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Speaker 1: Good morning.

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Speaker 2: I'm Nathan Hager and I'm Karen Moscow. Here are the

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Speaker 2: stories we're following today.

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Speaker 3: Karen, we begin with a selloff in chip stocks. In

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Speaker 3: Vidia is leading the declines, down more than four and

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Speaker 3: a half percent in early trading. It all comes after

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Speaker 3: a Wall Street Journal report saying Washington could soon close

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Speaker 3: loopholes in the sale of powerful chips to China.

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Speaker 4: We get details from Bloomberg's Doug Prisner.

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Speaker 5: The chips are those used to train AI models, and

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Speaker 5: the restrictions are aimed at containing China's technological rise, but

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Speaker 5: the move would clearly dent sales, and Vidia gets nearly

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Speaker 5: twenty percent of its revenue from China. Its chips are

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Speaker 5: vital to the development of generative AI models such as

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Speaker 5: chat GPT. This year and Vidia produced less capable chips

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Speaker 5: below thresholds requiring a license from the Commerce Department to

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Speaker 5: export to China or other countries of concern. But Washington

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Speaker 5: is now weighing action as soon as next month to

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Speaker 5: expand the curbs to include those lower powered semiconductors. In

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Speaker 5: New York, I'm Doug Krisnerberg Daybreak.

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Speaker 3: Okay, Doug, thanks, and checking some other chip stocks this morning,

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Speaker 3: Advanced micro Devices is down three and a half percent,

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Speaker 3: Applied Materials is down one and a half percent. Intel

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Speaker 3: also down more than one percent.

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Speaker 2: Well, another major story we're following this morning, Nathan takes

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Speaker 2: us overseas. Bloomberg News has learned that UBS plans to

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Speaker 2: get more than half of the workforce and inherited from

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Speaker 2: credit suits. Bloombergsh and Aali Bosik says the job losses

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Speaker 2: will start next month.

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Speaker 6: The way that this will be done, according to people familiar,

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Speaker 6: is three rounds of job cuts this year, with the

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Speaker 6: first round expected by the end of July and two

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Speaker 6: more rounds tentatively planned for September and October. So certainly

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Speaker 6: through the end of the year there will be kind

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Speaker 6: of a lot of communication with staff, plus probably a

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Speaker 6: lot of conversations across Wall Street and global finance.

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Speaker 2: And Bloomberg and Aali Bosik says UBS intends to reduce

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Speaker 2: the total combined headcount by about thirty five thousand.

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Speaker 3: Staying in Europe, Karen, we're watching for news on the

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Speaker 3: economy and global monetary policy on this final day of

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Speaker 3: the European Central Bank four in Central Portugal. Speakers on

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Speaker 3: the agenda today include Fed Chair j Powell, ECB President

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Speaker 3: Christine Legard, Bank of England Governor Andrew Bailey, and Bank

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Speaker 3: of Japan Governor Caswell Ueida.

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Speaker 2: Well back here in the US, Nathan, the economy is

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Speaker 2: also in focus. President Biden says he thinks the US

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Speaker 2: economy can avoid a recession in the coming months. Bloomberg's

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Speaker 2: Amy Morris has details from our ninety nine one newsroom

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Speaker 2: in Washington.

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Speaker 7: President Biden told donors that after economists have predicted a

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Speaker 7: recession for the past eleven months, he doesn't think it's

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Speaker 7: going to come, citing a strong labor market and his

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Speaker 7: efforts to tamp down inflation. National Economic Council Director and

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Speaker 7: former Vice Chair of the Federal Reserve Lyle Brainerd agrees,

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Speaker 7: we are.

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Speaker 2: Going to continue to see resilience against a backdrop of

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Speaker 2: what we have referred to as more stable economic growth.

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Speaker 7: Economic Council Chair Brainard made the comments as President Biden

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Speaker 7: is set to head to Chicago today, where he'll deliver

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Speaker 7: what the White House is calling a cornerstone address on

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Speaker 7: his ex economic policy, Bidenomics.

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Speaker 4: In Washington.

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Speaker 7: I Mamy Morris, Bloomberg Daybreak.

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Speaker 4: Thanks Amy.

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Speaker 3: Now let's get to the latest on Russia following last

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Speaker 3: week's failed Wagner Group mutiny. The brief rebellion against the

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Speaker 3: Russian government could boost the Biden administration's efforts to rally

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Speaker 3: more military support for Ukraine. White House Deputy Press Secretary

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Speaker 3: Olivia Dalton announced another half billion dollar draw down from

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Speaker 3: the Pentagon stockpiles yesterday.

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Speaker 8: This package includes key capabilities that will support Ukraine's counter

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Speaker 8: offensive operations, such as mind clearing equipment, armored vehicles, and

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Speaker 8: artillery rounds. It will also strengthen air defenses to help

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Speaker 8: Ukraine protect its people from rocket attacks.

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Speaker 3: Deputy Press Secretary Dalton says there has been strong bipartisan

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Speaker 3: support for Ukraine in the past. Sources tell Bloomberg News

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Speaker 3: the White House is expecting stronger commitments as well from

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Speaker 3: NATO allies when they meet next month in Lithuania.

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Speaker 2: Well, Nathan, another story we're following this morning brings us

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Speaker 2: to the skies of New York. That's smog which blanketed

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Speaker 2: skies in the Northeast earlier this month. Maybe coming back,

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Speaker 2: could we get the latest of the Bloomberg's John Tucker

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Speaker 2: in New York, John.

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Speaker 9: And Karen Air quality should reach unhealthy levels in Western

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Speaker 9: and Central New York today, and New York City will

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Speaker 9: be enveloped tomorrow. The city in the northeast tenth some

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Speaker 9: of the worst air quality in the world. Earlier this month,

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Speaker 9: when the smoke from Quebec forest fires swirled south, Governor

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Speaker 9: Conthy Hoko says, make no mistake about it. This is

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Speaker 9: the result of climate change.

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Speaker 1: We are truly the first generation to feel the real

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Speaker 1: effects of climate change, and.

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Speaker 2: We're also the last generation to do anything meaningful about it.

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Speaker 9: Large parts of Canada from coast to coast have been

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Speaker 9: burning for weeks, currently two hundred and fifty seven fires

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Speaker 9: of burning out of control. Now, if you think it's

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Speaker 9: an excuse to work from home, keep in mind that

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Speaker 9: modern office building filtration systems to a pretty good job

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Speaker 9: cleaning out harmful particulates. New York Out and John Tucker Bloomberg.

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Speaker 4: Daybreak, John. Thanks.

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Speaker 3: While unhealthy air may stress you out, investors are also

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Speaker 3: waiting for bank stress tests this afternoon from the Federal Reserve.

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Speaker 4: We get more from Bloomberg's Charlie Pellett.

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Speaker 10: It comes as regulators explore more stringent requirements on in

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Speaker 10: the aftermath of several lender collapses. Analysts largely expect banks

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Speaker 10: to sail through the tests, which examine how lenders would

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Speaker 10: hold up in a hypothetical severe global recession in which

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Speaker 10: US unemployment peaks at ten percent, commercial real estate prices

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Speaker 10: plunge forty percent, and the dollar surges against most major currencies.

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Speaker 10: In New York, Charlie Palett Bloomberg Radio.

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Speaker 4: This is Bloomberg.

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Speaker 2: Now.

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Speaker 3: Time to take a look at some of the other

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Speaker 3: stories making news in New York and around the world

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Speaker 3: with Bloomberg's Michael Barr.

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Speaker 4: Good morning, Michael, Good morning Nathan.

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Speaker 11: The travel night mayre drags on from severe weather. After

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Speaker 11: days of flight cancelations. More than one hundred flights already

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Speaker 11: are scrapped in the New York area today. It is

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Speaker 11: left travelers at Newark Airport frustrated.

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Speaker 4: Come on, this is like the Disney World Line from hell.

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Speaker 1: Here.

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Speaker 4: I feel gross.

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Speaker 1: I feel like I want to cry, but I have

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Speaker 1: nothing left.

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Speaker 11: Some passings we're told they won't be able to reach

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Speaker 11: their destinations until next week. Daniel Penny, the man accused

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Speaker 11: in the May subway chocold death of Jordan Neely, will

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Speaker 11: be arranged day in New York. Penny's grand jury indictment

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Speaker 11: will be unsealed. Tuesday was primary day in New York City.

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Speaker 11: In a closely watched race, use of Salaam, the exonerated

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Speaker 11: Central Park five criminal justice reform activists, has won a

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Speaker 11: seat for the City Council in the ninth district. Salam

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Speaker 11: got close to fifty one percent of the vote, compared

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Speaker 11: to his closest competitor, State Assembly Member A Nis Dickens,

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Speaker 11: with just over twenty five percent. Salam replaces Kirsten Richardson Jordan,

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Speaker 11: who announced in May she would not seek reelection. In

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Speaker 11: Council District thirteen, incumbent Democrat Marjorie Velasquez easily won her

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Speaker 11: primary against three other challengers. However, the Republican primary challenger's

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Speaker 11: race is still too close to call, with Christy Mamorto

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Speaker 11: showing a slight lead over George Havnrik four percent. Brooklyn's

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Speaker 11: three was created through redistricting to reflect the area's majority

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Speaker 11: Asian population. Susan Shong won her Democratic primary with fifty

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Speaker 11: nine percent. However, the Republican primary too close to call,

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Speaker 11: with Ying Tan ahead of Vito Labella fifty two to

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Speaker 11: forty eight percent for Bronx District Attorney, Democratic incumbent Darcel

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Speaker 11: Clark easily won with more than seventy three percent of

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Speaker 11: the vote. For Queen's District Attorney, Democrat incumbent Melinda Katz

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Speaker 11: grab more than seventy one percent of the vote.

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Speaker 12: I believe a good government is good campaigning. I believe

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Speaker 12: you take the guns off the streets, the gangs off

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Speaker 12: the streets. You think of innovative ways to take care

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Speaker 12: of those are the stealing things from drug stores and

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Speaker 12: retail stores. I believe you do good government.

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Speaker 13: It's good campaigning.

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Speaker 11: Audio courtesy of q Ands. She'll run against Republican Michael

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Speaker 11: Mosa in November. Some mayor wal races were also watching.

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Speaker 11: In Yonker's Democratic incumbent My Expano easily won. In Mount Vernon,

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Speaker 11: Democratic incumbent Sean Patterson Howard beat Andre Waller seventy one

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Speaker 11: percent to twenty nine percent. Global News twenty four hours

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Speaker 11: a day, powered by more than twenty seven hundred journalist

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Speaker 11: and analysts in over one hundred and twenty countries. I'm

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Speaker 11: Michael Barrd. This is Bloomberg, Nathan.

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Speaker 3: Thanks Michael, time out for the Bloomberg Sports Update. Good morning,

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Speaker 3: John stash Out.

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Speaker 10: Good morning Nathan.

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Speaker 14: The Yankees were coming off two wins over one of

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Speaker 14: baseball's better teams. First play Texas, they went to Oakland

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Speaker 14: and then lost to a team that's on pace perhaps

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Speaker 14: have the worst season in baseball history. The A's were

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Speaker 14: twenty and sixty, but they topped the Yanks two to one,

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Speaker 14: with the only Yankee ue being a home run by

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Speaker 14: Josh Donaldson, former All Star with the A's. That's his

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Speaker 14: seventh homer. He only has two other hits at City Field.

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Speaker 14: Metts used the long ball.

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Speaker 9: One that's lined in the air at the left center

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Speaker 9: and deep Gleamer going back at the track at the

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Speaker 9: Wallie can't get it.

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Speaker 2: It's gone.

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Speaker 5: The home run.

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Speaker 14: Head to the party deck in front of a great

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Speaker 14: wall of pushing Brandon Nippo.

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Speaker 4: With an opposite field hall run his second Hall brun

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Speaker 4: of the game on WCBS.

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Speaker 14: Daniel Vogelback also homer, so did Francisco Lindor two hundredth

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Speaker 14: of his career. Mets over the Brewers seven to two.

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Speaker 14: It's just their sixth win in the last twenty two games.

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Speaker 14: And we'll see what Mets owner Steve Cohen has to

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Speaker 14: say this afternoon. He's holding a rare press conference in Anaheim.

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Speaker 14: The legend of showe Otani continues in an Angels win

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Speaker 14: web with the White Sox on the mound, O'tani gave

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Speaker 14: up just one run four heads, struck out ten at

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Speaker 14: the play two long home runs.

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Speaker 4: He leads the majors with twenty eight.

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Speaker 14: The Devils have acquired Tyler Tofole in a trade with Calgary.

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Speaker 14: He was their leading scorer. NBA free agency begains Saturday.

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Speaker 14: A lot of attentions being paid to Damian Lillard, not

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Speaker 14: a free agent, but will Portland trade the seven time

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Speaker 14: All Star. They met with Lillard yesterday said they are

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Speaker 14: committed to building a winning team around him, and that

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Speaker 14: Lillard has not asked for a trade. Ryan Mallett, star

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Speaker 14: quarterback at Arkansas then played for three NFL teams, has

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Speaker 14: died at thirty five, apparently drowned in the Gulf of Mexico.

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Speaker 4: We're Bloomberg Sports.

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Speaker 13: From coast to coast, from New York to San Francisco,

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Speaker 13: Boston to Washington, DC, nationwide on Syrias Exam, the Bloomberg

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Speaker 13: Business app, and Bloomberg dot Com.

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Speaker 4: This is Bloomberg Daybreak. Good morning.

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Speaker 3: I'm Nathan Hager, and it is a tough morning for

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Speaker 3: chip stocks this morning, led by Nvidia following a report

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Speaker 3: that the Biden administration is looking to close the loopholes

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Speaker 3: that allow China to buy the chips that power artificial intelligence.

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Speaker 4: Let's bring in Alex Web for more on this.

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Speaker 3: Alex covers all things tech for US at Bloomberg News.

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Speaker 3: We should note, Alex that this is reporting from the

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Speaker 3: Wall Street Journal. But what are the loopholes that the

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Speaker 3: White House reportedly has its eye on here?

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Speaker 15: Yeah, so there was an initial round of rules that

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Speaker 15: tried to prevent bleeding edge chips that can be used

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Speaker 15: for AI applications from being sold into China. And in

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Speaker 15: terms of Nvidia, those are known as the A one

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Speaker 15: hundred range. So when in Vidia did quite agile league

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Speaker 15: quite quickly, they range called the eight hundred, which is

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Speaker 15: slightly lower power, and if you looked at the specifications

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Speaker 15: that were laid out by the government, they were then

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Speaker 15: allowed to be sold into China. So what, according to

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Speaker 15: the journals you state, is now being reported is that

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Speaker 15: these restrictions are going to be extended, so they will

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Speaker 15: cover those new A eight hundred chips and more than that,

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Speaker 15: even they will also be covering cloud operators. There is

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Speaker 15: a world where you can imagine that if you're a

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Speaker 15: Chinese company and you can't get the right technology inside China,

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Speaker 15: well then you might buy cloud capacity which is shored elsewhere,

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Speaker 15: perhaps you know, in the region, but operated by Google

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Speaker 15: or at Microsoft Azure or AWS to get around some

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Speaker 15: of those restrictions. And it seems as though they're going

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Speaker 15: to be closing that loophole as well.

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Speaker 3: And we're seeing the impact on the stock this morning,

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Speaker 3: investors thinking this could be a pretty tough for in Vidia,

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Speaker 3: given how sizable the Chinese market is for that chip maker.

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Speaker 3: What is the potential impact for chip makes and when

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Speaker 3: it comes to their bottom line here, I mean.

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Speaker 15: I think we've got to be careful not to overstated.

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Speaker 15: You must remember the of course, that in Vidia has

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Speaker 15: a very full valuation at the moment. It is the

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Speaker 15: most expensive chip stock in the Philadelphia Semiconductor Index, training

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Speaker 15: it close to fifty times its forward earnings. That means

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Speaker 15: that any indication that there might be restrictions to its

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Speaker 15: growth potential are obviously going to be taken with a

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Speaker 15: certain amount of skittishness by investors. When it comes to

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Speaker 15: in Vidia's total revenue, you know, China is it's actually

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Speaker 15: its third biggest market, representing about twenty one percent of sales,

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Speaker 15: behind Taiwan and of course the US. Some of the

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Speaker 15: end customers might actually, you know, so it's made in Taiwan,

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Speaker 15: it might ultimately be shipped to Taiwan in a different package, sorry,

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Speaker 15: to China, in a different package. It's really about limiting

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Speaker 15: the growth here. But as if you read the fantastic

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Speaker 15: artle by our colleagues and the most recent edition of

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Speaker 15: BusinessWeek profiling in video and the CEO Jensen one, there's

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Speaker 15: currently an eight month wait to be able to get

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Speaker 15: the bleeding Edge chips. So at least in the near term,

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Speaker 15: it doesn't look as though this would have any meaningful

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Speaker 15: effect on demand. The question then starts to be if

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Speaker 15: it affects it in the medium term, as you know,

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Speaker 15: US and European cloud capacity gets filled up.

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Speaker 3: Now, I guess that raises the question as well of

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Speaker 3: whether in Vidia could continue to shore up that sizeable

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Speaker 3: market it has in China even with these kinds of restrictions.

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Speaker 3: Is there a scenario that you could see that in

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Speaker 3: Vidia could try to hold on to that Chinese market.

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Speaker 15: I mean, they've clearly managed to find a way with

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Speaker 15: the previous rules to skirt the letter of the regulations.

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Speaker 15: You know, of course they did something that was entirely legal,

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Speaker 15: but they ultimately served up a chip that wasn't as good, right,

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Speaker 15: And then the question is, well, perhaps they can innovate

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Speaker 15: further and do something similar on those lines. Even so

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Speaker 15: would mean that China is not getting stuff that is

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Speaker 15: as good as what you know US cloud operators are

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Speaker 15: able to do at the moment, at any rate in

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Speaker 15: video are the only game in town and the only

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Speaker 15: others who are close the likes of AMD, they are

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Speaker 15: also covered by these restrictions. So the only solution from

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Speaker 15: a Chinese perspective is what can they come up with

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Speaker 15: some sort of domestic competitor. The answer might be yes,

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Speaker 15: but it's not going to be anytime soon. You're looking at,

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Speaker 15: you know, years and years out, because not only can

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Speaker 15: they not buy these chips, they can't buy the equipment

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Speaker 15: that's needed to make these chips, usually made by asmls.

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Speaker 15: So it's a tough challenge for China for in VideA.

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Speaker 15: It you know, might affect them around the edges, It

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Speaker 15: isn't the lion's share of their business.

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Speaker 3: About thirty seconds left here, Alex. But you mentioned the

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Speaker 3: restrictions on cloud leases that are reported in this Biden

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Speaker 3: administration strategy. I mean, that's the kind of thing that

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Speaker 3: could hit some of the biggest tech companies in the world.

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Speaker 15: Yes, but they aren't as big inside China as they

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Speaker 15: might be. And of course this is all new. This

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Speaker 15: is like green space for them, right. The AI processing

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Speaker 15: stuff is what they're adding. That's the way of bringing

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Speaker 15: new business in. It's not something they already have. So again,

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Speaker 15: it's a that's in their growth, not necessarily affecting the

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Speaker 15: businesses they already have, and that's the key issue at

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Speaker 15: the moment.

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