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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Daybreak ero A podcast. Good morning, It's Wednesday, the twenty

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Speaker 1: ninth of October. I'm Stephen Carolyn London. Coming up today.

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Speaker 1: In Vidia's CEO dismisses talk of an AI bubble as

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Speaker 1: he makes the case for tech firms sky high valuations.

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Speaker 1: Ubs delivers results that smash expectations on a big day

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Speaker 1: for European bank earnings. Plus why high frequency trading is

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Speaker 1: about to get even faster as a canary wharf rooftop

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Speaker 1: becomes the new battleground for those seeking an edge. Let's

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Speaker 1: start with a roundup of our top stories. The boss

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Speaker 1: of the world's most valuable company, in Vidia, has dismissed

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Speaker 1: concerns of an artificial intelligence bubble, saying the company's latest

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Speaker 1: chips are on track to generate half a trillion dollars

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Speaker 1: in revenue. Speaking to Bloomberg at an Nvidia event in Washington,

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Speaker 1: CEO Jensen Wong said the four point nine trillion dollar

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Speaker 1: cup company is partnering with firms like Nokia, Uber and

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Speaker 1: Palanteer to keep its technology at the center of the

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Speaker 1: AI boom.

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Speaker 2: I don't believe we're inn AI bubble, and the reason

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Speaker 2: for that is we're going through a natural transition from

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Speaker 2: an old computing model based on general purpose computing to

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Speaker 2: accelerated computing. We also know that AI has now become

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Speaker 2: good enough because of reasoning capability, research capabilities, its ability

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Speaker 2: to think, it's now generating tokens, in now generating intelligence

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Speaker 2: that's worth paying for.

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Speaker 1: Quong's comments came as the world's most valuable startup, open Ai,

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Speaker 1: unveiled a sweeping restructuring that gives longtime backer Microsoft a

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Speaker 1: twenty seven percent stake, valued at about one hundred and

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Speaker 1: thirty five billion dollars. Together, the announcements highlight the unprecedented

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Speaker 1: waves of investment and speculation fueling valuations across the sector well.

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Speaker 1: Justin Wang also warned that maintaining America's edge and AI

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Speaker 1: will require an approach that keeps China reliant on US technology.

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Speaker 1: The VITA CEO also said that President Trump's vowed to

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Speaker 1: win the global AI race is exactly what's needed.

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Speaker 2: We're currently assuming China is going to be zero percent

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Speaker 2: of our business, and if it comes back, if President

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Speaker 2: Trump was able to negotiate, or if China would like

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Speaker 2: us to come back to China. It's going to be

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Speaker 2: a huge.

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Speaker 1: Bonus for US wants. Comments come as the US President

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Speaker 1: prepares to meet his Chinese counterpart, cheating pay to finalize

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Speaker 1: a series of trade agreements, saying that rolling back tariff's

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Speaker 1: fees and exports restrictions. Speaking to reporters on Air Force one,

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Speaker 1: Trump said he will raise the issue of invidious chips

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Speaker 1: during the meeting.

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Speaker 3: We'll be speaking about Blackwell's the super duper GYP.

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Speaker 1: Blackwell's amazing Navidio makes it.

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Speaker 4: We're about ten years ahead of anybody else in gips,

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Speaker 4: in the highly sophisticated chips.

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Speaker 3: I think we may be talking about that with President.

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Speaker 1: That was President Trump speaking, also saying that he hopes

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Speaker 1: to lower tariffs and change for Chinese commitments on soybeans

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Speaker 1: and fentanel to some of the European banks. Reporting this morning,

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Speaker 1: UBS has seen profits more than a billion dollars higher

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Speaker 1: than expected in the third quarter. Net income came in

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Speaker 1: at almost two point five billion dollars unless it expected

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Speaker 1: one point four billion. The result was aided by lower

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Speaker 1: than expected legal costs over the settlement of a tax

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Speaker 1: evasion case in France and a legacy Credit Suisse issue.

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Speaker 1: The Swiss lenders investment banks saw pre tax profits that

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Speaker 1: was double what was estimated at nine hundred million dollars.

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Speaker 1: Inflows that the key wealth management units came in ahead

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Speaker 1: of estimates at thirty eight billion dollars, though pre tax

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Speaker 1: profit there was below estimates. Staying with bank earnings, Santander's

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Speaker 1: profits also came in above expectations at three point five

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Speaker 1: billion euros for the quarter. Net interest income at the

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Speaker 1: Spanish lender miss estimates, but loan loss provisions were lower

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Speaker 1: than had been expected. While in Germany, Deutsche Bank has

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Speaker 1: reported pre tax profits that also beat expectations, coming in

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Speaker 1: at two point four five billion euros. That was boosted

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Speaker 1: by better than expected revenue from its fixed income and

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Speaker 1: currency sales and trading division that came in at two

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Speaker 1: point four eight billion euros. To other news, Hurricane Melissa

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Speaker 1: has made landfall as the strongest storm ever recorded in Jamaica,

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Speaker 1: with sustained winds of one hundred and eighty five miles

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Speaker 1: per hour. The storm has brought days of torrential rain,

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Speaker 1: putting residents and an estimated twenty five thousand tourists at risk.

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Speaker 1: To make his Education Minister Dana Dixon says the conditions

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Speaker 1: are the worst the island has ever experienced.

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Speaker 5: It is important that we get everyone all to get

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Speaker 5: people to save areas.

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Speaker 6: It's not just the wind, it's also the rain.

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Speaker 1: The rainfall will be record levels. Education Minister Dana Dixon

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Speaker 1: speaking there. Melissa now dengraded to a Category four storm

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Speaker 1: is expected to reach Cuba and the Bahamas in the

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Speaker 1: next few hours. At least twenty people are reported to

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Speaker 1: have been killed in Gaza after Israel's Prime Minister benjaminette

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Speaker 1: and Yahoo ordered what he called force full strikes against Hamas.

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Speaker 1: Israeli military officials said the action was in response to

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Speaker 1: Hamas militants attacking their soldiers in the territory. Jen Gavito,

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Speaker 1: a senior advisor at the Coen Group, says there's still

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Speaker 1: a long way to go before the ceasefire can truly hold.

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Speaker 5: I do think that, you know, if you put this

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Speaker 5: agreement in the context of broader normalization potential between Arab

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Speaker 5: states and Israel, you know, everybody has incentive to this

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Speaker 5: to make this work long term. But there is an

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Speaker 5: awful lot of work to be done, not least of

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Speaker 5: which you know, the very very basic humanitarian requirements as

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Speaker 5: a starting point and then reducing the violence in the

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Speaker 5: West Bank as well.

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Speaker 1: Jen Gevito speaking, there is the renewed military Action tested,

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Speaker 1: an agreement whose key terms called for both Hamas and

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Speaker 1: Israeli forces to halt their attacks over Speaking in the

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Speaker 1: past few hours, the US President Donald Trump said that

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Speaker 1: nothing is going to jeopardize the ceasefire heat brokeers just

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Speaker 1: over two weeks ago, adding that Hamas is only a

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Speaker 1: very small part of peace in the Middle East, and

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Speaker 1: Federal Reserve policymakers are expected to lower interest rates by

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Speaker 1: a quarter percentage point later today. That comes despite a

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Speaker 1: lack of available data due to the ongoing US government shutdown.

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Speaker 1: FED Charge your Own Power signaled earlier this month that

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Speaker 1: rate setters remain focused on threats to the labor market,

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Speaker 1: but former Kansas City FED President Esther George says the

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Speaker 1: Central Bank should not lose sight of its goal to

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Speaker 1: keep inflation on target.

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Speaker 6: This is a tough environment when you have cross currents

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Speaker 6: of major policies in play of judging what that outlook

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Speaker 6: is going to be. That, of course, is why they're

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Speaker 6: paying particular attention to the labor market. I think that's

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Speaker 6: right to keep an eye on that by the same token,

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Speaker 6: their most direct impact does come through their inflation and

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Speaker 6: reduction ability.

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Speaker 1: There was former Kansas City Fed President s George. They're

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Speaker 1: speaking as we will have live coverage and analysis of

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Speaker 1: the Center Bank's rate decision on Bloomberg Radio at six

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Speaker 1: pm London time, with Jerome Pal's full press conference thirty

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Speaker 1: minutes later. Well, those are our top stories. I've been

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Speaker 1: on the markets this morning. We're looking at the MSCIS

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Speaker 1: Pacific Index up by four tenths of one percent, the

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Speaker 1: Nika and Tokyo two point one percent high, the Cospian

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Speaker 1: Soul one point seven percent higher. European stop futures a

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Speaker 1: little lower, down two tenths of one percent for eurostocks fifty,

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Speaker 1: although NAZAC futures on Wall Street are up four tenths

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Speaker 1: of one percent. As we're thinking about the movement in

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Speaker 1: tech shares today, the tenure Treasury yield to have of

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Speaker 1: that Fed decision holding steady a three point nine eight percent.

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Speaker 1: The Bloomberg Dollar Spot Index is a tenth of one

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Speaker 1: percent stronger. Now in a moment, more on the latest

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Speaker 1: bumper projections for AI chip sales, plus why a battleover

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Speaker 1: proximity is changing the game for high frequency traders in London.

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Speaker 1: But another story that I've been reading this morning, younger

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Speaker 1: customers have a bone to pay with KFC. Apparently Bone

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Speaker 1: in Fried Chicken is making the brand irrelevant and invisible.

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Speaker 1: That's according to its US president Catherine Tang Gillespie is

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Speaker 1: speaking to our colleague Red Brown about this. He's been

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Speaker 1: writing about how there's a boom in popularity for fried

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Speaker 1: chicken at American restaurants, but surprisingly that's not helping KFC,

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Speaker 1: which is actually the only one of the big chains

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Speaker 1: that focuses on this area to see it sales full.

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Speaker 1: Last year, Catherine Tang Gillespie from KFC told Red that

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Speaker 1: KFC used to be an American icon, but somewhere along

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Speaker 1: the way they stopped acting like one. And apparently this

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Speaker 1: is due to the increased popularity of boneless chicken products,

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Speaker 1: which KFC sells some of but doesn't focus on as well.

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Speaker 1: So the numbers from industry monitors have seen the sales

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Speaker 1: of boneless chicken go up by more than eleven percent,

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Speaker 1: while Bone in Chicken has fallen by four percent. In

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Speaker 1: case you're looking for data on your chicken consumption at

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Speaker 1: this hour of the morning. So this is something that

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Speaker 1: KFC is now trying to push back on with new products,

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Speaker 1: cut prices, and also viral marketing campaigns as well. Red

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Speaker 1: points out, though that KS actually tried out buckets of

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Speaker 1: bonus chickens in twenty thirteen, but it didn't last. Maybe

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Speaker 1: they were just ahead of their time. You can read

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Speaker 1: his full piece at Bloomberg dot com and we'll put

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Speaker 1: a link to it on our podcast show notes back

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Speaker 1: to the text story in videos, Jensen Wong just missing

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Speaker 1: concerns about an AI bubble as he predicted another surgeon

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Speaker 1: sales for its chips next year. There was also a

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Speaker 1: similar message from one of Nvidia's top suppliers, South Korea's

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Speaker 1: sk Heinex, as it reported an over sixty percent jump

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Speaker 1: in profit. Our technology editor Mayomi Neghihi joins me now

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Speaker 1: for more, May you be great to have you with us?

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Speaker 1: Are Jensen Wong's comments then, camming fears in the markets

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Speaker 1: that the AI rally's gone too far, too fast.

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Speaker 4: No, I don't think so. But he's definitely giving people

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Speaker 4: the confidence that other people will believe the party will

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Speaker 4: go on for a while. Yet, I would say in video,

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Speaker 4: supplier shares of advest test chairs search more than twenty percent.

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Speaker 4: Esk Heinecks shares a up. Jensen Wang saying that Blackwell

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Speaker 4: and will bring in half a trillion dollars in revenue

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Speaker 4: is just it just mind boggling numbers here, and it's

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Speaker 4: clear that orders are coming into and video supplier. I

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Speaker 4: think the underlying concerns remain. As a consumer, I have

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Speaker 4: yet to come across an AI service I can't do without,

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Speaker 4: and it's still a struggle to justify this level of

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Speaker 4: spending in these types of valuations that really are kind

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Speaker 4: of in part being fueled by the same companies investing

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Speaker 4: in one another and buying products from each other. But

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Speaker 4: that said, bubbles to a certain point are necessary for innovation.

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Speaker 4: It just gets more and more costly to develop, like

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Speaker 4: really life changing technology and infrastructure. So I think that's

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Speaker 4: what we're seeing in action, and the hope is that

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Speaker 4: when we emerge on the other side, we will have

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Speaker 4: as a society built something that has improved our lives

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Speaker 4: so that we can all quickly dust ourselves off when

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Speaker 4: the party does end.

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Speaker 1: Well indeed, but I mean no sign of the party ending.

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Speaker 1: If you look at esk Heinex's earnings today. What did

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Speaker 1: we learn from them, Well.

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Speaker 4: That this competition between tech companies and countries to sort

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Speaker 4: of build AI has hit fever. Pitch sk Heinex says

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Speaker 4: that they sold out on all their entire memory chip

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Speaker 4: lineup for all of next year. I mean that everything

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Speaker 4: has been spoken for, So we're talking you know, not

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Speaker 4: just the cutting edge AI chips, but you know, more

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Speaker 4: conventional chips that you use in server storage devices and switches.

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Speaker 4: So that's real equipment and real companies putting a lot

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Speaker 4: of money down to reserve this kind of infrastructure because

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Speaker 4: the competition is just so fierce and everyone is afraid

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Speaker 4: of falling behind.

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Speaker 1: This is interesting to think about.

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Speaker 4: Two.

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Speaker 1: Given Donald Trump's trip to Asia, Jensen Wang saying that

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Speaker 1: he'll be seeing Donald Trump at the APEX summit as well,

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Speaker 1: how vulnerable is in video or this sector in general

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Speaker 1: to the US President's policies.

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Speaker 4: I think it's extremely important. I mean, this meeting will

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Speaker 4: be pivotal. This may be one of the few chances

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Speaker 4: left for in video to pry open the China market

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Speaker 4: for in video chips. Again. Right now, the lead, the

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Speaker 4: technological lead in video has over Huawei is so formidable

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Speaker 4: that China might still be tempted to not go cold

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Speaker 4: Turkey on in video chips just yet and put its

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Speaker 4: sort of long term objectives of building tech resilience and

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Speaker 4: independence aside. But that said, I mean, all this on

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Speaker 4: again off again curbs on chip technology has really spooked

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Speaker 4: China and underlines the importance of developing its own chip

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Speaker 4: supply chain and chip ecosystem. So right now and Video's

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Speaker 4: lead is so vast that Chinese companies are sort of

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Speaker 4: compensating by bundling lots of Huawei chips together to try

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Speaker 4: to imagine video performance. And you know that just means

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Speaker 4: you need more power. But the longer China is sort

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Speaker 4: of forced to try to build its own chip supply

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Speaker 4: chain and ecosystem, the longer Chinese developers will you come

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Speaker 4: to rely on their own homegrown software, and the more

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Speaker 4: difficult it will be for in video to come back in.

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Speaker 4: So it really hurts in video to be shut out

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Speaker 4: of this huge renaissance that's occurring right now in AI

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Speaker 4: and robotics in China.

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Speaker 1: Yeah, a fascinating one to watch as well. Miaomi Negishi,

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Speaker 1: our technology ezer, thank you very much for bringing us

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Speaker 1: the latest on that story. Stay with us more from

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Speaker 1: Bloomberg Daybreak Europe coming up after this. Now, high frequency

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Speaker 1: trading is about to get even faster in London after

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Speaker 1: a little known technology firm took on the London Stock

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Speaker 1: Exchange Group in order to get access to a building's

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Speaker 1: rooftop for its radio devices. If follows an investigation by

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Speaker 1: the UK's Financial Conduct Authority in our private market support

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Speaker 1: and Meg Shorts, Meg Shors joins us now for more. Meg,

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Speaker 1: good morning, great to see you. What is this investigation about?

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Speaker 3: So it's really over a rooftop in East London and

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Speaker 3: who can access it? LSEG, the data center for their

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Speaker 3: exchange sits in the building and previously before the investigation

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Speaker 3: it was only them who could access it. So McKay brothers,

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Speaker 3: the little known company, they had to and other providers

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Speaker 3: had to put their radio technology on different rooftops and

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Speaker 3: they were ultimately further away from the exchange. And that's

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Speaker 3: quite important because their radio technology is connecting high frequency

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Speaker 3: traders to the exchange and it's all about speed. So

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Speaker 3: we're talking like a billionth of a second, but that

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Speaker 3: can be the difference of millions of dollars really, So yeah,

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Speaker 3: that's that's what it's about the access to the rooftop.

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Speaker 1: So why are these radio signals so important then for

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Speaker 1: high frequency trading.

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Speaker 3: Because it's it's basically this new kind of technology. So

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Speaker 3: previously high frequency trading at start there that involves these

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Speaker 3: really complex algorithms that kind of churn and analyze data

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Speaker 3: and then they execute the trades upon that. It used

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Speaker 3: to all be about fiber cables and how to make

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Speaker 3: them the straightest so that they could be the quickest,

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Speaker 3: but now it's about this like microwave technology. McKay Brothers

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Speaker 3: was actually one of the first to kind of come

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Speaker 3: up with this specific technology high frequency traders. You're thinking

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Speaker 3: of firms like Virtue and Jane Street. They used to

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Speaker 3: be it's not really a new thing anymore, but it

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Speaker 3: kind of was a bit vilified if you think of

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Speaker 3: like Flashboys Michael Lewis's book as kind of front running

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Speaker 3: investors getting ahead of normal trading. But it's not that

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Speaker 3: new anymore, so it's a little bit different.

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Speaker 1: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 1: stories making news for from London to Wall Street and beyond.

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