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

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Speaker 1: Dayvacate podcast, available every morning on Apple, Spotify or wherever

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Speaker 1: you listen. It's Thursday, the twenty fifth of July. Here

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Speaker 1: in London. I'm Caroline HEPKEA coming up today. President Biden

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Speaker 1: delivers his first speech since dropping his bid for a

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Speaker 1: second term, saying it's time for younger voices and cooling.

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Speaker 1: AI fever pushes the NASDAC into a trillion dollar tailspin.

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Speaker 1: Plus Rachel Reeves says the UK is open for business,

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Speaker 1: as one former Bank of England policymaker ones of tax

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Speaker 1: hikes to come. Let's start with a ramd up of

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Speaker 1: our top stories. President Biden has delivered his first speech

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Speaker 1: since ending his reelection campaign. He endorsed his vice president,

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Speaker 1: Kamala Harris to replace him. In an eleven minute oval

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Speaker 1: office address, Biden framed his decision to drop out of

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Speaker 1: the twenty two twenty four race has a bid to

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Speaker 1: unify the nation under a new generation of leaders. Addressing voters,

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Speaker 1: the President painted Democrats as defenders of vital institutions and

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Speaker 1: the US's democratic principles.

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Speaker 2: I've decided the best way forward is a past, the

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Speaker 2: torch for new generation as the best waiting an our nation.

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Speaker 2: You know, there is a time and a place for

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Speaker 2: long years of experience in public life. There's also a

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Speaker 2: time and a place for new voices, fresh voices, Yes,

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Speaker 2: younger voices.

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Speaker 1: The speech comes as it was confirmed that delegates to

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Speaker 1: the Democratic National Convention will now meet virtually within the

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Speaker 1: next two weeks to confirm Kamala Harris as the nominee

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Speaker 1: for president and her yet to be named running mate. Meanwhile,

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Speaker 1: NBC News says that Barack Obama plans to endorse Vice

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Speaker 1: President Kamala Harris for presidents soon. They cited multiple sources,

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Speaker 1: and as the Democrats co eleesce around Harris, Donald Trump

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Speaker 1: is pivoting to hear new challenger for the presidency. In

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Speaker 1: his first rally since President Biden dropped out, Trump attacked

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Speaker 1: Harris on a host of issues that will appeal to

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Speaker 1: Republican voters.

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Speaker 3: If you want socialist healthcare, nation, recon inflation, the death

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Speaker 3: of American energy, and a lying radical left liberal San

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Speaker 3: Francisco extremists as your commander in chief, then Kamala Harris

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Speaker 3: is your candidate. She's the one for you.

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Speaker 1: Trump also used the rally to attack Democrats on abortion

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Speaker 1: in a bid to neutralize what he is being seen

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Speaker 1: as a strong campaign issue for Harris and Democrats. More broadly,

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Speaker 1: now to the stock story, investors are cooling on AI

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Speaker 1: driven stock, sparking a one trillion dollar route in the

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Speaker 1: NAZNAQ one hundred, spurred by questions about how long it

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Speaker 1: takes for bets on technology to pay off. Nvidia, Broadcom,

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Speaker 1: arm and Tesla all saw stock declines, but Shelby McFadden,

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Speaker 1: senior analyst at Motley Fool Asset Management, says that investors

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Speaker 1: may not have enough information to make their minds up

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Speaker 1: about the sector.

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Speaker 4: What's going to cause the selloffs is the selling. The

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Speaker 4: investors have to go ahead and make that decision that

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Speaker 4: they have all of the information that they need to

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Speaker 4: make this conclusion. And I think that we're just a

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Speaker 4: little bit too early in earning season, even in tech earnings,

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Speaker 4: for the sort of mass of investors to say, you

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Speaker 4: know what we're done.

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Speaker 1: Here Motley Fools Shallby McFadden speaking there. The moves come

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Speaker 1: two weeks after softer inflation breedings prompted a rotation from

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Speaker 1: tech to companies that are expected to benefit most from

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Speaker 1: FED interest rate cuts well. Staying with tech stocks now

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Speaker 1: and Tesla shares are down after disappointing second quarter results.

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Speaker 1: That's after a rally on the company earlier this year,

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Speaker 1: also linked to AI speculation. Tesla shares themselves rose eighty

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Speaker 1: five percent between their low in April and a near

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Speaker 1: term peak in early July. However, week numbers and production

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Speaker 1: delays to the long awaited Robotaxi saw the stock plunge

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Speaker 1: twelve percent in US trading on Wednesday. Bloomberg's Abigail Doolittle

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Speaker 1: says the drop is sector wide.

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Speaker 5: On the surface, Tesla, they put up a little bit

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Speaker 5: of a messy quarter. The same was true for Alphabet,

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Speaker 5: But I think the real reason those stocks sold off

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Speaker 5: because they weren't so bad. We've had this big, big

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Speaker 5: rally out of the April low, so too far, too fast,

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Speaker 5: and we see that with Nvidia, they didn't do any

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Speaker 5: news at all, put out any news. That's stock down

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Speaker 5: seven percent the biggest drag. Plus when we connect it

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Speaker 5: with some of the macro factors and we take a

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Speaker 5: look at bonds, we have bonds rallying, we have the

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Speaker 5: yen rallying. That tells you investors are seeking safety.

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Speaker 1: So that was Bloomberg's Abigail do Little speaking there. Investors

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Speaker 1: are also concerned about Tesla's core ev business versus cooling demand.

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Speaker 1: Its automotive gross margin excluding regulatory credits fell by fourteen

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Speaker 1: point six percent in the second quarter. That's versus sixteen

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Speaker 1: point four percent in the first three months of the year.

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Speaker 1: So that on Tesla. This morning, now turning our attention

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Speaker 1: to the UK, Chancellor Rachel Reeves is taking her pro

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Speaker 1: business pitch to the G twenty in her first overseas trip.

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Speaker 1: The women in charge of Britain's economy is expected to

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Speaker 1: urge business leaders to take another look at Britain. Bloomberg's

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Speaker 1: James Walcock has.

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Speaker 6: More labour, has bet the house on growth, and now

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Speaker 6: Rachel Reeves wants to convince global business they can find

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Speaker 6: a new home in Britain. Her government hopes if it

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Speaker 6: can attract private investment, it can avoid or mitigate deep

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Speaker 6: spending cuts. But there are a few quick wins, something

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Speaker 6: the Chancellor herself told Bloomberg last week in her first

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Speaker 6: major broadcast interview in the job.

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Speaker 7: We're going to have to make difficult decisions. We need

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Speaker 7: to fix the foundations before we can start rebuilding things

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Speaker 7: in Britain. But unlike the previous government, I am going

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Speaker 7: to be honest about the scale of the challenge. I'm

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Speaker 7: going to level with people.

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Speaker 6: Many expect these tough times to be laid out in

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Speaker 6: detail next week when Reeves publishes an audit of the

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Speaker 6: previous government's finances. Michael Saunders, the former Banking the Chief economist,

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Speaker 6: thinks the Chancellor will use the bad news to justify

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Speaker 6: raising taxes on wealth to net the state an extra

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Speaker 6: twenty five billion pounds. In London, James Wilcock Bloomberg.

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Speaker 1: Radio Thames Water bonds have been cut to junk by Moody's,

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Speaker 1: triggering a new wave of headaches for Britain's largest water company.

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Speaker 1: Bloomberg has learned that the utility firm is asking the

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Speaker 1: regulator for special lenience as the downgrade may break its

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Speaker 1: license agreement. Earlier this week, the Environment Secretary Steve Reid

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Speaker 1: said that he wants to toughen up the regulator's stance

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Speaker 1: after a series of pollution leaks.

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Speaker 8: I want to crack on and clean up the water

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Speaker 8: as fast as we can by giving the regulator the

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Speaker 8: power so that water bosses who are responsible for these

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Speaker 8: unacceptable levels of illegal sewage pollution, will face criminal charges.

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Speaker 8: We're going to ban the payment of their multimillion pound

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Speaker 8: bonuses if they persist in behaving like this.

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Speaker 1: Steve Reid was responding to data showing UK sewage spills

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Speaker 1: were at a five year high. Thames Water already faces

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Speaker 1: potential finds for paying dividends to its parent company twice

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Speaker 1: last year and for sewage spills at treatment works, and

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Speaker 1: he finds will eat into its little remaining money, which

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Speaker 1: is expected to run out in May next year without

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Speaker 1: fresh investments. Let's discuss the top story then Today, of course,

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Speaker 1: everything that's going on in the US presidential race and more.

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Speaker 1: President Joe Biden framed his decision to drop out of

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Speaker 1: the twenty twenty four race as necessary for unity and

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Speaker 1: to save democracy. Talked about new voices, fresh voices being

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Speaker 1: needed in office. This is Donald Trump held a rally

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Speaker 1: in North Carolina, heaping criticism on his new opponent Kamala Harris,

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Speaker 1: and Israeli Prime Minister Benjamin Netanyaho addressed a joint session

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Speaker 1: of Congress. We'll joining me now to discuss our Senior

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Speaker 1: editor Bill Ferries, Good morning, Bill, Good to have you

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Speaker 1: on the program. What impact do you think that Joe

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Speaker 1: Biden's Oval Office address will have.

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Speaker 9: Well, it was an interesting speech, eleven minutes long, and

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Speaker 9: he really had I think two goals. One, as you mentioned,

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Speaker 9: is to try to unify the party, to try to

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Speaker 9: talk about why he withdrew from the race, and you know,

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Speaker 9: his view that democracy has been something he said all

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Speaker 9: along he views a democracy as being at stake in

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Speaker 9: this election. And he also frankly made a pitch for

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Speaker 9: I think, his own legacy in historical terms. He he

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Speaker 9: mentioned a lot of you know, the icons of American

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Speaker 9: political history, even all the way back to George Washington,

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Speaker 9: saying that you know, they've always put put country ahead

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Speaker 9: of personal interests, and you know, sort of defining his

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Speaker 9: decision in that context as well. Uh So, you know,

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Speaker 9: it'll be a lot it'll be a while before we

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Speaker 9: know whether that historical view of Biden comes into shape.

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Speaker 9: But his immediate focus was to really try to give

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Speaker 9: some additional momentum to Kamala Harris and try to get

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Speaker 9: more Americans, more Democrats excited about the election choice they face.

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Speaker 10: Yeah.

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Speaker 1: Absolutely, he tried to neutralize, isn't he some of the

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Speaker 1: Republican attack lines, for example on foreign wars, and he

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Speaker 1: also raised I thought quite interesting Supreme Court reform.

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Speaker 9: Yeah, so he did lay out a couple of the

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Speaker 9: things that he says he will spend the last six

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Speaker 9: months of his presidency focused on. He did say, as

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Speaker 9: you mentioned, that the US is not involved in any

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Speaker 9: major conflict in the world. That he's the first president

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Speaker 9: and I think he said over a century, who can

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Speaker 9: say that. I don't know how that will resonate given

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Speaker 9: the conflicts the US does have involvement in with Ukraine

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Speaker 9: and the Middle East. But then he talked about Supreme

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Speaker 9: Court reform, and that's something that's going to have It's

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Speaker 9: going to be a very difficult road for that, but

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Speaker 9: it does have an appeal to the more progressive wing

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Speaker 9: of the Democratic Party, which is frustrated at the really

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Speaker 9: the kind of the Trump dominated Supreme Court at this point.

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Speaker 1: Yeah. Speaking of Trump, he held a rally in North

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Speaker 1: Carolina saying that he defeated Joe Biden. So he sort

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Speaker 1: of you know, split screen on this idea again, Kamala Harris,

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Speaker 1: he really pivoted and had a lot of different attack

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Speaker 1: lines against her. You know, he talked about her being

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Speaker 1: the worst vice president in history, a bad prosecutor, incompetent,

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Speaker 1: that she would destroy the country. I mean, it was

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Speaker 1: a long, long list of negatives. It sounded like a

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Speaker 1: very typical Trump campaign.

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Speaker 9: Well, what we're seeing, you know from the Republicans. I mean,

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Speaker 9: this has been a head spending week for everybody, but

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Speaker 9: particularly Republicans who had focused on running against Joe Biden.

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Speaker 9: They are definitely trying out different attack lines on Kamala

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Speaker 9: Harris to see what sticks, what might be their most

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Speaker 9: effective approach. You had Donald Trump calling her a quote radical,

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Speaker 9: crazy person today as you said, attacking her judicial history,

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Speaker 9: and even going after her on abortion, which was quite

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Speaker 9: a surprise given that abortion and reproductive rights is something

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Speaker 9: that is one of the key areas that Donald Trump

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Speaker 9: is seen as potentially having a weakness in among voters,

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Speaker 9: particularly female voters.

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Speaker 1: Yeah, that is interesting. So that on the rallies and

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Speaker 1: the speeches. Meanwhile in Congress, Israeli Prime Minist of Benjamin

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Speaker 1: Nettnia who gave a speech he again started to his

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Speaker 1: hardline on winning the war in Hamas. It was quite

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Speaker 1: odd timing in some ways, wasn't it. Do you think

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Speaker 1: this is going to be then a big This will

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Speaker 1: be surely a big issue for the next US president.

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Speaker 9: Absolutely. I mean a lot will depend on the status

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Speaker 9: of the war in Gaza at the time the next

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Speaker 9: president takes office in January twenty twenty five. But this

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Speaker 9: was a very kind of politically loaded speech. It comes

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Speaker 9: at a really controversial time in the US. It was

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Speaker 9: planned before anyone had any idea that Joe Biden would

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Speaker 9: be leaving the campaign, and Donald Trump will have survived

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Speaker 9: an assassination attempt, of course, but it's still coming in

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Speaker 9: the middle of the election. There was it was a

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Speaker 9: no holds barred speech defending Israel's policies and saying, if

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Speaker 9: Israel could get more US support faster, we will quote

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Speaker 9: finish the job faster. So you had, you know, to

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Speaker 9: exemplify kind of the divisiveness. There were a number of

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Speaker 9: Democrats who boycotted this speech, and you even had at

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Speaker 9: least one holding up a small sign that said Netnyahu

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Speaker 9: was a war criminal. So it's it's definitely going to

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Speaker 9: have reverberations throughout this campaign and into the next presidency.

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Speaker 1: Yeah, Bill, thank you so much for being with me

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Speaker 1: and discussing everything that's going on then in US politic

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Speaker 1: and its importance on the world stage. Really appreciate your time,

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Speaker 1: Senior editor, Bill Ferries. Now to that tech route. Then,

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Speaker 1: doubts about the promise from artificial intelligence really broke through.

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Speaker 1: Yesterday the NASDAK dropped three percent. That meant a trillion

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Speaker 1: dollar route. Joining me now is Billmberg's tech editor Vlad

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Speaker 1: Savov to go through what happened. Vlad, why do you

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Speaker 1: think that the doubts about tech and about AI about

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Speaker 1: which we've heard so much have emerged?

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Speaker 2: Now?

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Speaker 10: What is the number of factors that play here? One

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Speaker 10: is when you look at Google CEO his comments after

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Speaker 10: earnings said that all this investment that we're putting in now,

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Speaker 10: which is tens of billions of dollars to acquire those

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Speaker 10: highly sought after and video chips and build massive data

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Speaker 10: centers for air processing, it's going to take a long time.

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Speaker 10: It was a bit of a sobering commentary there. Then

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Speaker 10: you also had a report about Open AI and the

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Speaker 10: fact that it's likely going to lose as much as

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Speaker 10: five billion dollars. You do have a very high run

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Speaker 10: rate for all of this AI development and a lot

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Speaker 10: of investors also. You have to bear in mind when

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Speaker 10: we talk about a tech route. It is coming in

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Speaker 10: the wake of a tech rally which was very much

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Speaker 10: driven by this further enthusiasm BYuT AI. So some of

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Speaker 10: them presumably are going to be taking profits and saying

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Speaker 10: there is a level of uncertainty here which I don't

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Speaker 10: need to play in. And that is really the case.

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Speaker 10: It is true that AI at the moment is still

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Speaker 10: more of a promise than a clear straight line from

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Speaker 10: investment to monetization.

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Speaker 9: Yeah.

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Speaker 1: Absolutely. Who did it hurt most though? And how much

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Speaker 1: has that money rotated then into small cap stocks? So

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Speaker 1: they've noticed that rotation?

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Speaker 10: Well here in Asia, I'm based in Hong Kong. One

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Speaker 10: of the biggest hits was taken by s K Heinix,

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Speaker 10: which is a little bit unfair because the company just

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Speaker 10: reported very good earnings in more than double revenue. It

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Speaker 10: is a supplier of high bandwidth memory, without which any

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Speaker 10: of those Nvidia and AMD graphics chips that create the

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Speaker 10: AI accelerators, they won't work. Heiniegs is the leader in this.

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Speaker 10: The company couldn't done it any better. It still took

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Speaker 10: as much as an eight percent hit on his share

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Speaker 10: price because, as I say, the sentiment has really shifted.

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Speaker 10: If you want to go into small stocks. You can

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Speaker 10: still look at hardware suppliers. Some of those in Japan

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Speaker 10: did not get hit as heavily because ultimately the chip

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Speaker 10: making gear and equipment makers are still going to have

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Speaker 10: a lot of orders. When you look at whether it

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Speaker 10: is Eske, Hannicks, where there is the likes of TSMC,

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Speaker 10: they still have plenty of orders on their books.

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