WEBVTT - Daybreak Weekend: US CPI, London Tech, China Eco Data 0:00:00.240 --> 0:00:07.680 Bloomberg Audio Studios, Podcasts, radio news. 0:00:10.840 --> 0:00:13.760 This is Bloomberg Daybreak Weekend, our global look at the 0:00:13.760 --> 0:00:16.280 top stories in the coming week from our Daybreak anchors 0:00:16.320 --> 0:00:18.759 all around the world. Straight Ahead on the program, we 0:00:18.800 --> 0:00:21.280 looked at some key inflation data in the US and 0:00:21.320 --> 0:00:24.960 how they could affect FED policy. I'm Nathan Hager in Washington. 0:00:25.280 --> 0:00:27.960 I'm Carolyn Hepke Harid London, where we're getting ready for 0:00:28.000 --> 0:00:29.920 the buzz of London Tech Week. 0:00:30.120 --> 0:00:33.320 I'm Doug Chrisner looking at how higher energy prices will 0:00:33.360 --> 0:00:34.720 impact Chinese inflation. 0:00:36.400 --> 0:00:40.440 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:40.479 --> 0:00:44.160 eleven three YEO New York, Bloomberg ninety nine to one, Washington, DC, 0:00:44.680 --> 0:00:49.800 Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Sirius 0:00:50.000 --> 0:00:53.480 XM one twenty one, and around the world on Bloomberg Radio, 0:00:53.560 --> 0:00:55.760 dot Com and the Bloomberg Business App. 0:01:00.800 --> 0:01:03.720 Good day to you. I'm Nathan Hager. We begin today's 0:01:03.760 --> 0:01:06.360 program with some key economic data in the US, with 0:01:06.400 --> 0:01:10.520 a big focus on inflation. The May Consumer Price index 0:01:10.600 --> 0:01:14.000 comes out Wednesday, followed by the index for producers the 0:01:14.080 --> 0:01:16.800 following day, and for more on what to expect We're 0:01:16.880 --> 0:01:20.039 joined by Edward Harrison, senior strategist at Bloomberg News and 0:01:20.080 --> 0:01:23.600 author of the Everything Risk newsletter. Always great to speak 0:01:23.600 --> 0:01:25.760 with you, Ed, And I think it's no secret that 0:01:26.120 --> 0:01:30.160 just about everything is more expensive these days. So what 0:01:30.200 --> 0:01:32.280 are you expecting to stand out when it comes to 0:01:32.319 --> 0:01:33.560 the data this week. 0:01:33.800 --> 0:01:39.160 Hey, Nathan, I'm expecting to see the numbers be relatively 0:01:39.200 --> 0:01:44.200 elevated across the board PPI more than CPI. And what 0:01:44.240 --> 0:01:48.560 we're looking for is we're looking for anything that's demonstray 0:01:48.880 --> 0:01:54.040 below three percent on any of the figures that we see, 0:01:54.080 --> 0:01:57.440 because the lowest expected number is two point nine percent 0:01:57.520 --> 0:02:00.720 for core CPI. If we can get something in the 0:02:00.800 --> 0:02:04.840 order of year and year increases more two point six 0:02:04.960 --> 0:02:08.679 two point seven, that would be a very positive signal 0:02:09.560 --> 0:02:12.840 for the Federal Reserve, which is meeting later in the month. 0:02:12.919 --> 0:02:15.920 Why are you expecting producer prices to be higher this 0:02:16.040 --> 0:02:17.960 time around, Well. 0:02:18.240 --> 0:02:22.880 Just because of expectations. In terms of the Bloomberg average expectations, 0:02:23.400 --> 0:02:27.520 the average economist expectations for final demand is six point 0:02:27.560 --> 0:02:31.880 four percent for the month of May, and we also 0:02:32.080 --> 0:02:35.160 have five point four percent expected if you take out 0:02:35.200 --> 0:02:39.359 food and energy and those numbers are higher than you know, 0:02:39.639 --> 0:02:43.320 a four point two percent number that's expected for CPI. 0:02:43.600 --> 0:02:45.560 What are you expecting that it's going to be driving 0:02:45.639 --> 0:02:47.360 all this? Of course, you know, you drive by a 0:02:47.360 --> 0:02:51.280 gas station these days and prices are still much higher 0:02:51.280 --> 0:02:53.800 than many of us would like to be spending. Is 0:02:53.880 --> 0:02:58.280 that really what's continuing to drive the inflation picture right now? 0:02:58.720 --> 0:02:58.800 No? 0:02:59.000 --> 0:03:00.760 And you know, so that's why I think that the 0:03:00.880 --> 0:03:04.320 number that I'm looking for in particular is the core 0:03:04.400 --> 0:03:09.000 number for a CPI, that number which is at currently 0:03:09.000 --> 0:03:10.960 it's at two point eight percent, it's expected to go 0:03:11.040 --> 0:03:14.280 up to two point nine percent. That's the number that says, 0:03:14.600 --> 0:03:17.000 here's what the economy looks like if you take out 0:03:17.480 --> 0:03:20.880 these vital food and energy items over the last year, 0:03:21.520 --> 0:03:25.480 here's the rise that we've seen. And if that number 0:03:25.800 --> 0:03:31.320 is decent, you know, moving more towards the FEDS two 0:03:31.320 --> 0:03:35.240 percent target, it changes the whole picture. Because last week 0:03:35.320 --> 0:03:38.600 on Friday, what we saw is we saw a job's 0:03:38.720 --> 0:03:41.800 number that was very large. If you look at the 0:03:41.840 --> 0:03:44.360 last three months of job gains, it's the best that 0:03:44.400 --> 0:03:47.480 we've seen since the beginning of twenty twenty four. And 0:03:47.520 --> 0:03:51.560 so the market priced in a rate hike is soon 0:03:51.800 --> 0:03:54.440 as the end of this year. On the back of that, 0:03:55.160 --> 0:03:59.600 anything that we can see in terms of inflation that 0:03:59.800 --> 0:04:04.720 is more towards two percent would therefore dial back those 0:04:05.040 --> 0:04:08.320 expectations and cause yields to go down. 0:04:08.480 --> 0:04:08.680 Yeah. 0:04:08.760 --> 0:04:11.240 Coming off the back of those jobs numbers, we actually 0:04:11.320 --> 0:04:15.040 spoke with White House National Economic Council Director Kevin Hasseid. 0:04:15.120 --> 0:04:17.680 He was saying that the FED should be able to 0:04:17.720 --> 0:04:21.320 look past an oil driven supply shock. Can it? 0:04:22.160 --> 0:04:25.320 No, it can't, because those numbers are the best that 0:04:25.360 --> 0:04:29.680 we've seen for the jobs in almost a three years 0:04:30.200 --> 0:04:32.160 or two and a half years, i should say. And 0:04:32.680 --> 0:04:37.240 the reality is is that with what we're seeing in 0:04:37.360 --> 0:04:41.760 the Gulf, in addition to core numbers that are that 0:04:41.800 --> 0:04:44.480 have reaccelerated. If you looked at PC, which is the 0:04:44.839 --> 0:04:49.960 Fed's preferred gauge, we have bottomed fourteen months ago in 0:04:50.000 --> 0:04:54.279 April twenty twenty five two point six percent. The most 0:04:54.320 --> 0:04:57.880 recent reading was three point three percent, So we've seen 0:04:57.920 --> 0:05:00.719 an acceleration in the core. This is taking out food 0:05:00.760 --> 0:05:03.760 and energy. So there's no way that the FED can 0:05:03.800 --> 0:05:07.560 look over that because we're looking at a trend that's 0:05:07.600 --> 0:05:10.120 been going on for more than a year. And we've 0:05:10.120 --> 0:05:13.880 seen an acceleration in the rate of inflation. 0:05:14.120 --> 0:05:17.359 So what do you see potentially snapping that trend? Is 0:05:17.360 --> 0:05:19.560 there anything that the FED can do at this point? 0:05:19.760 --> 0:05:22.160 No, the Fed can just sit and wait. And the 0:05:22.200 --> 0:05:29.279 reality again is that the Gulf only adds more problems there. 0:05:29.480 --> 0:05:31.920 The interesting bit is is that, you know, when this 0:05:32.680 --> 0:05:37.080 war began in the Middle East, people were expecting it 0:05:37.160 --> 0:05:40.240 to have a very negative impact on consumer spending. But 0:05:40.279 --> 0:05:42.479 it hasn't had a negative impact. It hasn't had a 0:05:42.480 --> 0:05:47.360 negative impact on a job formation. So you know, the 0:05:48.600 --> 0:05:52.120 steady state of the United States economy is very high, 0:05:52.400 --> 0:05:56.240 and that means that the ability of the FED to 0:05:56.320 --> 0:06:03.440 try to counteract the inflationary impulses is much greater, which 0:06:03.440 --> 0:06:07.120 means that we should expect the FED to hike before 0:06:07.160 --> 0:06:09.000 we expect them to lower rates. 0:06:09.160 --> 0:06:12.520 All right, appreciate this d as always. That's Bloomberg News 0:06:12.560 --> 0:06:16.520 Senior strategist Edward Harrison definitely check out adds the Everything 0:06:16.640 --> 0:06:19.279 Risk newsletter. You can find it at Bloomberg dot com, 0:06:19.320 --> 0:06:23.159 slash newsletters or by typing ni every Risk Go on 0:06:23.200 --> 0:06:25.640 the Bloomberg terminal. Let's take a look now at some 0:06:25.720 --> 0:06:28.200 stocks making news in the week Ahead. I'm Nathan Hager, 0:06:28.320 --> 0:06:31.800 joined by Bloomberg Cross Asset reporter of Adana Hirich. But Dana, 0:06:31.839 --> 0:06:35.320 we've got more tech earnings to look forward to this week, 0:06:35.360 --> 0:06:38.760 including Oracle after the close. Of course, this has been 0:06:39.200 --> 0:06:42.080 a company that's been a pretty big beneficiary of the 0:06:42.160 --> 0:06:45.320 AI buildout. So should we be looking for a blowout 0:06:45.400 --> 0:06:46.039 from Oracle? 0:06:46.880 --> 0:06:47.159 First? 0:06:47.200 --> 0:06:49.760 I want to say that every week we're looking forward 0:06:49.839 --> 0:06:51.600 to some sort of tech earnings, right, so. 0:06:51.800 --> 0:06:52.479 It seems like it. 0:06:52.600 --> 0:06:56.920 Yeah, every week there's something of interest happening. So for Oracle, 0:06:57.000 --> 0:07:02.640 that's ticker oh RCL on Wednesday, June tenth. The company 0:07:02.720 --> 0:07:06.919 was once best known for its namesake database software, but 0:07:07.000 --> 0:07:10.440 it's really found some success in providing the type of 0:07:10.560 --> 0:07:14.040 chips filled data centers and other equipment that's necessary for 0:07:14.160 --> 0:07:17.680 training and deploying AI models. And the reason I mentioned 0:07:17.720 --> 0:07:19.640 that is just so that we get a sense of 0:07:19.720 --> 0:07:23.640 what kind of read through it's giving us on a 0:07:23.680 --> 0:07:28.400 specific sector of the economy. Shares of Oracle are up 0:07:28.680 --> 0:07:33.120 some eighteen percent roughly eighteen percent year to date. Its 0:07:33.360 --> 0:07:37.240 last quarterly report was very strong in terms of what 0:07:37.280 --> 0:07:40.440 analysts had been expecting and what the company ended up 0:07:40.800 --> 0:07:45.800 delivering Its last report was in March, and shares actually 0:07:46.120 --> 0:07:51.320 soared after it posted results. It said that it's closely 0:07:51.360 --> 0:07:55.720 watched infrastructure business had jumped eighty four percent to four 0:07:55.720 --> 0:07:59.120 point nine billion dollars. The company also at the time 0:07:59.160 --> 0:08:02.640 said that revenue reach ninety billion in the fiscal year 0:08:02.680 --> 0:08:06.600 beginning in June. Also at the time, it handily beat 0:08:06.680 --> 0:08:11.960 analyst projections on a number of other measures. So the 0:08:12.040 --> 0:08:15.000 takeaway was that we were sort of seeing we were 0:08:15.000 --> 0:08:19.520 getting this through line on AI spending. It gave investors 0:08:19.640 --> 0:08:23.760 a really good look at how demand for AI centers 0:08:24.040 --> 0:08:26.960 was going. There had been in the past some concern 0:08:27.120 --> 0:08:30.840 that maybe that a specific corner of the market was 0:08:30.880 --> 0:08:34.200 maybe slowing down, but then Oracle gave us those results. 0:08:34.960 --> 0:08:39.440 Looking ahead, of course, we don't exactly know what the 0:08:39.440 --> 0:08:41.240 company is going to be telling us, but we do 0:08:41.320 --> 0:08:44.360 have some analyst projections, and we do have a report 0:08:44.440 --> 0:08:50.360 from Bloomberg Intelligence where the analysts there say oracles physical 0:08:50.480 --> 0:08:54.800 four qre results will likely reflect another quarter of robust 0:08:54.920 --> 0:08:56.760 AI infrastructure demand. 0:08:57.320 --> 0:09:01.560 Also this week, after the close on Thursday, we're going 0:09:01.600 --> 0:09:03.840 to hear from Adobe. Now, you got to think this 0:09:03.920 --> 0:09:06.560 company's got a lot to show for with all the 0:09:06.600 --> 0:09:09.880 fears around SaaS apocalypse or whatever we're calling it now. 0:09:09.960 --> 0:09:13.160 Yeah, exactly. And I love when a company can tell 0:09:13.240 --> 0:09:17.040 us a specific story, you know, one of especially with 0:09:17.080 --> 0:09:20.120 like Bellweather companies that can tell us something that's happening 0:09:20.160 --> 0:09:23.240 within a certain sector of the economy or the market, 0:09:23.320 --> 0:09:26.000 like we were just saying with Oracle. So for Adobe 0:09:26.440 --> 0:09:31.360 ticker ADB, reporting on June eleventh, after the market close, 0:09:31.960 --> 0:09:35.920 shares are not doing so great this year. They're down 0:09:36.040 --> 0:09:39.880 some twenty five percent so far this year. When we 0:09:39.920 --> 0:09:43.319 think of Adobe, we think of its software, it's creative tools, 0:09:43.520 --> 0:09:48.240 it's digital marketing offerings, and also of course PDFs, which 0:09:48.360 --> 0:09:51.800 I can never figure out how to edit or save 0:09:51.920 --> 0:09:56.960 or print seriously, But a lot of Adobe's revenue is 0:09:57.000 --> 0:10:01.720 generated via those subscriptions. Analysts will be paying attention to that. 0:10:01.840 --> 0:10:06.000 But Adobe actually has a very interesting theme and the 0:10:06.040 --> 0:10:09.600 story going on right now, which is that there are 0:10:09.720 --> 0:10:14.080 talks about who it's next CEO will be. Bloomberg just 0:10:14.160 --> 0:10:18.800 reported that the company is eyeing to internal leaders for 0:10:19.679 --> 0:10:24.760 its quest for a new chief executive officer, and Adobe 0:10:24.760 --> 0:10:27.719 has hired a well known search firm to look at 0:10:27.720 --> 0:10:31.280 some external candidates who could be suited to running the 0:10:31.320 --> 0:10:36.079 company in our ai era. And so there are two 0:10:36.120 --> 0:10:40.160 contenders of two of its main business units who are 0:10:40.320 --> 0:10:43.360 sort of like the leading in house candidates, and then 0:10:43.559 --> 0:10:46.360 you know whoever else that they're looking at from the outside. 0:10:46.440 --> 0:10:50.920 So analysts really are thinking about, you know what, will 0:10:50.920 --> 0:10:55.520 we get some clarity around the CEO transition. It's sure 0:10:55.520 --> 0:10:58.400 to be a key focus on the earnings call yea. 0:10:58.440 --> 0:11:01.280 So maybe more than just numbers in this sorting. 0:11:01.080 --> 0:11:03.920 St exactly exactly. It might even supersede some of the 0:11:03.920 --> 0:11:06.600 financial metrics themselves, which is really interesting. 0:11:06.800 --> 0:11:09.680 Yeah, it certainly is not just tech. Later on this 0:11:09.720 --> 0:11:12.480 week as well, we're going to hear from Lenar reporting 0:11:12.520 --> 0:11:16.720 their earnings. It's been pretty tough for the homebuilders in 0:11:16.760 --> 0:11:18.760 this rate and price environment. 0:11:18.800 --> 0:11:23.000 Fildana exactly another great example of a company that's giving 0:11:23.080 --> 0:11:26.680 us a look at, in this case the housing market. 0:11:26.720 --> 0:11:31.559 The home building market ticker LN shares are also lower 0:11:31.679 --> 0:11:35.680 so far this year. The company is reporting after the 0:11:35.760 --> 0:11:39.199 close on Thursday, June eleventh. This is one of the 0:11:39.280 --> 0:11:43.560 largest US homebuilders by revenue, and again another great read 0:11:43.679 --> 0:11:46.640 on home builder sentiments. So just in terms of some 0:11:46.679 --> 0:11:50.000 of the data that we've seen for new home sales. 0:11:50.080 --> 0:11:52.840 For instance, in April they had fallen month over month 0:11:53.160 --> 0:11:57.040 some six percent to around six hundred and twenty two thousand. 0:11:57.559 --> 0:12:01.520 US homebuilder sentiment had rebound London in May, but in 0:12:01.559 --> 0:12:07.239 general it sort of remains pretty low, given affordability concerns 0:12:08.040 --> 0:12:11.880 weighing on a lot of consumers and also weighing on 0:12:12.760 --> 0:12:15.760 the spring selling season, and so it's important to keep 0:12:15.800 --> 0:12:18.800 those things in mind in terms of what the housing 0:12:18.840 --> 0:12:21.720 market looks like and whether or not people think we're 0:12:21.760 --> 0:12:26.359 going to potentially continue to see a lackluster housing market persists, 0:12:26.920 --> 0:12:28.200 you know, in future quarters. 0:12:28.600 --> 0:12:30.559 Yeah, so we're going to learn more about the AI 0:12:30.640 --> 0:12:34.200 build out and the housing build out this week. Thank you, Vildona. 0:12:34.240 --> 0:12:38.000 That's Vildona Hirich, Cross asset reporter for Bloomberg News, and 0:12:38.040 --> 0:12:40.480 coming up on Bloomberg day Break weekend, we'll discuss what 0:12:40.559 --> 0:12:44.240 to expect from London's tech week. I'm Nathan Hager, and 0:12:44.280 --> 0:12:57.800 this is Bloomberg. This is Bloomberg day Break Weekend, our 0:12:57.800 --> 0:13:00.360 global look ahead at the top stories for invests in 0:13:00.400 --> 0:13:03.600 the coming week. I'm Nathan Hager in Washington. Up later 0:13:03.640 --> 0:13:06.040 in the program, we'll look to some key inflation data 0:13:06.080 --> 0:13:10.520 in China. But first London Tech Week starts Monday. Executives 0:13:10.520 --> 0:13:14.080 from AI labs like Anthropic Perplexity and Open Ai are 0:13:14.120 --> 0:13:16.839 headed to Britain, which, after the US and China, sees 0:13:16.880 --> 0:13:20.040 the highest AI investment globally. Let's get more from Bloomberg 0:13:20.080 --> 0:13:22.000 day Break Europe banker Caroline Hepger in. 0:13:21.960 --> 0:13:26.760 London, Nathan Summer conference season has arrived in London. CEOs, 0:13:26.800 --> 0:13:31.360 politicians and innovators are rubbing shoulders the likes of south 0:13:31.400 --> 0:13:35.640 By Southwest Founders Forum and London Tech Week, but the 0:13:35.679 --> 0:13:39.559 regular gatherings mask a moment of deep uncertainty about the future. 0:13:40.000 --> 0:13:44.280 Artificial intelligence promises to reshape the business world, but for 0:13:44.440 --> 0:13:48.679 UBS's chief economists to ar captain, the new technology isn't 0:13:48.760 --> 0:13:52.119 yet even close to delivering on its promises. 0:13:52.440 --> 0:13:55.240 I think there are certainly a lot of corpors benefiting 0:13:55.240 --> 0:13:58.120 from this spending boom and top twenty percent spending, but 0:13:58.120 --> 0:14:00.400 there's also I think a very large part of the 0:14:00.440 --> 0:14:03.240 population and businesses that is not benefiting from that, and 0:14:03.320 --> 0:14:05.720 so I think we're in this sort of still relatively 0:14:05.760 --> 0:14:06.960 fragile equilibrium. 0:14:07.040 --> 0:14:10.880 Okay, you mentioned productivity gains. Where are you seeing them 0:14:10.960 --> 0:14:11.960 in Europe from AI. 0:14:12.559 --> 0:14:15.560 Oh I'm not seeing here anyway yet, so I think 0:14:15.559 --> 0:14:17.440 it's way too early, right, So there's a we're in 0:14:17.480 --> 0:14:20.440 the Capex phase what I call the figuring it out phase, right, 0:14:20.480 --> 0:14:25.320 So we are diffusing AI into organizations, and the implementation 0:14:25.400 --> 0:14:27.920 model is to go to people like me, give them 0:14:27.960 --> 0:14:29.880 some AI programs and go figure it out. Right, that's 0:14:29.880 --> 0:14:31.960 not a good implementation model. And if you look at 0:14:31.960 --> 0:14:35.400 the implementation rate, so we do an enterprise adoption survey, 0:14:35.480 --> 0:14:38.000 it's still very very low, less than twenty percent of 0:14:38.040 --> 0:14:40.720 all the firms claim to be implementing at skill. So 0:14:40.760 --> 0:14:43.400 it just cannot be the case that anything is happening 0:14:43.480 --> 0:14:45.600 yet because no one's changed hiring behavior and no one's 0:14:45.600 --> 0:14:48.200 really figured it out yet. Now, the reason it shows 0:14:48.240 --> 0:14:50.160 up in the US in productivity data is because if 0:14:50.200 --> 0:14:52.720 you create a lot of output with capex, you don't 0:14:52.760 --> 0:14:55.800 hire anybody. It looks like per employee you're generating more output. 0:14:55.800 --> 0:14:58.720 But that's not AI productivity the way I think about it, right, 0:14:58.720 --> 0:15:01.520 that's just a shift from producing with libra to producing 0:15:01.560 --> 0:15:03.520 with capital. In Europe, of course, you don't even have that. 0:15:03.720 --> 0:15:06.680 AAR captain there speaking to me and James Wilcock on 0:15:06.720 --> 0:15:11.480 Bloomberg Radio for Britain. Add to that, a somewhat more 0:15:11.560 --> 0:15:15.200 frosty relationship with the US may be growing wariness of 0:15:15.240 --> 0:15:18.680 Silicon Valley and a ship of state which seems to 0:15:18.800 --> 0:15:22.320 lack a rudder. So does Britain's pitch to be an 0:15:22.360 --> 0:15:26.560 AI leader increasingly look a little thin. Bloomberg TV anchor 0:15:26.680 --> 0:15:29.520 Tom McKenzie joins me, Now you get the lucky job 0:15:29.520 --> 0:15:31.640 of going down to London Tech Week to take the 0:15:31.680 --> 0:15:35.240 temperature rub shoulders with all of these big CEOs, what 0:15:35.360 --> 0:15:36.840 are you trying to find out? 0:15:37.440 --> 0:15:39.960 Look? I think this is an incredible moment obviously for 0:15:39.960 --> 0:15:41.800 the world of technology when we think about what's happening 0:15:41.840 --> 0:15:44.840 in the US with the upcoming listings and IPOs of 0:15:44.840 --> 0:15:48.760 SpaceX and likely of course Anthropic and Open AII as well. 0:15:48.840 --> 0:15:52.280 So that intense focus on the innovation and the buildout 0:15:52.280 --> 0:15:54.080 of these companies. And so the key question really is 0:15:54.120 --> 0:15:56.080 where does the UK play in all of this? And 0:15:56.120 --> 0:15:58.680 this is a really key annual gathering that pulls together 0:15:58.720 --> 0:16:01.920 the great and the good ministers as well senior government 0:16:01.960 --> 0:16:05.400 figures with leading CEOs across the UK tech ecosystem. So 0:16:05.760 --> 0:16:08.400 my key questions and what I'm really trying to find 0:16:08.440 --> 0:16:11.600 out is where does the UK play in the AI story? 0:16:11.840 --> 0:16:14.840 Do we have some advantages that other nations don't, What 0:16:14.920 --> 0:16:16.880 kind of companies do we building, what kind of support 0:16:16.960 --> 0:16:19.400 is the government giving to those companies? And can this 0:16:19.520 --> 0:16:21.560 be sustainable? Is this something that's going to have a 0:16:21.600 --> 0:16:25.440 broader macroeconomic impact as well? That will really be the 0:16:25.520 --> 0:16:28.840 key focus as I talked to CEOs executives and government 0:16:28.880 --> 0:16:30.000 ministers as well next week. 0:16:30.120 --> 0:16:33.960 Yeah, it comes after the UK government launched this five 0:16:34.040 --> 0:16:38.160 hundred million pounds for AI in the UK that was 0:16:38.200 --> 0:16:42.000 in April. It doesn't sound like very much money, does 0:16:42.040 --> 0:16:45.680 it when you think about the billions in the AI space. 0:16:46.360 --> 0:16:49.440 But it is intent, isn't it. What do you think 0:16:49.480 --> 0:16:52.240 about the UK and whether we can really claim to 0:16:52.320 --> 0:16:54.920 be a tech leader? How much does it show about 0:16:54.960 --> 0:16:58.400 impetus to be in that leadership role in the UK? 0:16:58.520 --> 0:17:00.280 I think there's a couple of metrics that you could 0:17:00.280 --> 0:17:03.360 point to that show that there is a really healthy 0:17:03.440 --> 0:17:06.080 momentum right now in the UK and the UK really 0:17:06.160 --> 0:17:09.720 can claim to be playing a role. Not sure if 0:17:09.720 --> 0:17:12.960 it's leading, but certainly a role, a significant role in 0:17:13.040 --> 0:17:16.399 terms of the build out of AI and innovation. You 0:17:16.480 --> 0:17:18.800 do have that fund from the UK government, the UK 0:17:18.840 --> 0:17:21.200 Sovereign Wealth Fund, which yes, you say, in comparison the 0:17:21.240 --> 0:17:23.240 numbers we see in the US is is minimal. But 0:17:23.280 --> 0:17:25.280 what they would tell you James Wise is the chair 0:17:25.320 --> 0:17:28.280 formerly and also at Balderton which is eventually capital firm. 0:17:28.320 --> 0:17:30.199 What James would say is that look, not only do 0:17:30.200 --> 0:17:32.360 we invest, but we also open the doors to government 0:17:32.359 --> 0:17:34.840 for you. That credential that you get, that stamp of 0:17:34.960 --> 0:17:37.960 UK government approval actually is meaningful. In fact, I was 0:17:37.960 --> 0:17:40.640 speaking to Isomorphic Labs, a drug discovery company that sits 0:17:40.720 --> 0:17:42.760 under alphabet is a unit there, and speaking to their 0:17:43.200 --> 0:17:45.520 president he said it is meaningful. They've also had investment 0:17:46.480 --> 0:17:49.959 from the UK Sovereign Fund, so that is an important 0:17:49.960 --> 0:17:52.640 part we have. You know, three of the top ten 0:17:52.760 --> 0:17:56.120 universities in the world are in the UK, Cambridge, Oxford 0:17:56.320 --> 0:17:59.280 and Imperial. We have that talent, that deep research talent. 0:17:59.320 --> 0:18:02.520 We do have the cap of the City of London, 0:18:02.680 --> 0:18:04.560 and we do have access of course in those connections 0:18:04.880 --> 0:18:07.280 to Europe as well, so on all those fronts there 0:18:07.359 --> 0:18:11.520 is some supportive kind of muscle tissue there. What you're 0:18:11.520 --> 0:18:13.240 also seeing in terms of fun flows. I'll just give 0:18:13.240 --> 0:18:15.320 you a few statistics then that's come out of a 0:18:15.359 --> 0:18:18.120 recent technician report. The UK tech sector has a combined 0:18:18.119 --> 0:18:21.320 market value now of about one point six trillion US dollars, 0:18:21.680 --> 0:18:24.960 and AI's total UK tech market value is in fact 0:18:24.960 --> 0:18:27.159 more than doubled in the last five years. You have 0:18:27.280 --> 0:18:31.760 companies like eleven Labs, like Synthesia, like Wave AI raising 0:18:31.800 --> 0:18:33.800 billions of dollars, and. 0:18:33.800 --> 0:18:39.040 So in terms of adoption and the next steps, how 0:18:39.119 --> 0:18:43.200 far are we seeing the latest advances in AI filtering 0:18:43.320 --> 0:18:47.560 through into how startups are doing business, but also into 0:18:47.600 --> 0:18:52.280 how other businesses are adopting this technology and turning it 0:18:52.359 --> 0:18:54.399 into productivity gains. 0:18:54.760 --> 0:18:58.840 And I think that is a question that remains partly answered. 0:18:59.000 --> 0:19:02.080 And you go around the UK's tech ecosystem and you 0:19:02.080 --> 0:19:06.000 speak to people working in those organizations, they are leaning in. 0:19:06.040 --> 0:19:09.439 They're using these platforms, They're using these AI solutions. No 0:19:09.520 --> 0:19:12.640 doubt you and I are using forms of AI probably 0:19:12.640 --> 0:19:15.879 on a daily basis as well. We maybe as individuals 0:19:15.880 --> 0:19:19.600 be able to point to productivity gains. The harder question 0:19:19.680 --> 0:19:22.560 to answer is at the corporate level, to your point, 0:19:22.600 --> 0:19:25.880 at the enterprise level, are we yet seeing that filtering 0:19:25.880 --> 0:19:28.560 through to earnings to the bottom line. I think the 0:19:28.680 --> 0:19:31.680 jury is still out on that, but it is relatively 0:19:31.720 --> 0:19:35.480 early days in terms of adoption, and smaller companies and 0:19:35.480 --> 0:19:39.120 smaller enterprises may be adopting more quickly. Bigger enterprises, particularly 0:19:39.160 --> 0:19:41.399 those that are regulator heavy regulator for example in the 0:19:41.400 --> 0:19:44.200 financial services space, may take a little longer. 0:19:44.280 --> 0:19:44.520 Though. 0:19:44.640 --> 0:19:47.840 There are examples of banks that are leaning in too 0:19:47.920 --> 0:19:50.720 AI adoption, and we've seen evidence of that in terms 0:19:50.720 --> 0:19:52.879 of their commitments and their spending. So I think we 0:19:52.920 --> 0:19:54.960 still need to see that evidence come through. And that 0:19:55.119 --> 0:19:57.399 is a really key point because that comes down to 0:19:57.560 --> 0:19:59.639 the return on investment. Are we getting our bank for 0:19:59.680 --> 0:20:04.200 our bus As companies spend increasingly large amounts on AI solutions, 0:20:04.200 --> 0:20:07.880 on so called tokens, is that paying off? 0:20:08.040 --> 0:20:08.280 Yeah? 0:20:08.320 --> 0:20:12.119 Absolutely. As sort of thinking about adoption also skills, What 0:20:12.160 --> 0:20:13.919 sort of skills do people need to be able to 0:20:14.040 --> 0:20:16.240 use AI? That's one of the issues that's been brought 0:20:16.320 --> 0:20:18.600 up a lot, hasn't it in the UK? And you're right, 0:20:18.640 --> 0:20:21.480 how much does it cost a company actually to have 0:20:21.720 --> 0:20:25.560 AI tools that all of their workers can use those 0:20:25.600 --> 0:20:30.080 sort of token costs. Look, there's another sort of slightly 0:20:30.640 --> 0:20:33.600 darker issue, which is sort of the uncertainty around the 0:20:33.680 --> 0:20:35.439 labor government. And I mean I was speaking to the 0:20:35.480 --> 0:20:38.120 AI Minister only a few weeks ago about that software 0:20:38.440 --> 0:20:40.679 well funded. I know you speak to a lot of 0:20:41.600 --> 0:20:45.680 players and policy makers. The future of the current Prime 0:20:45.720 --> 0:20:48.960 Minister is very uncertain. Andy Burnham, who seems at the 0:20:48.960 --> 0:20:52.000 moment like the front runner maybe to replace him, sounds 0:20:52.040 --> 0:20:55.639 a bit tough on regulation in the AI industry, in 0:20:55.680 --> 0:21:00.000 the tech industry. Is that going to seep into issue 0:21:00.160 --> 0:21:04.240 use if there's a kind of tougher view around technology 0:21:04.320 --> 0:21:04.880 in Britain. 0:21:04.960 --> 0:21:07.119 I think that is an important question. Clearly, it's a 0:21:07.240 --> 0:21:12.480 question that we're putting to company executives around political uncertainty 0:21:12.480 --> 0:21:15.120 in the UK and what that means for their investment 0:21:15.200 --> 0:21:17.040 plans and their hiring plans. So I think that's a 0:21:17.119 --> 0:21:20.120 valid question for those working and operating in the tech 0:21:20.160 --> 0:21:24.159 ecosystem as well. I think it's fair to say that 0:21:24.240 --> 0:21:28.560 the AI Minister kenesian Arian is pretty well received within 0:21:28.920 --> 0:21:35.119 the tech ecosystem. I hear pretty solid responses off record 0:21:35.119 --> 0:21:39.000 and on record to what that government minister is doing 0:21:39.200 --> 0:21:45.040 Kanishka alongside the AI Sovereign Fund, and that is something 0:21:45.080 --> 0:21:48.720 that clearly AI leaders and entrepreneurs in the UK. They 0:21:48.720 --> 0:21:51.359 want to see that kind of commitment continuing, and there 0:21:51.400 --> 0:21:54.200 has been some evidence that the UK is and the 0:21:54.280 --> 0:21:55.920 UK government is trying to be on the front foot 0:21:56.040 --> 0:22:00.560 in terms of aligning the regulation with innovation with adoption. 0:22:00.600 --> 0:22:02.080 You've got one example of coming up at the end 0:22:02.080 --> 0:22:04.840 of this year, which is Weimo is very likely to 0:22:04.960 --> 0:22:07.719 be testing and actually rolling out its cars for the public. 0:22:07.720 --> 0:22:09.560 They're testing now rolling out its cars for the public 0:22:09.880 --> 0:22:11.959 by the end of this year. I speaking to them. 0:22:12.080 --> 0:22:15.560 That's still currently the plan, and that is because the 0:22:15.680 --> 0:22:18.639 UK has put in place a regulatory framework that allows 0:22:18.640 --> 0:22:20.159 them to do that for the first time out of 0:22:20.200 --> 0:22:23.439 the United States. So that is one example. It's not 0:22:23.480 --> 0:22:25.840 to say that there aren't others who say we need 0:22:25.880 --> 0:22:28.600 to have checks and balances around this technology. Yeah, so 0:22:28.720 --> 0:22:31.200 I think it's an important question. Will that stability or 0:22:31.280 --> 0:22:34.240 question marks about the future government post some kind of 0:22:34.240 --> 0:22:37.480 headwind is something that I will be addressing and bringing 0:22:37.520 --> 0:22:40.160