WEBVTT - OpenAI, Broadcom Ink 10-Gigawatt Chip Deal 0:00:02.520 --> 0:00:13.400 Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live 0:00:13.440 --> 0:00:17.280 from coast to coast with Caroline Hyde in New York 0:00:17.520 --> 0:00:19.480 and Ed lave Lowe into San Francisco. 0:00:22.239 --> 0:00:24.040 This is Bloomberg Tech coming up. 0:00:24.079 --> 0:00:26.800 Broadcom surges as it signs a multi year agreement with 0:00:26.880 --> 0:00:28.600 OPENINGI to design. 0:00:28.360 --> 0:00:30.320 Custom chips and networking equipment. 0:00:30.760 --> 0:00:34.000 Plus market spouts back as President Trump signaled open US 0:00:34.000 --> 0:00:36.199 to a deal with China. Amid the latest trade showdown 0:00:36.440 --> 0:00:37.559 what it means Tech. 0:00:37.440 --> 0:00:39.440 And Rare Earth and Warner Brothers. 0:00:39.520 --> 0:00:43.080 Discovery has read buffed Paramounts Guide Dancer's initial takeover approach 0:00:43.159 --> 0:00:46.520 for being too low according to sources. We'll have the latest, 0:00:46.600 --> 0:00:49.320 but first we go out to the Middle East, where 0:00:49.320 --> 0:00:51.320 President Trump is in the middle of a visit in 0:00:51.400 --> 0:00:53.360 recognition of the end of the war in Gaza, with 0:00:53.440 --> 0:00:57.520 both Hamas and Israel releasing hostages and prisoners. Today, let's 0:00:57.560 --> 0:01:00.320 go live now to Bloomberg's Oliver Crok, who's injury for 0:01:00.360 --> 0:01:03.080 the latest sun setting with you. We understand now President 0:01:03.080 --> 0:01:04.400 Trump has arrived in Egypt. 0:01:07.360 --> 0:01:07.960 Yeah, that's right. 0:01:08.040 --> 0:01:10.040 Really the sun setting here and closing what is a 0:01:10.120 --> 0:01:14.479 truly historic day for the region and certainly for the Israelis. 0:01:14.480 --> 0:01:17.080 Where we've see, as you said to Caroline, the release 0:01:17.280 --> 0:01:21.000 of the last twenty living hostages into Israeli custody there 0:01:21.080 --> 0:01:24.160 now back on Israeli soil, the release of those prisoners 0:01:24.560 --> 0:01:28.720 from the jails and being held by the Israelis, back 0:01:28.760 --> 0:01:30.600 to the West Bank, back to Gaza, back to a 0:01:30.680 --> 0:01:33.400 number of other places. A deal that was struck by 0:01:33.520 --> 0:01:37.760 President Trump through his sort of unorthodox foreign policy, and 0:01:37.880 --> 0:01:41.160 something that really was inconceivable two weeks ago. The next step, now, 0:01:41.240 --> 0:01:43.360 the next chapter is beginning in Egypt. As you can 0:01:43.400 --> 0:01:47.480 see Donald Trump sitting next to LCCI, the President of Egypt, 0:01:47.560 --> 0:01:50.040 to try to figure out the sort of very difficult 0:01:50.120 --> 0:01:52.960 phase two of this, which is what do security conditions 0:01:53.000 --> 0:01:55.720 look like going forward? In Gaza. Hamas is still armed. 0:01:55.720 --> 0:01:57.520 They have not agreed to put down their arms. That 0:01:57.680 --> 0:01:59.680 is really a precondition to make any of the sort 0:01:59.680 --> 0:02:02.600 of US plans of the Trump twenty point plan come 0:02:02.680 --> 0:02:04.800 into being. That is a requirement. And of course the 0:02:04.880 --> 0:02:07.400 question long term of governance of Goza and this so 0:02:07.560 --> 0:02:09.840 called Board of Peace that will be chaired by Donald 0:02:09.880 --> 0:02:12.760 Trump and potentially other leaders. Those are the conversations that 0:02:12.800 --> 0:02:15.120 will beginning be beginning right now in Egypt. 0:02:15.360 --> 0:02:17.600 Bloomberg's Oliver Crook A long day. Let's now listen in 0:02:17.680 --> 0:02:20.079 to President Trump as he speaks in Egypt. 0:02:20.120 --> 0:02:24.240 And it continues till today. So I want to thank 0:02:24.320 --> 0:02:26.639 you all very much. I appreciate the way you covered 0:02:27.800 --> 0:02:31.280 this really momentous. I've never seen anything like it, the 0:02:31.400 --> 0:02:34.880 level of love, the level of respect for what it is, 0:02:35.000 --> 0:02:37.919 and it's you know, it's pieces of the Middle East, 0:02:37.960 --> 0:02:40.880 and everybody said it's not impossible to do, and it's 0:02:40.919 --> 0:02:43.480 going to happen, and it is happening, is before you 0:02:43.720 --> 0:02:46.960 very eyes, and that's why it's become so fascinating. 0:02:47.200 --> 0:02:48.400 Marco, do you have anything to. 0:02:48.440 --> 0:02:51.760 Say to Egypt's been a phenomenal participant. I think Golo, 0:02:51.840 --> 0:02:54.080 Steven Jerry will tell you the critical role they played, 0:02:54.480 --> 0:02:56.840 and they can tell you themselves. They hosted the talks 0:02:56.880 --> 0:02:58.560 here and they're going to play a very important role 0:02:58.639 --> 0:03:01.480 now in the follow up implementation of this, which is 0:03:01.600 --> 0:03:05.440 really it's not simply about restoring Gaza, it's about transforming 0:03:05.919 --> 0:03:08.600 the region. So we have an incredible partner along the Alliance, 0:03:09.080 --> 0:03:11.959 very capable partner here and a tremendous collection of leaders. 0:03:12.280 --> 0:03:13.960 This is clearly in my mind. 0:03:14.000 --> 0:03:15.519 I think, in the mind of everyone in this room, 0:03:15.919 --> 0:03:18.120 probably one of the most important days for world peace 0:03:18.480 --> 0:03:23.640 in fifty years. That's not an exaggeration, only fifty, maybe one. 0:03:23.560 --> 0:03:26.200 Hundred in the World War two. 0:03:26.840 --> 0:03:29.320 Mister Wickcof and mister Kushner, I'm curious you've played such 0:03:29.320 --> 0:03:31.959 an important role in the tactical negotiations here. 0:03:33.840 --> 0:03:36.520 Or its as a lot more has to be brought 0:03:36.560 --> 0:03:37.200 to the table here. 0:03:38.240 --> 0:03:40.880 Oh, the minute, the minute we at ink the deal, 0:03:41.240 --> 0:03:44.160 Jared and I were already working on the implementation side 0:03:44.200 --> 0:03:47.160 of the deal, so we've dug in. 0:03:47.320 --> 0:03:49.760 We'll be here quite a bit. That's at the direction 0:03:49.880 --> 0:03:50.440 of the President. 0:03:50.560 --> 0:03:52.240 That's probably when it's going to be one of the 0:03:52.280 --> 0:03:53.680 most important pass here. 0:03:55.120 --> 0:03:56.680 Jared is remarkable to work with. 0:03:56.800 --> 0:03:59.080 I talk about it all the time, and of course 0:03:59.120 --> 0:04:00.640 we both love working for the president. 0:04:00.680 --> 0:04:02.720 So I would say, uh, feels like. 0:04:02.720 --> 0:04:03.800 A very honorable job. 0:04:05.640 --> 0:04:07.920 Mister President, Would you like to say something would be 0:04:07.960 --> 0:04:08.560 a bit better? 0:04:08.880 --> 0:04:09.280 I guess. 0:04:10.280 --> 0:04:11.680 So, what do you if the bead in a a 0:04:11.760 --> 0:04:15.880 hub of a coup of dice and that's hanged with putty, 0:04:15.920 --> 0:04:19.680 shot out this shotting shit, it's. 0:04:20.560 --> 0:04:25.200 It's wickyser this way this way they put in the sweet. 0:04:24.920 --> 0:04:26.880 When we can had the but wouldn't have you. 0:04:26.880 --> 0:04:29.159 Set out and look at like. 0:04:29.320 --> 0:04:30.039 The hanger type. 0:04:31.760 --> 0:04:37.360 I had to hang it as at right as a rounds. Well. 0:04:37.440 --> 0:04:39.760 First of all re elections say I welcome to you 0:04:39.839 --> 0:04:42.840 between each other. It's a great pleasure and the honor 0:04:43.400 --> 0:04:46.920 to have you with us here in the city of 0:04:47.080 --> 0:04:52.680 peast tram Shaknus would extend uh on behalf of all 0:04:52.720 --> 0:04:57.320 reluctions and the beasts lovers around your elds, so you 0:04:58.080 --> 0:05:03.880 your appreciation. I never facts as I'm president and momentus 0:05:04.080 --> 0:05:06.120 accomplished by your hands. 0:05:06.040 --> 0:05:08.520 And they're going to do the hypercundaries and they can 0:05:08.720 --> 0:05:09.480 hate the cold. 0:05:12.000 --> 0:05:12.560 Where ahead. 0:05:15.200 --> 0:05:20.599 I'm very confident that your Excellency is the only one 0:05:20.760 --> 0:05:26.080 who's killed of bringing this about and bringing them to 0:05:26.240 --> 0:05:27.920 this war, whether you're been. 0:05:28.120 --> 0:05:32.839 To start the counties, because that was the bitter counties. 0:05:33.240 --> 0:05:36.160 And then I had a conclusion. I had a pers people. 0:05:36.040 --> 0:05:40.240 Contin are you even said that very precisely during my 0:05:40.920 --> 0:05:45.320 communication with your excess, that you are the only one 0:05:45.400 --> 0:05:49.640 who is able to bring about peace and to achieve. 0:05:49.360 --> 0:05:50.280 Peace in this moment. 0:05:51.360 --> 0:05:53.960 We head back now to Juristen and Bloomberg's Oliver Crook 0:05:54.040 --> 0:05:57.800 stands by to interpret what is currently momentous occasion in Egypt, 0:05:57.839 --> 0:06:01.200 President Trump, alongside the leader of Egypt, of just interpret 0:06:01.279 --> 0:06:02.800 the next steps that everyone. 0:06:02.560 --> 0:06:03.240 Now focuses on. 0:06:05.920 --> 0:06:07.360 Yeah, I mean, what is going to be the next 0:06:07.360 --> 0:06:09.719 step is really marking the moment for which we shouldn't 0:06:09.720 --> 0:06:12.200 sort of undervalue how significant it is, and that is 0:06:12.240 --> 0:06:14.080 going to be the signing of the sort of peace document, 0:06:14.120 --> 0:06:18.000 sort of ceremonial moment by presumably Donald Trump and a 0:06:18.080 --> 0:06:20.200 number of others who have been very active in the 0:06:20.320 --> 0:06:23.040 negotiations here. I mean there have been a few nations 0:06:23.080 --> 0:06:25.719 that Trump has talked about a lot being very actively 0:06:25.760 --> 0:06:28.599 involved in the negotiations. Of course, the Egyptians having played 0:06:28.640 --> 0:06:31.080 a crucial role, the Kataris of course, as we know, 0:06:31.160 --> 0:06:35.720 but then quite unexpectedly and quite significantly, the Turks and 0:06:36.040 --> 0:06:38.320 President Erduwan who really came in and put a lot 0:06:38.360 --> 0:06:41.320 of pressure to bear on Hamas, which we understand it 0:06:41.400 --> 0:06:45.040 was really the Kataris and Turkey that put that pressure 0:06:45.080 --> 0:06:47.240 onto Hamas that got them really over the line to 0:06:47.360 --> 0:06:50.800 come to this agreement and finally release those last twenty hostages. 0:06:50.839 --> 0:06:52.560 That has been the sort of one of the main 0:06:52.839 --> 0:06:55.200 war aims of the Israelis. One was to destroy Hamas. 0:06:55.360 --> 0:06:57.440 The other was the release of the hostages. And as 0:06:57.480 --> 0:06:59.960 far as Hamas will be viewing, the situation really relinked 0:07:00.000 --> 0:07:02.560 puishing their last sort of piece of leverage that they 0:07:02.640 --> 0:07:06.280 have against the Israelis, so absolutely significant. So bringing all 0:07:06.360 --> 0:07:09.040 of these nations together to start to discuss what the 0:07:09.160 --> 0:07:11.880 sort of posts war the day after Architecture looks like 0:07:12.240 --> 0:07:13.880 is I think has gone. It was always going to 0:07:13.920 --> 0:07:16.680 be the most difficult part of this conversation, and that 0:07:16.800 --> 0:07:19.720 is a conversation that begins now with President Trump sitting 0:07:19.720 --> 0:07:23.200 alongside President Cci and Charmel Shaik and starting to begin 0:07:23.360 --> 0:07:26.480 to build those coalitions of trying to build a security 0:07:26.520 --> 0:07:29.320 apparatus within Gaza, one that is both credible to the 0:07:29.440 --> 0:07:32.920 Israelis and to the Palestinian people, in order to bring 0:07:33.000 --> 0:07:36.600 in this sort of technocratic, Palestinian led governance structure that 0:07:36.720 --> 0:07:39.640 can sit a top of Gaza in order to facilitate 0:07:39.880 --> 0:07:43.040 the rebuilding and of course getting aid and ultimately potentially 0:07:43.280 --> 0:07:45.880 and this is a provision theoretically that is possible with 0:07:45.960 --> 0:07:48.080 this twenty point plan, a Palestinian state. 0:07:48.840 --> 0:07:52.160 Oliver Krook life from Jerusalem. We thank you very much. 0:07:52.240 --> 0:07:55.360 Indeed, now let's turn out attentions to the broader markets 0:07:55.440 --> 0:07:58.040 right now. It has been a risk on mood to 0:07:58.200 --> 0:08:00.280 those that are participating one and a half percent on 0:08:00.320 --> 0:08:02.440 the Nasdaq one hundred a bounce back from Friday when 0:08:02.480 --> 0:08:06.640 the anxiety around US China relationship du back risk taking. 0:08:06.760 --> 0:08:09.640 We now see one and a half points added. It's 0:08:09.680 --> 0:08:11.280 interesting that, of course we've got to dive into the 0:08:11.320 --> 0:08:12.320 Ai side of the story. 0:08:12.360 --> 0:08:13.720 The key deal that you've got to keep. 0:08:13.600 --> 0:08:16.400 An eye on is that between Broadcom and open Ai, 0:08:16.800 --> 0:08:20.360 absolute surge in this particular chip stock. It's going to 0:08:20.440 --> 0:08:23.320 design not only chips, we're also networking equipment. We're up 0:08:23.400 --> 0:08:25.640 nine one hundred and fifty billion dollars being added to 0:08:25.680 --> 0:08:28.080 the market capitalization of Broadcom. We're going to dig into 0:08:28.120 --> 0:08:31.840 that exact story right now because Bloomberg, Seth Spiegerman joins us. 0:08:32.160 --> 0:08:33.680 And this is interesting because and. 0:08:33.840 --> 0:08:36.439 Video and AMD seemed to be able to get deals 0:08:36.480 --> 0:08:38.640 but had to sweeten them for open Ai. This time 0:08:39.120 --> 0:08:41.439 it's just plain old ten billion dollars to ten giga 0:08:41.480 --> 0:08:42.520 what's it feeans Seth. 0:08:43.240 --> 0:08:44.559 Yeah, I mean, we're still trying to figure out the 0:08:44.600 --> 0:08:47.120 exact financial contours of this deal book. It's also a 0:08:47.160 --> 0:08:48.520 bit different than some of the other deals that we've 0:08:48.520 --> 0:08:51.200 seen Opening Idea recently. I mean, they're trying not only 0:08:51.360 --> 0:08:54.200 to pave the way for more computing capacity, but also 0:08:54.240 --> 0:08:56.439 to play a more central role in sort of the 0:08:56.480 --> 0:08:59.400 stack that supports AI by working with Broadcom to begin 0:08:59.520 --> 0:09:02.319 customs designing their own chips. And I think we should 0:09:02.320 --> 0:09:03.920 expect to see more of this from open Ai in 0:09:03.960 --> 0:09:05.599 the next couple of years, as they want to be, 0:09:05.840 --> 0:09:09.160 you know, kind of simultaneously owning the AI models but 0:09:09.320 --> 0:09:12.720 also having startain to have some proprietary intelligence into how 0:09:12.760 --> 0:09:15.400 to best set up data centers and chips to facilitate 0:09:15.480 --> 0:09:16.040 those models. 0:09:16.160 --> 0:09:18.679 And it's interesting Braallcom of course doesn't supply the data centers, 0:09:18.760 --> 0:09:21.080 but it provides a lot of the equipment that's going. 0:09:21.000 --> 0:09:21.880 To be going into them. 0:09:21.960 --> 0:09:25.360 Seth, what is the argument, how much more efficient can 0:09:25.840 --> 0:09:28.280 your own design chips be? Alphabet already does it for 0:09:28.400 --> 0:09:29.440 example with will come. 0:09:30.040 --> 0:09:31.240 Yeah, I mean it remains to be seen, but I 0:09:31.280 --> 0:09:33.480 think for OpenAI, there's a couple of clear incentives here. One, 0:09:33.559 --> 0:09:34.960 it doesn't have to you know, it's at the front 0:09:35.000 --> 0:09:37.480 of the line for these chips. Two, as it is 0:09:37.600 --> 0:09:39.959 closest to its own AI models, its own needs, and 0:09:40.000 --> 0:09:42.599 the future of AI development, the company might be the 0:09:42.640 --> 0:09:44.760 best position to figure out what it most needs from 0:09:44.840 --> 0:09:47.320 the chips out there. And three, Opening has a lot 0:09:47.320 --> 0:09:49.600 of experience now and setting up these data centers. When 0:09:49.600 --> 0:09:51.800 you think about the chips, rats and servers like, it 0:09:51.880 --> 0:09:54.720 has a unique proprietary perspective on how to best design 0:09:54.760 --> 0:09:57.520 these data centers. All that combined might help Opening I 0:09:57.640 --> 0:09:59.959 cut costs and also build more efficient. 0:09:59.600 --> 0:10:03.320 System berg Seth Figerman. We so appreciate you joining. Let's 0:10:03.320 --> 0:10:06.959 get a portfolio management perspective right now. Ude Charuvu is 0:10:07.080 --> 0:10:11.160 portfolio manager Harding Lovner, and I'm really interested in the 0:10:11.200 --> 0:10:14.319 fact that you've got holdings in VideA. You're clearly a 0:10:14.400 --> 0:10:18.200 supporter of the AI theory. But are we looking at 0:10:18.200 --> 0:10:19.559 a bubble and you get these sorts. 0:10:19.360 --> 0:10:22.520 Of deals, Well, go to look at a cho race 0:10:22.600 --> 0:10:24.559 one in terms of timing of the deals. If it 0:10:24.679 --> 0:10:27.360 is a bubble, it's potentially an MPV issue. Is it 0:10:27.960 --> 0:10:29.760 Are we going to get all this revenue. 0:10:29.440 --> 0:10:30.200 In ten years time? 0:10:30.720 --> 0:10:32.679 For five years time? And that's what the market is 0:10:32.720 --> 0:10:35.160 trying to figure out right now. People try to compare 0:10:35.200 --> 0:10:37.080 this to the dot com bubble, et cetera. But there's 0:10:37.080 --> 0:10:39.000 a difference here. A lot of the companies who are 0:10:39.040 --> 0:10:41.320 buying a lot of these products are supported by strong 0:10:41.400 --> 0:10:43.760 cash flows, free cash flows, which means that there is 0:10:43.880 --> 0:10:47.520 potential for these revenues to come through, especially if AI 0:10:47.679 --> 0:10:50.280 demand take up goes along the lines of what we're 0:10:50.280 --> 0:10:51.600 seeing in the last two three years. 0:10:51.760 --> 0:10:54.320 I mean, none more so have the financial flex than 0:10:54.360 --> 0:10:54.800 in video. 0:10:55.160 --> 0:10:57.440 And it's interesting that in Vidia when signing that ten 0:10:57.520 --> 0:11:01.320 gig or what compute capacity with open Ai, did give 0:11:01.320 --> 0:11:04.280 one hundred million dollars in terms of support buying equity. 0:11:04.679 --> 0:11:08.640 Is those sort of circular financing deals something that gives 0:11:08.679 --> 0:11:10.360 you pause or do you think that that's part. 0:11:10.200 --> 0:11:11.160 Of what the deal needs to be? 0:11:11.559 --> 0:11:13.400 No, that does give us posts. 0:11:13.480 --> 0:11:15.079 You do look at that and say, hang on, this 0:11:15.240 --> 0:11:18.000 is not clear blue sky. There are some things need 0:11:18.080 --> 0:11:19.839 we need to think of. So that's why the next 0:11:19.920 --> 0:11:22.199 two three is are going to be really important because 0:11:22.240 --> 0:11:24.760 what we want to see is the return on the 0:11:24.800 --> 0:11:27.960 capis that companies like Alphabet Meta, a lot of these 0:11:28.720 --> 0:11:31.520 big companies are spending to show up. If it shows up, 0:11:31.800 --> 0:11:33.960 then what you realize is that this hundred billion dollars 0:11:34.080 --> 0:11:37.199 is not circular but just the kickstart. So that's what 0:11:37.320 --> 0:11:38.360 that's what we want to try and see. 0:11:38.480 --> 0:11:39.400 I mean, you own meta. 0:11:39.480 --> 0:11:41.760 A meta has shown up in terms of generative AI 0:11:41.840 --> 0:11:44.160 being folded into the advertising model being able to be 0:11:44.200 --> 0:11:46.160 built in and bring real revenue to bear right here 0:11:46.240 --> 0:11:46.560 right now. 0:11:46.840 --> 0:11:48.240 But how long you're. 0:11:48.040 --> 0:11:50.000 Going to have to weigh for Alphabet's bet to really 0:11:50.040 --> 0:11:52.439 pay off? For we already see a nvideo, but do 0:11:52.480 --> 0:11:55.079 you think more broadly opening eye eventually really showing that 0:11:55.120 --> 0:11:57.439 productivity is going to gain them in terms of revenue. 0:11:57.720 --> 0:12:00.679 So from an Alphabet from the software companies perpective, we 0:12:00.800 --> 0:12:02.439 do think that the next twelve months are going to 0:12:02.480 --> 0:12:05.079 be really important. What you do need to see is 0:12:05.640 --> 0:12:08.280 not just the return on capex going through, but the 0:12:08.400 --> 0:12:11.840 revenue growth coming through to support that in twenty seven 0:12:11.960 --> 0:12:15.079 twenty eight that we are going to see a continued 0:12:15.160 --> 0:12:18.520 acceleration or at least stability in revenue growth. Without that, 0:12:18.640 --> 0:12:20.640 it's very hard to see how the market gets really 0:12:20.679 --> 0:12:23.240 comfortable with the amount of capics that's being spent right now. 0:12:23.360 --> 0:12:25.000 I mean, you just said it does give you pause, 0:12:25.040 --> 0:12:26.520 and there isn't just blue sky when it comes to 0:12:26.520 --> 0:12:26.880 in video. 0:12:26.920 --> 0:12:29.360 So have you just been trimming some of the exposure. 0:12:29.440 --> 0:12:32.440 Has now been the time to just stay holding pat 0:12:32.559 --> 0:12:35.880 and not adding to some of the overall portfolio exposure. 0:12:35.520 --> 0:12:36.240 To some of these names. 0:12:36.520 --> 0:12:38.520 So we tend to think of in terms of longer terms. 0:12:38.559 --> 0:12:40.640 So what does this look like in the next five years? 0:12:40.920 --> 0:12:43.360 When we look at from that perspective, the evaluation doesn't 0:12:43.360 --> 0:12:44.200 look extreme at this. 0:12:44.240 --> 0:12:44.760 Point in time. 0:12:45.080 --> 0:12:47.080 It does look at a point give us a pause 0:12:47.120 --> 0:12:48.719 in terms of, look, what else do we need to 0:12:48.760 --> 0:12:51.800 factor in to keep buying more? But at the same time, 0:12:51.840 --> 0:12:53.480 it doesn't give us any fear that, hey, this is 0:12:53.520 --> 0:12:55.160 an imminent bubble as you want, As. 0:12:55.080 --> 0:12:56.880 You asked at the start well on Friday, there was 0:12:56.880 --> 0:12:59.680 a lot of pause between US and China and particularly 0:13:00.000 --> 0:13:02.240 access with some of these companies to rare earth that 0:13:02.440 --> 0:13:05.000 ultimately are very dependent on China. How much have you 0:13:05.080 --> 0:13:07.040 been making that into a supply chain headache for some 0:13:07.080 --> 0:13:08.000 of the companies you own. 0:13:08.360 --> 0:13:10.000 So that's again it's a timing issue. 0:13:10.040 --> 0:13:10.680 So there's two parts. 0:13:10.840 --> 0:13:13.280 The first part is is this has become a prolonged 0:13:13.320 --> 0:13:15.520 issue due a political issue. Then there's a lot of 0:13:15.600 --> 0:13:18.400 other things that you think of, not just the semiconductor companies, 0:13:18.679 --> 0:13:21.120 with all the FMCG companies, all the other companies that 0:13:21.240 --> 0:13:23.840 sell into emerging markets, and all global treats. 0:13:23.960 --> 0:13:25.680 So let's set that aside, that this is. 0:13:25.679 --> 0:13:28.360 A solvable problem that gets solved at some point in 0:13:28.400 --> 0:13:31.839 the time, then it's a timing issue already. What the 0:13:31.920 --> 0:13:36.040 companies are telling us is there's a real supply issue 0:13:36.280 --> 0:13:39.040 that they don't have enough computing power. So that means 0:13:39.240 --> 0:13:42.280 that people who make these chips benefit from any of 0:13:42.320 --> 0:13:44.920 these supply chain issues because to them they get pricing 0:13:44.960 --> 0:13:47.120 power in the short term, but in the long term 0:13:47.200 --> 0:13:50.440 this gets solved, so it's a temporary issue. So if anything, 0:13:50.960 --> 0:13:53.360 these sort of market dips is an opportunity that you 0:13:53.440 --> 0:13:55.640 look at saying, what are the good quality companies that 0:13:55.800 --> 0:13:57.360 you do know have pricing power that you want to 0:13:57.400 --> 0:13:58.320 buy into right now. 0:13:58.360 --> 0:14:00.600 And what are they If it's not the obvious AI 0:14:00.760 --> 0:14:03.120 winners and darlings who've already seen hit are trillion dollars. 0:14:03.480 --> 0:14:05.640 No, No, they still remain as I said, they still 0:14:05.679 --> 0:14:06.280 remain attractive. 0:14:06.320 --> 0:14:07.920 But there's there's a broader spectrum out there. 0:14:07.920 --> 0:14:10.520 If you look at companies like Delta Electronics, which provides 0:14:10.559 --> 0:14:13.800 electronics and cooling, coqruitment to data centers. You look at Schneider, 0:14:14.360 --> 0:14:16.440 you look at SAP, which is going to benefit from 0:14:16.480 --> 0:14:18.640 the fact that AI gets taken up by more and 0:14:18.720 --> 0:14:21.520 more enterprise. So there's a bigger ecosystem than just the 0:14:21.560 --> 0:14:24.280 semiconducted companies or just the cloud companies, and. 0:14:24.320 --> 0:14:26.720 A global ecosystem. Your name and a couple of Europeans. 0:14:26.760 --> 0:14:29.280 Then Ude Charuva is so good to have him in 0:14:29.400 --> 0:14:31.920 Harding Lovner. We have come back soon. Meanwhile, coming up 0:14:32.000 --> 0:14:34.200 rare earth stocks, they've been surging. We've just been talking 0:14:34.200 --> 0:14:37.160 about them. US trying to trade spats have reignited. We're 0:14:37.200 --> 0:14:39.240 going to dig into that next. This has been bad tech. 0:14:46.120 --> 0:14:46.640 Rare ear and. 0:14:46.680 --> 0:14:51.600 Critical minerals producers surged after President Trump and China reignited 0:14:51.640 --> 0:14:54.040 fears of a potential trade spat between the two countries. 0:14:54.360 --> 0:14:57.560 But just today JP Morgan articulating it will funnel one 0:14:57.600 --> 0:15:00.760 and a half trillion dollars into companies that will US 0:15:00.880 --> 0:15:04.480 security and resiliency, including earth minerals from all. 0:15:04.520 --> 0:15:06.040 Bloomberg Senior Tech. 0:15:06.000 --> 0:15:09.000 Editor Mike Shepper joins us on what is a geopolitical 0:15:09.120 --> 0:15:11.040 story that is really affecting some of these stocks. 0:15:11.080 --> 0:15:13.800 What's your key takeaway today, Well. 0:15:13.680 --> 0:15:16.480 The key takeaway is that the ball is still moving 0:15:17.240 --> 0:15:18.520 between the two sides. 0:15:18.640 --> 0:15:19.960 We are seeing JD. 0:15:20.120 --> 0:15:23.360 Van's playing bad cop in the discussions. Right after Donald 0:15:23.400 --> 0:15:26.800 Trump signals some openness to trying to back away from 0:15:26.880 --> 0:15:30.040 this standoff that just erupted over the past several days, 0:15:30.640 --> 0:15:33.640 Jdvan saying, look, it is up to China now to 0:15:34.120 --> 0:15:37.080 make the next move. Beijing in turn responding with the 0:15:37.200 --> 0:15:41.080 same saying, look, it is Washington that now needs to 0:15:41.160 --> 0:15:44.640 make some sort of concession for US to relax. 0:15:44.280 --> 0:15:46.840 Some of these newly imposed export controls. 0:15:47.080 --> 0:15:49.720 And what is really hitting a nerve here in Washington 0:15:49.880 --> 0:15:52.960 is that it is a reimposition of export controls on 0:15:53.120 --> 0:15:56.320 rareerads that are critical to so many industries here in 0:15:56.360 --> 0:16:00.320 the US, everything from consumer electronics to defense. It is 0:16:00.480 --> 0:16:03.520 also the imposition of controls and the technology used to 0:16:03.640 --> 0:16:07.400 extract it, and that poses a complication for US efforts 0:16:07.480 --> 0:16:10.440 potentially to try to do more of this at home. 0:16:10.800 --> 0:16:14.160 China is exerting what it sees as leverage in rare 0:16:14.240 --> 0:16:17.760 roots because it holds roughly half of the world's reserves 0:16:17.880 --> 0:16:21.280 in rare orts and It dominates production and refining of 0:16:21.440 --> 0:16:24.880 these materials which are used, as I said, across the economy, 0:16:24.960 --> 0:16:30.400 and iPhones in consumer electronics, even smart vision goggles, night 0:16:30.480 --> 0:16:33.640 vision goggles used by the military. So we are seeing 0:16:33.720 --> 0:16:37.320 something crucial for the US. But China is also trying 0:16:37.360 --> 0:16:40.640 to exert this leverage to perhaps get some concessions from 0:16:40.720 --> 0:16:44.680 the US on export controls governing things such as semiconductor 0:16:44.760 --> 0:16:49.120 manufacturing equipment and AI chips as well, and so this 0:16:49.320 --> 0:16:51.680 will be playing out rapidly. They don't have a lot 0:16:51.720 --> 0:16:54.320 of time to solve this before those tarifts that Donald 0:16:54.360 --> 0:16:57.200 Trump threatened take effect on November first. 0:16:57.480 --> 0:16:59.280 Now, the key thing Caro to watch this week. 0:16:59.400 --> 0:17:01.280 Later this week will be that there will be a 0:17:01.360 --> 0:17:06.000 Chinese delegation here in DC for the IMF World Bank 0:17:06.640 --> 0:17:09.960 Annual semi annual meetings. We'll want to see what may 0:17:10.119 --> 0:17:13.720 emerge in terms of first steps toward a rap Rochemont. 0:17:13.800 --> 0:17:17.359 Mike Shephard, we appreciate the breakdown and let's stick with 0:17:17.600 --> 0:17:19.879 China and joining us as Michelle Guide, our CEO of 0:17:19.920 --> 0:17:22.800 the CROC Institute for Tech Topomacy and Purdue. Are we 0:17:22.880 --> 0:17:26.560 expecting a dayton? Are we expecting a pullback? From the brink, 0:17:26.600 --> 0:17:27.399 because Friday it. 0:17:27.440 --> 0:17:31.760 Felt very much live and well when it comes to anxiety, well. 0:17:31.600 --> 0:17:33.600 I think what we're seeing is that this type of 0:17:33.680 --> 0:17:36.280 volatility is just the cost of doing business with a 0:17:36.440 --> 0:17:40.960 totalitarian state, and as long as it involves China, volatility 0:17:41.359 --> 0:17:43.159 and uncertainty in the market is really going to be 0:17:43.640 --> 0:17:45.120 a fat rather than a problem. 0:17:45.160 --> 0:17:47.600 And so there's two really important. 0:17:47.280 --> 0:17:50.160 Things here for business leaders to understand as we watch 0:17:50.240 --> 0:17:54.840 these negotiations continue. First is that every time that there's 0:17:54.880 --> 0:17:58.600 a ninety day extension here, it's not really a pause. 0:17:58.640 --> 0:18:02.119 We're just entering an other inning of negotiations, and so 0:18:02.840 --> 0:18:05.600 this type of posturing is going to continue to happen, 0:18:06.040 --> 0:18:08.200 and markets need to bake that in. So it's like 0:18:08.320 --> 0:18:10.639 make a note for February, because if we get to 0:18:10.720 --> 0:18:15.000 November and then we get another extension, then this is 0:18:15.040 --> 0:18:15.920 all going to happen again. 0:18:16.080 --> 0:18:17.000 So it's peace number one. 0:18:17.440 --> 0:18:19.560 Second, and even more importantly. 0:18:19.720 --> 0:18:23.720 Is even when we have an agreement, we are doing 0:18:23.800 --> 0:18:27.160 business with a totalitarian state in the Chinese Communist Party, 0:18:27.440 --> 0:18:30.480 So we still can't relax because they aren't in the 0:18:30.560 --> 0:18:34.119 business of honoring agreements until the point that it becomes 0:18:34.440 --> 0:18:38.800