WEBVTT - Daybreak Weekend: Fresh Data, Mobile World Congress, Baidu Earnings 0:00:02.560 --> 0:00:05.080 This is Bloomberg day Break Weekend, our global look at 0:00:05.080 --> 0:00:07.080 the top stories in the coming week from our day 0:00:07.120 --> 0:00:09.360 Break anchors all around the world, and straight ahead on 0:00:09.400 --> 0:00:11.799 the program, a look at the US housing market ahead 0:00:11.800 --> 0:00:14.760 of the big spring home buying season and some highly 0:00:14.800 --> 0:00:19.279 anticipated data on inflation and economic growth. I'm Tom Busby 0:00:19.360 --> 0:00:19.919 in New York. 0:00:20.239 --> 0:00:23.000 I'm Stephen carolind London, where we're looking ahead to AI's 0:00:23.239 --> 0:00:27.400 starring role at this year's Mobile World's Congress in Barcelona. 0:00:27.480 --> 0:00:29.840 And I'm Ran Curtis in Hong Kong. I'll take a 0:00:29.880 --> 0:00:34.040 look at my news upcoming results, whether AI makes an intercot. 0:00:37.200 --> 0:00:41.239 That's all straight ahead on Bloomberg Daybreak Weekend, The business 0:00:41.280 --> 0:00:45.280 news you need to wrap up your week, Available on Apple, Spotify, 0:00:45.400 --> 0:00:48.760 the Bloomberg Business Appen everywhere you get your podcasts. 0:00:53.520 --> 0:00:55.400 Good day to you. I'm Tom Busby and we begin 0:00:55.440 --> 0:00:59.320 today's program with home buyers, home sellers, home builders, and 0:00:59.400 --> 0:01:02.600 home improf been chains for more on where we stand. 0:01:02.640 --> 0:01:06.360 We welcome Bloomberg Intelligence US home building analyst Drew Reading. 0:01:06.440 --> 0:01:08.640 Drew, thanks for being here, Thanks for having me. 0:01:08.800 --> 0:01:12.880 Well, let's start with the biggest roadblocks in the home 0:01:12.920 --> 0:01:16.720 buying selling Everybody sky high home prices, a dearth of 0:01:16.720 --> 0:01:20.160 homes on the marketplace, and mortgage rates, which just last 0:01:20.160 --> 0:01:22.640 week rose back above seven percent for the first time 0:01:22.680 --> 0:01:26.319 since early December. Drew, is there any relief in sight, 0:01:26.480 --> 0:01:28.000 any good news out of this. 0:01:28.440 --> 0:01:29.800 I think you hit the nail on the head with 0:01:30.040 --> 0:01:32.399 the challenges facing the home buyer. I mean, we've had 0:01:32.520 --> 0:01:35.880 home prices rise more than forty percent over the last 0:01:35.880 --> 0:01:39.320 couple of years. We've had interest rates rise from three 0:01:39.360 --> 0:01:43.760 percent now above seven percent. We have the worst affordability 0:01:43.760 --> 0:01:46.840 on record if you look at monthly payments relative to income. 0:01:48.240 --> 0:01:50.600 We've been describing the housing market as kind of a 0:01:50.640 --> 0:01:53.280 tale of two markets. On one hand, you have the 0:01:53.320 --> 0:01:56.520 resale market, who's battling not only the high rates, but 0:01:56.600 --> 0:02:00.320 low inventory and homeowners who don't want to sell. On 0:02:00.360 --> 0:02:03.880 the other hand, you have the new home market, where 0:02:04.240 --> 0:02:07.360 builders have done extremely well. Sales actually grew in twenty 0:02:07.400 --> 0:02:10.800 twenty three, and that's because they've been bringing more supply 0:02:10.880 --> 0:02:14.800 to the market. They've been pretty aggressive and adjusting base prices. 0:02:14.960 --> 0:02:16.840 So if you look at prices in the new home market, 0:02:16.919 --> 0:02:20.160 they were actually down double digits in twenty twenty three, 0:02:20.960 --> 0:02:24.280 And most importantly, they've been offering financing incentives, so that's 0:02:24.320 --> 0:02:26.080 been a big tool in their belt that the existing 0:02:26.120 --> 0:02:29.600 home market really doesn't have to leverage. So a buyer 0:02:29.639 --> 0:02:31.600 who's going out into the market now is looking at 0:02:31.600 --> 0:02:35.120 something in the seven percent range. Builders are able to 0:02:35.160 --> 0:02:37.200 offer lower rates somewhere in the five and a half 0:02:37.200 --> 0:02:40.040 to six percent range, So that's been a huge differentiator 0:02:40.080 --> 0:02:40.399 for them. 0:02:40.520 --> 0:02:43.480 Now, you follow the builders, so you know what they do, 0:02:43.600 --> 0:02:47.359 where they do it, how they think. Home builder sentiment 0:02:47.639 --> 0:02:51.280 actually was I think a six month high right now. However, 0:02:51.680 --> 0:02:54.360 they also face a lot of challenges, don't they. Not 0:02:54.520 --> 0:02:57.959 enough available land, not enough of skilled labor. I mean, 0:02:58.080 --> 0:03:01.399 how are they still building these homes where people want 0:03:01.440 --> 0:03:03.760 to buy with the challenges that they face. 0:03:04.240 --> 0:03:07.920 Yeah, builders have been facing these challenges for quite some 0:03:08.000 --> 0:03:10.799 time now. You mentioned, you know, the lack of available labor, 0:03:11.040 --> 0:03:15.080 particularly as volumes heat up, the lack of developed land, 0:03:15.080 --> 0:03:17.280 which we think could become even more of a problem 0:03:17.320 --> 0:03:20.560 for the industry. But the way I would look at 0:03:20.560 --> 0:03:22.400 the new home market is, on one hand, you have 0:03:22.800 --> 0:03:27.080 the large, well capitalized, pickly traded home builders, and on 0:03:27.120 --> 0:03:30.560 the other hand you have smaller private peers. We think 0:03:30.600 --> 0:03:33.560 that the large builders are going to continue to take 0:03:33.680 --> 0:03:36.000 market share from those smaller private piers. And the main 0:03:36.040 --> 0:03:39.480 reason is because a lot of the private builders are 0:03:39.800 --> 0:03:43.560 reliant on regional bank financing in order to grow, whether 0:03:43.600 --> 0:03:48.480 it's for land acquisition, land development, or construction loans. And 0:03:48.880 --> 0:03:52.440 with not only the cost of those loans going higher, 0:03:52.440 --> 0:03:55.440 but also the availability as the economy has weakened a 0:03:55.480 --> 0:03:58.440 little bit, we're seeing their ability to access that growth 0:03:58.440 --> 0:04:01.360 capital has come down. We think that the large builders 0:04:01.400 --> 0:04:03.480 are stepping in to fill the void because they've got 0:04:03.520 --> 0:04:07.240 strong balance sheets, they've got long land pipelines, and they're 0:04:07.240 --> 0:04:09.680 able to self develop their land. So we think that, 0:04:10.200 --> 0:04:11.960 you know, as we move through twenty twenty four and 0:04:12.000 --> 0:04:15.280 into twenty twenty five, they'll continue to be the beneficiaries. 0:04:15.880 --> 0:04:18.640 Now I imagine also some of these builders, the ones benefiting 0:04:18.640 --> 0:04:21.599 the most, are the ones building homes where people want 0:04:21.640 --> 0:04:24.400 to live. And that means the Sun Belt Florida, all 0:04:24.480 --> 0:04:28.240 the way across to Texas and the Southwest. Are there 0:04:28.440 --> 0:04:31.680 other builders having success? You know, the Toll Brothers up 0:04:31.680 --> 0:04:35.640 in the northeast. Are they building big houses, make mansions 0:04:35.680 --> 0:04:38.400 or even mansions? Are are they all seeing you know, 0:04:38.440 --> 0:04:41.000 the rising tide lift all boats in the housing market. 0:04:42.120 --> 0:04:44.640 Yeah, that's a great question. And you know, when you 0:04:44.640 --> 0:04:46.800 look big picture, the Sunbelt is really where you want 0:04:46.800 --> 0:04:50.160 to be due to more favorable demographic patterns. That's where 0:04:50.200 --> 0:04:54.000 the population shifting, that's where the job growth is. Affordability 0:04:54.080 --> 0:04:56.080 is better, so you see some migration out of some 0:04:56.120 --> 0:04:59.159 of the higher cost markets. What's interesting right now is 0:04:59.200 --> 0:05:03.680 we are seeing pretty broad based rebound in the new 0:05:03.680 --> 0:05:07.520 home market across the country. Some of the hardest hit 0:05:07.560 --> 0:05:09.480 markets in the back half of twenty twenty two were 0:05:09.480 --> 0:05:13.960 in the West, think California, the Pacific Northwest to Southwest, 0:05:14.000 --> 0:05:17.320 but we're even seeing a strong rebound there. You mentioned 0:05:17.320 --> 0:05:20.720 the Northeast, which is actually an interesting example because if 0:05:20.760 --> 0:05:23.800 you look at sales paces that the builders have been 0:05:23.800 --> 0:05:27.880 doing relative to twenty nineteen, the Northeast and the Midwest 0:05:27.880 --> 0:05:29.720 have held up really well. And I think part of 0:05:29.760 --> 0:05:32.080 that has to do with the fact that maybe these 0:05:32.080 --> 0:05:34.800 are markets that didn't participate as much on the way up, 0:05:34.880 --> 0:05:37.920 so they weren't the boom markets, but they also didn't 0:05:37.960 --> 0:05:40.400 follow as much on the way down. When things got 0:05:40.440 --> 0:05:41.960 a little bit hairy. Theer in the back half of 0:05:41.960 --> 0:05:44.800 twenty twenty two and into twenty twenty three, So the 0:05:44.839 --> 0:05:48.560 Northeast has done really well. We heard from Toll Brothers 0:05:48.600 --> 0:05:51.880 recently they noticed strength across their entire footprint, across all 0:05:51.920 --> 0:05:54.000 of their price points. So it's been a pretty broad 0:05:54.040 --> 0:05:54.760 based rally. 0:05:54.880 --> 0:05:58.640 Wow, yeah, everybody wins now. One thing you have been 0:05:58.680 --> 0:06:03.680 reporting on though, is is more modest, moderately priced new homes, 0:06:04.560 --> 0:06:06.160 more of them going up. What can you tell us 0:06:06.160 --> 0:06:06.600 about that. 0:06:06.800 --> 0:06:10.000 There's been a decided shift over the last several years 0:06:10.960 --> 0:06:14.000 from builders who wanted to engage more at the entry level. 0:06:14.920 --> 0:06:16.600 One of the reasons is because that's where a lot 0:06:16.600 --> 0:06:19.120 of the demographic based demand is now and will be 0:06:19.200 --> 0:06:22.279 in the coming years. The other reason that they're targeting 0:06:22.279 --> 0:06:26.640 that market is for relative affordability. As I mentioned, affordability 0:06:26.640 --> 0:06:30.080 is near the worst on records. So one way builders 0:06:30.080 --> 0:06:33.839 are looking to address that is through doing smaller square 0:06:33.839 --> 0:06:36.400 footage floor plans, which allows them to get the price down. 0:06:36.440 --> 0:06:38.960 They're also doing projects with more density, so they could 0:06:38.960 --> 0:06:43.000 spread more units over the same piece of land and 0:06:43.040 --> 0:06:46.760 spread out costs that way and address affordability for the 0:06:46.760 --> 0:06:48.800 buyer through density. So there's a couple of different ways 0:06:48.839 --> 0:06:51.719 they're doing it. It's something that's been ongoing for a 0:06:51.720 --> 0:06:53.760 couple of years, but it's starting to be emphasized a 0:06:53.760 --> 0:06:54.640 little bit more. Now. 0:06:54.839 --> 0:06:57.320 One last question, Drew, and it's about last week we 0:06:57.400 --> 0:07:00.320 had home depot earnings. This week we have lows. Are 0:07:00.360 --> 0:07:05.040 we likely to see the same kind of not disappointing results, 0:07:05.120 --> 0:07:08.720 but clearly home improvement projects have slowed down. 0:07:09.360 --> 0:07:12.400 Yeah, expectations coming into the print for lows are all 0:07:12.440 --> 0:07:15.880 that high. As you mentioned, home Deep gives some rather 0:07:16.120 --> 0:07:18.840 disappointing guidance I think on the outlook for twenty twenty four, 0:07:18.880 --> 0:07:21.640 calling for the market to be down about one percent, 0:07:22.320 --> 0:07:24.800 I expect to hear similar commentary from Loew's. 0:07:24.720 --> 0:07:28.480 Our thanks to Bloomberg Intelligence US home building analyst Drew Redding, 0:07:28.520 --> 0:07:31.520 and up next, some closely watched economic data points out 0:07:31.600 --> 0:07:34.240 this week what they could mean for the Fed's next 0:07:34.280 --> 0:07:36.560 policy meeting just three weeks from now. And for more 0:07:37.000 --> 0:07:41.680 we welcome Bloomberg International Economic and Policy correspondent Michael McKee. Well, 0:07:41.760 --> 0:07:44.840 let's start with the Fed's preferred measure of inflation. This 0:07:44.920 --> 0:07:48.800 is a mouthful. The personal consumption expenditure core price index 0:07:48.840 --> 0:07:52.160 for the month of January and the fourth quarter. That's 0:07:52.160 --> 0:07:54.760 the biggie this week. What are you expecting to see? 0:07:54.840 --> 0:07:56.400 Well, we get to the fourth quarter as part of 0:07:56.400 --> 0:07:59.760 the GDP report. It's a revision, so that doesn't get 0:07:59.760 --> 0:08:02.600 as much attention from the Fed because it's quarterly, it's 0:08:02.640 --> 0:08:07.520 over a three month average. But the monthly number, which 0:08:07.560 --> 0:08:10.520 represents the latest month that we have will be January, 0:08:10.640 --> 0:08:12.560 and that's the one that the FED looks at because 0:08:12.600 --> 0:08:14.960 it gives them the most complete picture they think of 0:08:15.040 --> 0:08:18.320 where inflation is at the moment, and that's going to 0:08:18.400 --> 0:08:21.480 be the key for them, where inflation is at the 0:08:21.560 --> 0:08:24.960 moment in the PCE, because in the CPI, obviously it 0:08:25.120 --> 0:08:30.680 was not good news for January. Now, the forecast for 0:08:30.920 --> 0:08:34.600 the PCE is for a two point four percent year 0:08:34.640 --> 0:08:37.960 over year increase, which is down from two point six 0:08:38.040 --> 0:08:41.640 the year before, and a two point eight percent, down 0:08:41.679 --> 0:08:46.120 from two point nine percent for the core. FED Vice 0:08:46.200 --> 0:08:49.959 chair Phillip Jefferson spoke last week and said the FED 0:08:50.040 --> 0:08:53.520 staff is basically predicting the same thing. So there are 0:08:53.559 --> 0:08:56.000 people out there who think we might see an increase 0:08:56.440 --> 0:09:00.560 in the PCE this month because of some unusual factors, 0:09:00.920 --> 0:09:04.960 but the Fed seems sanguine going into the number. 0:09:05.120 --> 0:09:07.280 Now, what are the factors that we see that could 0:09:07.559 --> 0:09:08.839 make inflation even worse. 0:09:09.400 --> 0:09:11.760 Well, one of the questions is what's happening with energy 0:09:11.840 --> 0:09:16.559 and with food because those went up in the CPI report, 0:09:18.160 --> 0:09:20.520 expected to but not by as much as they did. 0:09:20.559 --> 0:09:25.480 And then the ongoing question is always what's happening with housing? 0:09:25.920 --> 0:09:31.600 The CPI showed unexpected strength in housing inflation when it's 0:09:31.720 --> 0:09:34.920 supposed to be according to everybody who follows it going down. 0:09:35.320 --> 0:09:37.560 It's less of a weight in the PCE, so it 0:09:37.600 --> 0:09:40.960 may not make as much of a difference, but it 0:09:41.040 --> 0:09:45.640 could affect that number as well. But the big one 0:09:45.640 --> 0:09:49.920 in the PCE, this is what I call the Pogo problem. 0:09:50.400 --> 0:09:53.760 We have met the enemy and he is us. Our 0:09:53.880 --> 0:09:58.199 listeners are at fault because so much trading has gone 0:09:58.200 --> 0:10:02.400 on in the markets, and obviously the markets have continued 0:10:02.440 --> 0:10:07.640 to go up, so stock trading fees are a big 0:10:07.679 --> 0:10:11.280 component of why the PCE has stayed high. And there 0:10:11.320 --> 0:10:13.920 are some analysts who really follow this stuff closely who 0:10:13.960 --> 0:10:17.400 think that's the number that's going to push PCE higher 0:10:17.440 --> 0:10:18.480 and instead of lower. 0:10:18.559 --> 0:10:21.320 Let's go back to GDP because you talked about that. 0:10:21.679 --> 0:10:23.880 We're going to get a reading, a second reading on 0:10:23.960 --> 0:10:27.560 fourth quarter GDP. What kind of growth overall growth are 0:10:27.600 --> 0:10:29.440 we expecting in the economy, and also what does that 0:10:29.480 --> 0:10:30.280 mean for the full year? 0:10:31.440 --> 0:10:33.360 Oh, if we only knew what it meant for the 0:10:33.400 --> 0:10:36.240 full year. Three point three percent was the initial read, 0:10:36.320 --> 0:10:40.240 and the economists we survey don't expect a change in that, 0:10:40.559 --> 0:10:42.359 just a little bit of a change in the composition, 0:10:42.480 --> 0:10:46.520 with more coming from business investment in inventories and a 0:10:46.559 --> 0:10:50.559 little bit less from personal consumption consumer spending. But for 0:10:51.160 --> 0:10:54.560 the year, the view has been that we are seeing 0:10:55.160 --> 0:10:58.040 a slowing in the economy, and we have seen some 0:10:58.160 --> 0:11:02.520 numbers that suggest that. But I go back to some 0:11:02.559 --> 0:11:05.200 of the remarks from FED officials in this last week 0:11:05.240 --> 0:11:08.520 where they warn that one of the dangers is that 0:11:08.600 --> 0:11:12.080 consumer spending doesn't drop off that much, and that we 0:11:12.120 --> 0:11:15.400 do see a stronger than expected economy through the year. 0:11:15.760 --> 0:11:18.280 That could put pressure on inflation, and that would have 0:11:18.320 --> 0:11:21.560 an impact on if and when they start cutting interest rates. 0:11:21.600 --> 0:11:25.560 So it's something to keep in mind. It's really hard 0:11:25.600 --> 0:11:29.959 to make a prediction because it's been so it's been 0:11:30.000 --> 0:11:33.439 so weird coming out of the pandemic. Nobody expected the 0:11:33.559 --> 0:11:37.640 kind of recovery that we've gotten, and it could keep going. 0:11:37.880 --> 0:11:40.480 Well, that's for sure. I mean, even with a slight 0:11:41.080 --> 0:11:44.400 pullback in consumer spending, three point three percent growth in 0:11:44.440 --> 0:11:47.400 the final three months of the year is pretty strong. 0:11:48.120 --> 0:11:51.160 Good news in Washington, certainly for this administration as we 0:11:51.200 --> 0:11:52.240 go into an election year. 0:11:52.679 --> 0:11:55.000 Yeah, they should be meeting to figure out how they're 0:11:55.000 --> 0:11:57.640 going to sell all this to the American public because 0:11:57.640 --> 0:12:01.800 obviously the political polls don't match what's happening with the 0:12:02.000 --> 0:12:07.320 economy at this point. But overall, if the economy doesn't 0:12:07.320 --> 0:12:11.600 go into recession and inflation does come down, then that 0:12:11.720 --> 0:12:15.920 could be good news for Joe Biden. The saying is 0:12:15.920 --> 0:12:19.440 always it's the economy stupid, and people have wondered if 0:12:19.480 --> 0:12:22.280 that's going to be the case this year, and we'll see. 0:12:22.600 --> 0:12:24.640 Well, a lot to look forward to, and our thanks 0:12:24.679 --> 0:12:29.520 to Bloomberg International Economic and Policy correspondent Michael McKee, coming 0:12:29.600 --> 0:12:31.720 up on Bloomberg Day Break weekend to look ahead to 0:12:31.760 --> 0:12:35.720 the Mobile World Congress that takes place in Spain this week. 0:12:36.040 --> 0:12:49.200 I'm Tom Busby, and this is Bloomberg. This is Bloomberg 0:12:49.280 --> 0:12:51.360 Day Break weekend, our global look ahead at the top 0:12:51.400 --> 0:12:54.360 stories for investors in the coming week. I'm Tom Busby. 0:12:54.400 --> 0:12:54.920 In New York. 0:12:55.280 --> 0:12:57.560 Up later in our program a look at inflation in 0:12:57.640 --> 0:13:00.920 New Zealand and the next move from its bank, as 0:13:01.000 --> 0:13:04.760 well as earnings from China's biggest tech giant, but first. 0:13:04.920 --> 0:13:08.200 Mobile technology arguably one of the fastest growing sectors of 0:13:08.240 --> 0:13:12.760 the twenty first century and one investors think has boundless possibilities. 0:13:12.920 --> 0:13:15.760 In the coming days, everyone who is anyone in the 0:13:15.800 --> 0:13:18.480 world of connectivity will convene under one roof at the 0:13:18.520 --> 0:13:23.120 annual Mobile World Congress in Barcelona, trading ideas and discussing 0:13:23.160 --> 0:13:26.280 the future. But can telecom keep up with multiple high 0:13:26.320 --> 0:13:28.880 paced advancements in the world of tech. For more, Let's 0:13:28.920 --> 0:13:32.600 go to London and bring in Bloomberg Daybreak anchor Steven Carroll. 0:13:32.640 --> 0:13:36.920 Tom The market frenzy about tech and artificial intelligence driven 0:13:37.040 --> 0:13:40.400 gains seems to have reached fever pitch this earning season. 0:13:40.640 --> 0:13:43.280 Telecommunications is one of the many industries that's racing to 0:13:43.360 --> 0:13:48.200 adapt and harness its advantages. This year's Mobile World Congress 0:13:48.240 --> 0:13:51.240 in Barcelona will see major tech companies, including the likes 0:13:51.240 --> 0:13:54.440 of Meta, lining up to showcase their AI products to 0:13:54.480 --> 0:13:57.320 the sector. A recent survey of more than four hundred 0:13:57.320 --> 0:14:01.760 telecoms industry professionals by AI chip giant Nvidia underlined this, 0:14:02.160 --> 0:14:05.760 over half of respondents agreed or strongly agreed that adopting 0:14:05.800 --> 0:14:09.079 AI will be a source of competitive advantage. That's a 0:14:09.080 --> 0:14:11.360 score that's up from just thirty nine percent in twenty 0:14:11.559 --> 0:14:15.280 twenty two. In Nvidia themselves are seeing blockbuster growth thanks 0:14:15.320 --> 0:14:18.240 to the technology, and their latest results show no sign 0:14:18.280 --> 0:14:22.400 of that growth slowing down. The CEO of Futurum, Daniel Newman, 0:14:22.440 --> 0:14:26.280 and bab o'donald, chief analyst at TECHnalysis, say the pressure 0:14:26.480 --> 0:14:29.600 is on for Nvidia to continue these gains. 0:14:30.680 --> 0:14:32.800 The only result that was going to be acceptable was 0:14:32.800 --> 0:14:35.520 not only a beat, but a substantial beat and a 0:14:36.040 --> 0:14:40.080 guidance upbeat because people are beginning to wonder, how many 0:14:40.120 --> 0:14:43.840 consecutive quarters can this company continue to run with triple 0:14:43.880 --> 0:14:47.160 digit revenue growth and high triple digit earnings growth. But 0:14:47.240 --> 0:14:49.640 it seems each quarter they continue to surprise. 0:14:49.920 --> 0:14:53.240 This is a company that continues to execute and completely 0:14:53.280 --> 0:14:57.320 blow away everybody's most robust forecast. I mean, they raise 0:14:57.400 --> 0:15:00.360 their own forecast, the street raises the forecast, and they 0:15:00.400 --> 0:15:02.440 still beat them. It's kind of crazy. And of course 0:15:02.520 --> 0:15:04.080 the big question has been how. 0:15:03.920 --> 0:15:05.000 Long can this continue? 0:15:05.000 --> 0:15:07.480 How long can this go on. The competition has never 0:15:07.600 --> 0:15:10.920 been more fierce than it is right now foreign Vidia, 0:15:10.960 --> 0:15:12.560 but they have a huge headstart. 0:15:12.600 --> 0:15:14.600 Do you think there is sort of a consensus in 0:15:14.640 --> 0:15:17.280 the industry to put some competitive pressure back on. 0:15:17.360 --> 0:15:21.080 In video, they've been innovating at a pace that nobody 0:15:21.080 --> 0:15:22.280 else has been able to keep up. 0:15:22.320 --> 0:15:26.920 With Daniel Newman from Futuram and Bob O'Donnell at tech Analysis, 0:15:26.960 --> 0:15:30.480 they're discussing the latest results from Nvidia with Bloomberg. Well, 0:15:30.480 --> 0:15:33.640 perhaps some of those future gains could come from AI 0:15:33.800 --> 0:15:38.160 collaborations with the telecoms industry. Those conversations will be happening 0:15:38.160 --> 0:15:41.440 at Mobile World Congress in the coming days. Apart from 0:15:41.480 --> 0:15:44.000 the latest tech, industry players will also be considering the 0:15:44.080 --> 0:15:48.080 regulatory requirements that are facing some telecoms companies that aren't 0:15:48.080 --> 0:15:51.600 applicable to their big tech cousins. Telecoms may just be 0:15:51.640 --> 0:15:53.680 at the beginning of its AI journey, but will it 0:15:53.760 --> 0:15:56.960 be a dalliance or a long lasting partnership. While I've 0:15:56.960 --> 0:16:00.000 been discussing all of this with our European telecoms and chips, 0:16:00.280 --> 0:16:02.720 Jillian Deutsch and I started by asking here how important 0:16:02.840 --> 0:16:07.160 Mobile World Congress is in setting the agenda for the sector. 0:16:07.960 --> 0:16:10.960 Yeah, this is really the key event for the year, 0:16:11.000 --> 0:16:12.400 and I think it's gonna be fun to kind of 0:16:12.440 --> 0:16:16.000 see not as European telcos which have lots of things 0:16:16.040 --> 0:16:19.240 that they're pushing, for example, deregulation and lots of m 0:16:19.240 --> 0:16:21.440 Andy talks across Europe, but also a lot of different 0:16:21.480 --> 0:16:24.800 international telcos and also major US tech companies coming to 0:16:25.320 --> 0:16:28.960 all descending on Barcelona to kind of really set the 0:16:28.960 --> 0:16:31.160 agenda for tacos in tech the next year. 0:16:31.760 --> 0:16:33.520 So AI is one of the key themes at this 0:16:33.640 --> 0:16:37.400 year's events, talk us through where Telecom's companies are with 0:16:37.560 --> 0:16:40.400 them implementing that technology and where they found success with it. 0:16:42.000 --> 0:16:44.800 Yeah, I mean AI has definitely hit a taco sector 0:16:44.840 --> 0:16:46.240 of course as well, and so I think we're going 0:16:46.280 --> 0:16:49.680 to be seeing lots of announcements about, you know, different 0:16:49.680 --> 0:16:52.320 offerings with different US tech giants for example, and how 0:16:52.320 --> 0:16:55.520 they're integrating artificial intelligence into their offerings, you know. I mean, 0:16:55.720 --> 0:16:57.360 I just definitely think a lot of this is hype. 0:16:57.360 --> 0:16:59.840 I think anyone who founds tech is used to hypes 0:17:00.320 --> 0:17:03.000 of course, and AI is obviously in the most recent ones. 0:17:03.200 --> 0:17:04.960 But I do think there's a lot of really interesting 0:17:05.359 --> 0:17:08.280 ways that companies are trying to integrate AI into their offerings, 0:17:08.480 --> 0:17:11.480 really kind of to improve the experience for consumers when 0:17:11.480 --> 0:17:15.200 it comes to customer service also with businesses, and really 0:17:15.280 --> 0:17:18.240 kind of creating you know, more streamlined offerings for their 0:17:18.280 --> 0:17:20.639 for their clients. And so I think a lot of 0:17:20.640 --> 0:17:23.080 this also will be kind of in with kind of 0:17:23.119 --> 0:17:25.680 key announcements with big tech giants. So we already saw 0:17:25.720 --> 0:17:27.760 now key is stock going up recently when they announced 0:17:27.760 --> 0:17:29.720 a partnership with the Videos. Those kind of big names 0:17:29.760 --> 0:17:32.080 obviously are really important to show that they are really 0:17:32.119 --> 0:17:34.879 serious about AI and intergeting AI. But also I think 0:17:34.920 --> 0:17:37.240 we'll see some interesting ones. You know, BT for example, 0:17:37.320 --> 0:17:40.439 last year announced pretty massive job cuts fifty five thousand 0:17:40.480 --> 0:17:43.639 people until twenty to thirty and that's not entirely but 0:17:43.680 --> 0:17:45.679 at least in part because they're integrating AI, so it's 0:17:45.720 --> 0:17:47.800 kind of helping them to trim from the fat in 0:17:47.840 --> 0:17:49.800 the company. And so I think that's we might see 0:17:49.800 --> 0:17:52.600 some more more kind of uses of AI in that sense. 0:17:53.400 --> 0:17:55.760 So does it do we have the sense that European 0:17:55.800 --> 0:17:59.720 companies are sufficiently investing in this given that so many 0:17:59.760 --> 0:18:02.479 of the technology advancements are coming from US firms. 0:18:03.440 --> 0:18:06.720 That's a great question. I mean, celcos are It's funny, 0:18:06.560 --> 0:18:08.919 they are really afraid of just becoming you know, a 0:18:08.960 --> 0:18:10.560 pipe in the ground, right, And so it's kind of 0:18:10.560 --> 0:18:12.560 sparked this kind of panic a lot of among a 0:18:12.600 --> 0:18:15.640 lot of tech tech taco companies across Europe, and so 0:18:15.760 --> 0:18:17.720 that has led to this massive push to keep innovating 0:18:18.600 --> 0:18:20.560 and and there are a lot of questions about whether 0:18:20.640 --> 0:18:23.720 or not they actually can outcompete you know, Silicon Valley 0:18:23.720 --> 0:18:26.320 giants that have you know, massive market caps and have 0:18:26.680 --> 0:18:29.280 all of that talents obviously you know, really harmonized or 0:18:29.280 --> 0:18:33.480 centralized into one location and already in their companies, and 0:18:33.520 --> 0:18:35.240 a lot of what these celcos are doing is to 0:18:35.240 --> 0:18:37.159 really trying to compete with them. So you see a 0:18:37.200 --> 0:18:40.359 lot of kind of IT solutions and cloud solutions and 0:18:40.560 --> 0:18:43.760 networks and factories and these are all things that actually 0:18:43.760 --> 0:18:48.119 put tuco's in direct competition with US tech giants. And 0:18:48.200 --> 0:18:50.160 I think there's a lot of skepticism that they can 0:18:50.200 --> 0:18:53.720 really outcompete tech giants, but that is really a crucial 0:18:53.920 --> 0:18:56.360 crucial thing for tacos going forward, if they really want 0:18:56.480 --> 0:19:00.400 to make sure they're not just you know a utility company. 0:19:00.600 --> 0:19:03.080 So it is a question of cooperation as well as 0:19:03.080 --> 0:19:04.680 some competition in these areas too. 0:19:06.200 --> 0:19:07.880 Yeah, absolute, I me, you know, we already do see 0:19:07.920 --> 0:19:10.879 lots of tacos and tech giants working together. They have 0:19:10.960 --> 0:19:12.800 for a long time when it comes to data centers 0:19:13.760 --> 0:19:16.119 and other kinds of partnerships they've had, or even you know, 0:19:16.200 --> 0:19:18.439 when you open up your you know, you turn on 0:19:18.480 --> 0:19:21.720 your TV, you probably see YouTube or Netflix offerings, right, 0:19:21.800 --> 0:19:25.040 So telcos really do rely on us tech giants as well. 0:19:25.040 --> 0:19:26.960 It's kind of a fren of me love hate relationship 0:19:26.960 --> 0:19:29.000 between the two, and I do think we see that 0:19:29.000 --> 0:19:33.240 that kind of relationship really play out in Brussels, where 0:19:33.240 --> 0:19:36.440 I'm based and covered tech regulation or have cover tech Regnation. 0:19:37.320 --> 0:19:39.280 A lot of these techos argue that they're way more 0:19:39.280 --> 0:19:43.000 over regulated than they're often American counterparts, and are really 0:19:43.040 --> 0:19:47.520 pushing for tucos to help out with with helping tech giants. 0:19:47.560 --> 0:19:52.440 Excuse me, helping telcos with these massive, expensive network infrastructure investments. 0:19:52.520 --> 0:19:54.240 And they say, you know a lot of these tech 0:19:54.280 --> 0:19:56.600 giants get to piggyback off of the really expensive and 0:19:56.600 --> 0:19:57.880 complicated work that they do. 0:19:59.040 --> 0:20:01.720 Yeah, that's a really just in conversation that I'm sure 0:20:01.720 --> 0:20:05.280 will be featuring two at Mobile Work Congress. What you know, 0:20:05.320 --> 0:20:07.359 the European Commission recently published a white paper on this 0:20:07.440 --> 0:20:10.680 on reforms to the market. What were the problems that 0:20:10.680 --> 0:20:12.120 that white paper identified. 0:20:13.440 --> 0:20:16.240 I think it's really interesting because Taco's for the past 0:20:16.320 --> 0:20:18.960 least couple of years, I've really been, like I said, 0:20:19.040 --> 0:20:21.840 arguing that tech companies need to help with the bill 0:20:21.920 --> 0:20:26.120 for infrastructure, and this argument was dubbed fair share Tech 0:20:26.119 --> 0:20:29.880 companies need to pair their fair share for infrastructure. That 0:20:30.280 --> 0:20:33.119 specific lobbing effort failed, but what they did do is 0:20:33.160 --> 0:20:35.720 really put Taco's back at the top of regulator's agenda. 0:20:35.760 --> 0:20:38.359 They've been really overlooked for the past five plus years. 0:20:38.880 --> 0:20:41.119 So this white paper was really interesting because it actually 0:20:41.160 --> 0:20:43.639 dives into the issues that Tacos have been complaining about 0:20:43.640 --> 0:20:45.879 for years and acknowledge a lot of the issues that 0:20:45.920 --> 0:20:48.240 they've been complaining about. You know, it's an incredibly fragmented 0:20:48.320 --> 0:20:52.040 market with over fifty players in you across the EU, 0:20:52.160 --> 0:20:53.840 you know, compared to the United States where they're early 0:20:53.880 --> 0:20:57.720 three maybe four kind of massive players. They do knowledge 0:20:57.720 --> 0:21:02.240 that they're overregulated. There's too much bureaucracy to get permits 0:21:02.240 --> 0:21:04.840 et cetera. But I think when it comes to the 0:21:04.880 --> 0:21:06.800 actual solutions, I think most of the telcos I talk 0:21:06.880 --> 0:21:09.960 to feel like the paper is kind of lacking. There's 0:21:10.000 --> 0:21:13.000 some talk about, oh, we should harmonize spectrum policies atle 0:21:13.000 --> 0:21:14.919 bit more across the European Union, and we need to 0:21:14.960 --> 0:21:18.639