Speaker 4: so I do think it makes sense for him to
Speaker 4: get to go in there. I'm not so sure what
Speaker 4: he expects will come out of it, unfortunately, because I
Speaker 4: just don't think the administration negotiates in a way where
Speaker 4: they're giving things away without getting something back.
Speaker 6: In her Trump.
Speaker 7: Well, we were just hearing President Trump asked about whether
Speaker 7: or not he thinks the deal would be kept if
Speaker 7: there would be a problem with security, as Ker Starmer
Speaker 7: is saying, a peace deal, if there is to be one,
Speaker 7: needs to last. President Trump Hagar says he's known Vladimir
Speaker 7: Putin a long time and doesn't believe he will violate
Speaker 7: his word.
Speaker 5: Do you believe that? Yeah?
Speaker 4: No, I absolutely believe not only that will Putin violates
Speaker 4: his word, and he will do so happily and has
Speaker 4: proven to do so multiple times over the last several decades,
Speaker 4: but over the last twenty years. But it's also the
Speaker 4: fact that negotiated settlement. And I'm not trying to seem
Speaker 4: like I'm a warmonger. I don't want war to last
Speaker 4: longer than it needs. But if you have a negotiated
Speaker 4: settlement where Putin comes out with more than he should
Speaker 4: get and nothing that prevents him from from invading again,
Speaker 4: then it just gives him time to resupply his army,
Speaker 4: to rebuild his troops and his weapons and his stockpile,
Speaker 4: and to pick himself up and go after to go
Speaker 4: and maybe to invade Ukraine again. But it could be
Speaker 4: Georgia or Moldova. And the thing is, the proof is
Speaker 4: in the pudding. Putin had pursued this type of aggression
Speaker 4: since two thousand and eight, when he first went into Georgia,
Speaker 4: and we know that if it's not outright aggression that
Speaker 4: his tentacles are reaching into these countries in Moldova, Slovakia,
Speaker 4: all these other countries, Hungary where he's trying to push
Speaker 4: a pro Russian movement and control these countries, perhaps without
Speaker 4: even needing to invade them. And so any kind of
Speaker 4: deal that is shaped needs to include, if not some
Speaker 4: kind of promise of NATO membership, then some kind of
Speaker 4: provision that triggers NATO membership if Ukraine is invaded, if
Speaker 4: these other countries are invaded. Now, I know that's complicated.
Speaker 4: You can't guarantee that for sure. What does invasion mean?
Speaker 4: Are you going to have a NATO membership that will
Speaker 4: in fact approve it in the instance that it's needed.
Speaker 4: But there needs to be something there in place. And
Speaker 4: I do know, because I've been speaking to the White House.
Speaker 4: I do know that there are advisors advising Trump to
Speaker 4: do that.
Speaker 5: So we'll just have to see how it turns out.
Speaker 3: I want to ask you about specifically security guarantees or
Speaker 3: what this White House sees as something.
Speaker 2: Just as good, Hugar.
Speaker 3: We've heard this back and forth a couple of times
Speaker 3: now that with a minerals deal, there'll be US officials
Speaker 3: there following up on the elements of that deal that
Speaker 3: an inherent security guarantee will come because US investment is there.
Speaker 3: This was brought up a short time ago in the
Speaker 3: Oval Office. Donald Trump said, the backstop will be Americans
Speaker 3: working in Ukraine to implement a.
Speaker 2: Rare Earth's deal.
Speaker 3: With your experience on the National Security Council, is that
Speaker 3: a realistic view?
Speaker 4: And you know what I feel with Bloomberg and with
Speaker 4: Bloomberg's viewers. Would any of those viewers accept a deal
Speaker 4: that isn't written in a contract? And then so the
Speaker 4: answer is no, that's not secure enough. Yes, of course,
Speaker 4: if you have US presence and you have US companies,
Speaker 4: does it.
Speaker 5: Mean that would it help?
Speaker 8: Sure?
Speaker 4: Perhaps, But it's no guarantee, and you have that any
Speaker 4: anywhere around the world could land in a conflict and
Speaker 4: the US has to leave. When Russia was first annexed
Speaker 4: crime in twenty fourteen, I was at the Treasury Department
Speaker 4: at the time, and we had a lot of American
Speaker 4: companies tell us that they did not want to leave Russia.
Speaker 5: Now the conflict wasn't there, but they didn't want to leave.
Speaker 4: They didn't want to They didn't want to leave their
Speaker 4: energy investments or drilling in the lurch, and we told
Speaker 4: them they had no choice. So that's never a guarantee.
Speaker 4: If you have American presence of broader American companies, that
Speaker 4: doesn't de facto mean that they protect territory. It just
Speaker 4: maybe there's an incentive for the US to ensure that
Speaker 4: they're protected. But it doesn't mean anything unless it's written
Speaker 4: in stone. And I think that when it comes to
Speaker 4: presidents of Lensky, and I'm watching him be a very
Speaker 4: adept leader. He is trying to work with Trump. He's
Speaker 4: the one who came up with the minerals deal to
Speaker 4: begin with back in October, with his victory plan. Now,
Speaker 4: he may have not expected that Trump would ask for
Speaker 4: five hundred million dollars worth of minerals, or that it
Speaker 4: might not come with security arrangements, but he knows.
Speaker 5: He has no choice but to work with Trump. Trump
Speaker 5: controls the purse.
Speaker 4: Strings, but he's also not gonna levy attacks on his
Speaker 4: people for generations to come without something in return. And
Speaker 4: Europe is there, so they're going to do that. But
Speaker 4: we have to remember that Trump is a maximalist negotiator.
Speaker 4: He pushes out the maximus scenario that he can try
Speaker 4: and get because he knows he's going to get something
Speaker 4: less and again, not my style of negotiating. However, I
Speaker 4: do I hope, and I know hope is not a policy.
Speaker 4: I would hope that there's something there. We don't know
Speaker 4: all the terms yet, but I believe that that there
Speaker 4: will be something there that will be enforced in a
Speaker 4: negotiated settlement that should prevent Putin from invading again.
Speaker 5: I hope that that is the case.
Speaker 4: I would hope that the Trump administration knows that it
Speaker 4: would only be emboldening Russia if it doesn't include that
Speaker 4: kind of provision.
Speaker 7: Well, we just heard President Trump say again, and we've
Speaker 7: heard this from the administration before Ukraine joining NATO won't happen.
Speaker 5: Hagar.
Speaker 7: We have less than a minute left here, but I
Speaker 7: do want to ask you about another conflict. Is it's
Speaker 7: this weekend that the Phase one of the ceasefire agreement
Speaker 7: between Israel and Amas is set to expire. What do
Speaker 7: you think happens next?
Speaker 5: That's said, so, I'm glad it expires Saturday at midnight.
Speaker 4: That doesn't necessarily mean that war will start, that the
Speaker 4: bombs will start at one am. It could ostensibly, But
Speaker 4: what we will have, in reality is likely an extension
Speaker 4: of a few days of this ceasefire, and the language
Speaker 4: of the of Phase one was actually written where the
Speaker 4: existing terms of the ceasefire for Phase one can continue.
Speaker 5: For a few weeks.
Speaker 4: Even so for a few days up to a few weeks,
Speaker 4: meaning for a few days or a few weeks, you
Speaker 4: could have, and it seems that there is a desire
Speaker 4: for that. You could have even a continued exchange of
Speaker 4: hostages for prisoners. You could have a continued a state
Speaker 4: of the ceasefire that has been the case for.
Speaker 5: The last six posoks. While these folks are negotiating Phase two,
Speaker 5: and they are negotiating Phase.
Speaker 4: Two, I don't believe these two would if they were
Speaker 4: to even come to an agreement, would even look the
Speaker 4: way President Biden.
Speaker 5: Has plan it out back in May, where you have
Speaker 5: all the hostage.
Speaker 7: From regard we have to leave it there. Hagar Shamali,
Speaker 7: formerly of the National Security Council. With us here on Bloomberg.
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Speaker 3: It'll be on Tuesday that we're talking about a joint address,
Speaker 3: a joint session of Congress. It's like the State of
Speaker 3: the Union, but they don't call it that the first
Speaker 3: time around. For the new president, it'll be an update
Speaker 3: on things, the state of our Union. He'll probably still
Speaker 3: say that is what getting stronger, getting greater again. A
Speaker 3: lot of questions about who would have the honor of
Speaker 3: going on the front of the wheaties box here, not
Speaker 3: always a very easy assignment to deliver. If the official
Speaker 3: party response after the speech, it will be Senator Elissa
Speaker 3: Slotkin Michigan delivering the official Democratic response. So next Tuesday night,
Speaker 3: after we do the whole speech, the call in response,
Speaker 3: and everything else that happens in the House chamber, that's
Speaker 3: who you'll be hearing from. It'll be curious to consider
Speaker 3: what the optics are going to be like whether a
Speaker 3: kitchen table is involved. I'm Joe, Matthew and Washington. Thanks
Speaker 3: for being with us here on the Thursday edition of
Speaker 3: Balance of Power. I see you Axios on this little Friday.
Speaker 3: We've got news at the White House. They're in the
Speaker 3: Oval Office right now, Kuer Starmer, Donald Trump, the President,
Speaker 3: the Prime Minister sitting around the fireplace, presumably with a
Speaker 3: press pool in tow and because it's in the Oval,
Speaker 3: we're not going to be able to bring you in
Speaker 3: there live, but we will once the tape comes out
Speaker 3: of there and they can play it back. There have
Speaker 3: been questions about this whole press pool thing and exactly
Speaker 3: who's going to be assigned to it each day according
Speaker 3: to the White House, but this is supposed to play
Speaker 3: out essentially the way the Macron visit did a cup
Speaker 3: days ago. You get the bilateral and the Oval, spend
Speaker 3: some time with the media, little Q and a warm
Speaker 3: things up, and then later on it's currently scheduled for
Speaker 3: two pm, and that will likely not be anywhere near
Speaker 3: the start time of the joint news conference in the
Speaker 3: East room.
Speaker 2: Starmer Trump.
Speaker 3: By the way, the British media they don't ask questions
Speaker 3: the way we do around here, so this could actually
Speaker 3: get interesting when we hear some of the more pointed
Speaker 3: ideas from the British press. They're all here, everybody's over there.
Speaker 3: It's a big crowd on the campus at the White House,
Speaker 3: and that's where we start our conversation with today's political panel.
Speaker 3: Genie Shanzo is with this Bloomberg Politics contributor, Democratic analyst
Speaker 3: and senior Democracy fellow with the Center for the Study
Speaker 3: of the Presidency in Congress, and Chape and Phase Back,
Speaker 3: Republican strategist, founder of Lighthouse Public Affairs. Great to see
Speaker 3: you both, Chape and it's been a while and nice
Speaker 3: to have you back here on the panel. Genie, we
Speaker 3: went through this together a couple of days ago with Macron.
Speaker 3: There's already a different vibe though, right between these two.
Speaker 3: Donald Trump actually likes Keir Starmer and seems to want
Speaker 3: to offer some sort of deliverables, even if not in
Speaker 3: the actual literal definition of security guarantees. What's going to
Speaker 3: come out of this visit, Yeah, I mean it hits.
Speaker 8: An uphill battle for Starmar, certainly because we heard from
Speaker 8: the President yesterday that, you know, the security guarantees that
Speaker 8: McCrone came asking for and Starmar is asking for are
Speaker 8: probably not going to be forthcoming. Although he did say
Speaker 8: that Russia would have to give up something. We don't
Speaker 8: know what that is, so maybe there's a little movement there,
Speaker 8: I think for Starmar. Of course, what you were just
Speaker 8: talking about is the issue of tariffs. And I just
Speaker 8: loved your conversation with Mike McKee because I love Mike McKee,
Speaker 8: and he said there is no clarity here, so I said, oh,
Speaker 8: thank god, Mike McKee.
Speaker 2: I thought it was just me.
Speaker 8: But Starmar is certainly trying to get some clarity on
Speaker 8: the tariffs which are pending. So I think those are
Speaker 8: the two big things we're looking for. But of course
Speaker 8: it is a really fraught time in Europe. And you know,
Speaker 8: somebody reminded me that there was a column the other
Speaker 8: day from Martin Wolf saying the US is now an
Speaker 8: enemy of Europe. Now that's certainly overstated in my mind,
Speaker 8: but that's the view of some people over in Europe.
Speaker 8: So they're going to be treading a little bit carefully,
Speaker 8: I think in this meeting today, and certainly the press
Speaker 8: are going to be fascinating to hear from overseas.
Speaker 3: How's this going to go chap It in your view?
Speaker 3: And what would make this qualify as a win for
Speaker 3: Donald Trump?
Speaker 9: Well, of course for Donald Trump extracting any sort of
Speaker 9: concessions or anything that he can you know, go to
Speaker 9: the reporters and talk about extracting from from them or
Speaker 9: him would be a win. What that is you know,
Speaker 9: maybe anybody's guests at this point, I think Genie's write
Speaker 9: about the two top topics and what's important. I think
Speaker 9: she's also right about this is a fraud time. I
Speaker 9: agree we are not Europe's enemy, and I find that
Speaker 9: view a little strange considering, you know, America has been
Speaker 9: the world's piggybait, the world's police policemen, the world's protector, all.
Speaker 2: Of this stuff.
Speaker 9: And Donald Trump has a mandate to be transformational. So
Speaker 9: he's taking a look, rightly, So with these relationships, what
Speaker 9: are we getting out of it? How is it serving
Speaker 9: American interests? I think, as opposed to the last four years,
Speaker 9: you're going to see a president who that's really his
Speaker 9: only concern. Now you may disagree with what he thinks
Speaker 9: is an American's interest, but I think that's the framework
Speaker 9: that he's using for these meetings.
Speaker 3: This is a different relationship though, right, isn't it. Chapin,
Speaker 3: It's one thing to have Emmanuel Macrone. He says, hey,
Speaker 3: here's a manual. You know, there was a lot of
Speaker 3: kind of chest thumping between these two trying to get
Speaker 3: the better of each other.
Speaker 2: He actually likes here, Starmer.
Speaker 3: They've had a relationship going back to before the election,
Speaker 3: and there was a two hour phone call that followed
Speaker 3: Donald Trump's victory. He also likes the United Kingdom. He
Speaker 3: wants to get the invite for the state visit and
Speaker 3: spend time with the king. Right, this is potentially a
Speaker 3: different vibe in this meeting today. Could it help here, Starmer?
Speaker 9: I think it can help both men. You know, relationships
Speaker 9: matter for all the you know Ballely who over. You
Speaker 9: know Trump's relationships from his first term with you know, dictators,
Speaker 9: and you know North Korea and Russia. I mean, relationships matter, right,
Speaker 9: He cares about peace between Ukraine and Russia. So I
Speaker 9: find it very odd that all the that everyone seems
Speaker 9: to be in favorable war and and more money and
Speaker 9: soldiers and manpower being sunk into this thing. So it
Speaker 9: is a different relationship. Perhaps the UK is a little
Speaker 9: harder of a target when you're when you're blustering against
Speaker 9: world leaders than France is, but it is it is
Speaker 9: a historically important relationship too, and I think both men
Speaker 9: understand that as well.
Speaker 3: The special relationship. Genie uh facing a new reality today,
Speaker 3: what will look like by the time there is a deal,
Speaker 3: presuming there is one for Ukraine.
Speaker 8: Yeah, first of all, to your point about him liking
Speaker 8: a great Britain, he certainly likes the royal family.
Speaker 5: And you know, you're wonder.
Speaker 8: If Farmer should have brought with him Princess Kate and
Speaker 8: Prince William because he's no fan of Harry and Meghan
Speaker 8: as we know full well, but those two he really
Speaker 8: seems to appreciate, so that may have, you know, lund
Speaker 8: him in good Steed there. You know, I think this
Speaker 8: agreement is fascinating because it is so very vague what
Speaker 8: we know about it at this point. You know, they're
Speaker 8: talking about this jointly owned investment fund. It's going to
Speaker 8: involve new resources, not the old, but again no commitment
Speaker 8: on security or additional funding for the wars. So what
Speaker 8: this looks like in terms of the specifics are very
Speaker 8: unclear at this point. It sort of reminds me what
Speaker 8: we saw out of the house the other day. This
Speaker 8: is sort of like a framework with the specifics yet
Speaker 8: to be filled in. But I do think this is
Speaker 8: an important first step for Zelenski and I think the
Speaker 8: agreement of this framework as I'm calling it, is important
Speaker 8: because number one, he gets to talk to visit with
Speaker 8: face to face with President Trump before Putin, and that
Speaker 8: is a win for Zelensky because for a while we
Speaker 8: thought maybe Putin and Trump would meet face to face first,
Speaker 8: so that is important. And also he gets to let
Speaker 8: Donald Trump celebrate a win, a victory in agreement. Nothing
Speaker 8: Donald Trump likes more than an agreement. So here is one,
Speaker 8: vague as it is, and then they can move forward
Speaker 8: on the specific So I think this is a good
Speaker 8: day tomorrow for Zelenski, but I think from a foreign
Speaker 8: policies perspective, it is an awfully odd day for the
Speaker 8: US that we would be requesting from a war towards
Speaker 8: the country payback.
Speaker 7: You know.
Speaker 8: It has a very very sort of of concerning I
Speaker 8: think for long term prospects of our relationships around the world.
Speaker 8: But a win for Zelensky for sure in the short term.
Speaker 3: I'm guessing, based on what you said earlier, Chapin, that
Speaker 3: you like that you want to see the US got
Speaker 3: something back.
Speaker 2: Am I wrong?
Speaker 9: Not at all? I mean, I think every decision has
Speaker 9: to be run through a framework of is this helping
Speaker 9: America or not. Why else would we be doing it.
Speaker 9: We've put hundreds of billions of dollars into Ukraine and
Speaker 9: we can't trust them with the money, and now people
Speaker 9: want us to trust them with our men and women
Speaker 9: in the military end lives.
Speaker 2: I don't think so.
Speaker 9: So absolutely, we should be getting something for this if
Speaker 9: we're going, you know, on a return on investment. Now,
Speaker 9: maybe helping Ukraine is the right thing to do. But
Speaker 9: you know, only in the Trump era can working towards
Speaker 9: peace and getting something for America be criticized, right, I mean,
Speaker 9: I don't understand it.
Speaker 3: Well, Jeanie today is going to help to inform tomorrow
Speaker 3: when Vladavia Zelenski arrives, is he going to want to
Speaker 3: negotiate with Donald Trump or is he going to sit
Speaker 3: down and sign a deal? Because the White House seems
Speaker 3: to think this is done.
Speaker 8: Yeah, it's still unclear. I do think we are going
Speaker 8: to see the deal signed. I do think he will
Speaker 8: express to Donald Trump his view. But I do think
Speaker 8: this framework likely gets signed. But when we think about
Speaker 8: the criticism of this deal, let's think about it from
Speaker 8: the long term perspective. You already have the incoming Chancellor
Speaker 8: of Germany. Talking about Britain and France extending their nuclear
Speaker 8: umbrella to Germany. I mean, just pause and think about that. Germany,
Speaker 8: with the rise of the far right party in the
Speaker 8: election on Sunday, is talking potentially about thinking about the
Speaker 8: development of nuclear weapons. We haven't seen anything like that
Speaker 8: since World War Two. That is a frightening, frightening proposition.
Speaker 8: And we are also speaking of starmer the Baltic's, Poland Norway.
Speaker 8: They are talking about a growing European defense community in
Speaker 8: which Ukraine, the most powerful military in Europe, the biggest
Speaker 8: defense industry in Europe, would be a leading component. So
Speaker 8: we are talking about a movement away from the US
Speaker 8: as it pertains to security. And yes, we have invested
Speaker 8: millions of dollars, billions of dollars in Ukraine. Why because
Speaker 8: thinking of a return on investment that is cheaper than
Speaker 8: us having the cost of human lives on the line
Speaker 8: or nuclear Germany over there potentially, So there's another way
Speaker 8: to think about this. Then, out of just the sheer
Speaker 8: dollars that are being talked about, and so I think
Speaker 8: the long term impacts are what people are deeply concerned about.
Speaker 3: Spending time with our great political panel Genie Schanzeno and
Speaker 3: Chape and Fay with some headlines now coming from the
Speaker 3: Oval Office.
Speaker 2: They have begun their meeting guys.
Speaker 3: Reporters in the room are letting us know what they're
Speaker 3: talking about, as Donald Trump says, they will also discuss
Speaker 3: trade beyond Ukraine, and Donald Trump saying he will visit
Speaker 3: the UK in the near future. So it looks Genie
Speaker 3: like he is going to spend some time with the
Speaker 3: royals here. Keir Starmer thanking President Trump for changing the
Speaker 3: conversation on a peace deal.
Speaker 2: It seems he.
Speaker 3: Has brought a letter from the King which is just
Speaker 3: being presented now in our second hour. Likely because they're
Speaker 3: going to go on for a bit, we'll bring you
Speaker 3: into the Oval this conversation. You'll actually hear it, see
Speaker 3: it in real time.
Speaker 2: Jape and Fay.
Speaker 3: These these sort of events in the Oval Office, whether
Speaker 3: it's a bilateral, whether a foreign leader, or signing eos
Speaker 3: or talking about executive actions, have become kind of live
Speaker 3: at the improv for Donald Trump. He's laying down a
Speaker 3: half hour to an hour a day in the Oval,
Speaker 3: back and forth with reporters. This is what some Americans
Speaker 3: said they wanted right when when Joe Biden wasn't talking
Speaker 3: to the media on a daily basis, Is this something
Speaker 3: that he can keep up beyond the first one hundred days.
Speaker 9: I'm Americans. I mean, you know, if a Republican is
Speaker 9: an office, all you hear about from the press and
Speaker 9: the left is, you know, answer questions and how many
Speaker 9: press conferences. We didn't hear about that for four years,
Speaker 9: and so now it is refreshing, and I think it's good.
Speaker 9: More transparency is always better. Again, we're living in the
Speaker 9: upside down, right, transparency apparently is bad. The president answering questions,
Speaker 9: you know, is being criticized. But you're right, and I
Speaker 9: think it's a good, refreshing, transformational tone.
Speaker 3: I had never heard anybody, I have to admit, I
Speaker 3: thought it was I thought everybody was. He's on TV
Speaker 3: fifteen hours a day. I thought this was a good thing.
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch
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Speaker 3: In Vidia speaking right, I mean it's down today. You
Speaker 3: just heard Charlie, it's down five bucks. But think of
Speaker 3: how many people picked up shares of Nvidia a couple
Speaker 3: of years.
Speaker 2: Ago, and they just keep looking at that four oh
Speaker 2: one k. Come on, Jensen.
Speaker 3: We had the big earnings report last night, went pretty well,
Speaker 3: matched expectations topped other expectations. When you look at the
Speaker 3: AI spend, this thing is chugging along. But the stock
Speaker 3: is lower this morning, and I'll be it maybe a
Speaker 3: little exhausted after such an advance. But of course expectations
Speaker 3: were so high for Nvidia. That's why it's in Nvidia.
Speaker 3: People expect a Christmas miracle every couple of months here.
Speaker 2: It doesn't always work out like that.
Speaker 3: So yeah, stocks trading lower, it's pulling a bunch of
Speaker 3: other shares lower with it. The mag seven's down, a
Speaker 3: lot of the AI related names are down. AMD is down, Constellation,
Speaker 3: the cooling companies, all the stuff we look at typically
Speaker 3: when it comes to data center feeling this So it's
Speaker 3: a kind of a market event here in Washington. It's
Speaker 3: a policy event, and there are a lot of questions
Speaker 3: right now about whether export controls that have been turned
Speaker 3: on in Vidia repeatedly actually have any impact at all.
Speaker 3: Jensen Wong doesn't seem to think so. In an interview
Speaker 3: on the Other Network following the quarterly report, it says
Speaker 3: it's unsure if these controls against China are effective national
Speaker 3: security measures for the US. It's hard to tell whether
Speaker 3: it's effective.
Speaker 2: Responding to a question.
Speaker 3: About whether Deep Seek proved the whole thing wrong, and
Speaker 3: that's where we start our conversation with Michael Shepherd, who's
Speaker 3: with us in studio here. We wanted to talk to
Speaker 3: him in advance of the report, but of course we
Speaker 3: spent a lot of time in the cabinet room yesterday.
Speaker 3: He covers the intersection of Washington policy and technology. Senior
Speaker 3: editor for Technology and Strategic Industries. Nice to see you
Speaker 3: the day after shopping. Great, So big questions always when
Speaker 3: we sit down with Mike Shepherd. It's never a small thought.
Speaker 3: It's a big think on export controls, whether they're worth
Speaker 3: it at the expense for instance of a company like
Speaker 3: in video when a Deep Seek just pops up and says, hey,
Speaker 3: we stole your stuff anyway, Well.
Speaker 6: This is one of the big questions actually that was
Speaker 6: surrounding the Trump administration as it took power, and that
Speaker 6: was whether they would continue further down this path of
Speaker 6: trying to restrict China's access to advanced technologies, including chips
Speaker 6: and semiconductors, because there is a lot of impact on
Speaker 6: US businesses. And you know, the idea of restricting China,
Speaker 6: the world's second largest economy and the world's largest market
Speaker 6: for semiconductor purchases, it really does have implications for companies
Speaker 6: like Intel, but a whole bunch of others. In Vidia,
Speaker 6: you know, of course, they do a lot of China business.
Speaker 6: And when it comes to export controls, Joe, they did
Speaker 6: acknowledge on the call. Jensen Wang himself said that, look,
Speaker 6: our China business is down a little bit since the
Speaker 6: export controls have been put into place, and that's been
Speaker 6: over the past couple of years. More recently we've seen
Speaker 6: a new round. Right before Joe Biden left office, his
Speaker 6: parting gift to Donald Trump was a new three tiered
Speaker 6: system of access, if you will, to AI computing power,
Speaker 6: and that is a set of limits on how many
Speaker 6: of these advanced semiconductors anyone from certain countries can buy.
Speaker 6: So in the first year, we talked about Cure Starmer
Speaker 6: and his visit the UK, of course, and very close
Speaker 6: US allies would be in the twenty or so nations
Speaker 6: that get that you're behind the velvet rope. But if
Speaker 6: you're in kind of the big middle, you will have to,
Speaker 6: you know, work harder to gain that access. You can
Speaker 6: buy fewer chips without getting an export license. And then
Speaker 6: if you're China, you're really in the third tier like
Speaker 6: Russia and other US adversaries, where it's much more well.
Speaker 3: At the same time, Jensen Wong said last night, there's
Speaker 3: a lot of competition in China. He named Huawei as
Speaker 3: a major competitor. Are we playing fair with our own
Speaker 3: companies here when it comes to an Nvidia for instance,
Speaker 3: or are we holding back innovation?
Speaker 6: And that is the very question that not only Jensen Wang,
Speaker 6: but other big CEOs have been raising. We heard Andy Jasse,
Speaker 6: who was interviewed by our colleague Caroline Hyde earlier today
Speaker 6: on Bloomberg Technology, basically laying out his concerns specifically for
Speaker 6: Amazon World Services. He said, look, not a direct problem
Speaker 6: for US, and yet he sees the risk in the
Speaker 6: same way that Jensen Wang does. You end up pushing
Speaker 6: US allies toward other countries. He didn't name China, but
Speaker 6: you know, maybe you push those other countries to trying
Speaker 6: to acquire chips from Chinese chip makers like SMIC or others.
Speaker 3: The other side of this is, of course, come on,
Speaker 3: the biggest company in the world. From time to time,
Speaker 3: they're printing money. The backlog is so long the pipeline,
Speaker 3: I mean, they can't they can't meet the orders they're receiving.
Speaker 2: So why not turn the screws.
Speaker 1: A little more.
Speaker 6: Well, what they're seeing is a loss of opportunity. And
Speaker 6: actually Jensen did talk about this yesterday and he said that, look,
Speaker 6: deep Seek, you know, presents a challenge, but it also
Speaker 6: presents an opportunity. And we remember the you know, the
Speaker 6: week after deep Seek introduced its revolutionary R one chapop.
Speaker 6: It really shook up companies across the board, but in
Speaker 6: particular video. It's seventeen percent drop on that Monday, a
Speaker 6: week after the deep Seek release, one of the biggest
Speaker 6: market losses in history, really, but it highlighted the stakes
Speaker 6: for Nvidio. But what Jensen was saying essentially was that look,
Speaker 6: deep seeks innovation actually creates new avenues of demand potentially
Speaker 6: for us. You know, the demand for computing power through
Speaker 6: a model like this could grow exponentially depending on how
Speaker 6: it's deployed. Like the one off of achieving and creating
Speaker 6: the model is one thing, but then when you put
Speaker 6: it to use, that's where you need the compute.
Speaker 3: Interesting as the White House kind of figures out where
Speaker 3: to go here, and I don't know if we're getting
Speaker 3: any clarity from the administration on the number of nations
Speaker 3: that are on that list, for instance, or.
Speaker 2: How they're going to handle this.
Speaker 3: Donald Trump met with Jensen Wong talked about it in
Speaker 3: person just a couple of weeks ago. Is this, like
Speaker 3: many things from this White House, whether it's tariff's other
Speaker 3: geopolitical matters, were simply no one knows.
Speaker 6: You're right, Joe, We are living day to day and
Speaker 6: even yesterday you talked about the cabinet meeting. We got
Speaker 6: one message on TARA against Canada and Mexico, and we
Speaker 6: get another one this morning. Thing through the President's truth
Speaker 6: social feed about the timing of those levees and whether
Speaker 6: or not they would definitely go into effect and when
Speaker 6: and under what circumstances. And the same thing today with
Speaker 6: China tariffs too, he announced another ten percent.
Speaker 2: What does that mean? In video? And for this conversation,
Speaker 2: we're having.
Speaker 6: Well, you know, they did address that on the call yesterday.
Speaker 6: The CFO talked about it a little bit, and essentially
Speaker 6: they called tariffs a big unknown for them. They said
Speaker 6: that they will comply, of course, with whatever measures the
Speaker 6: US government imposes in this era via tariffs or export controls,
Speaker 6: but the tariffs are a bit of an unknown because
Speaker 6: it also raises questions about, well, what happens if there's
Speaker 6: retaliation by US trading partners, what happens if other companies
Speaker 6: start to move in different directions. And remember Video makes
Speaker 6: its chips in Taiwan. T SMC is you know, essentially
Speaker 6: its foundry. So you know, tariff sun chips coming in
Speaker 6: from Taiwan would hit potentially in Video and and that
Speaker 6: would be a challenge. And if you're a hyperscaler here
Speaker 6: in the US with data centers that you're building, think Microsoft,
Speaker 6: think Amazon, on the cost of those chips would start
Speaker 6: to go up.
Speaker 3: Taiwan came up in that Cabinet meeting yesterday, and of
Speaker 3: course you're instantly thinking about Taiwan, Semiconductor, Video, all of
Speaker 3: these designers who rely on the foundries in Taiwan, and
Speaker 3: he would not take a stand against China taking over.
Speaker 6: He really shut it down.
Speaker 3: Joe, How what if your gentsen won? How do you
Speaker 3: make plans around something like that?
Speaker 6: It is difficult to do so. And you know they
Speaker 6: have been with the construction of plants and facilities here
Speaker 6: by TSMC here in the US. That does provide a
Speaker 6: little bit of a hedge. And in fact that TSMC
Speaker 6: facilities producing chips at an early you know, early test,
Speaker 6: at an even greater yield than what they are getting
Speaker 6: back we know where that's promising. They're starting to ramp
Speaker 6: up right now.
Speaker 3: And that is and that is actually the sort of
Speaker 3: legacy of the Biden administration, isn't it. That's that's what
Speaker 3: we never saw happen while he was sitting in the overlope.
Speaker 6: It is, that's right. But at the same time, we
Speaker 6: are seeing that some of these other plans, including the
Speaker 6: ones that Intel has in the pipeline, are struggling. That's
Speaker 6: the facility in Ohio. They're looking for customers.
Speaker 2: They're looking for the command the wrong company.
Speaker 6: There are some questions about that, and and I think
Speaker 6: that if we talk to Biden administration officials now after
Speaker 6: leaving office, they may have a different view, But they
Speaker 6: really did see Intel as a national champion. I mean
Speaker 6: Intel inside Joe, it's it's something we have.
Speaker 2: I can hear thele in my head right now.
Speaker 3: Well, exactly left on the side.
Speaker 2: Of the road.
Speaker 6: Well, in a way they they have, they've struggled in
Speaker 6: some of the same ways that other parts of the
Speaker 6: US economy have struggled to you know, the the economy
Speaker 6: did evolve away from them, and a lot of manufacturing
Speaker 6: was moved overseas for a lot of different reasons too.
Speaker 6: The company transformed. It's trying to transform itself yet again
Speaker 6: at something that they hope would last. But it's been
Speaker 6: a struggle too.
Speaker 3: CHP, thank you as always, Michael Sheppard with us live
Speaker 3: in Washington. Thanks for listening to the Balance of Power podcast.
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