Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is the Bloomberg Dapic. Your podcast Goodborning is Wednesday,
Speaker 2: the fifth of August. I'm Caroline Hepka in London.
Speaker 1: And I'm Stephen Caroline Brussels. Coming up today. Building the
Speaker 1: Future Isn't cheap. SpaceX's AI splurge puts a dampner on
Speaker 1: its first set of earnings since going public.
Speaker 2: Bloomberg lands that former European and Russian officials have held
Speaker 2: secret talks on the war in Ukraine.
Speaker 1: Plus why nuclear plants in Romania and Hungary may need
Speaker 1: to be shut down because there's not enough water in
Speaker 1: the Danube River to cool them.
Speaker 2: Let's start with a round up of our top stories.
Speaker 1: SpaceX shares fell over seven percent and after ours, US
Speaker 1: trading has higher AI spending overshadowed better than expected quarterly results.
Speaker 1: Revenue beat estimates at seven point eight billion dollars, while
Speaker 1: the company posted eight smaller than expected loss. However, capital
Speaker 1: spending sword as Elon Musk pushes ahead with his AI
Speaker 1: and space ambitions. Bloomberg Tex' Ed Ludlow has the details.
Speaker 3: SpaceX spent a staggering eighteen point four billion dollars in
Speaker 3: the quarter and the vast majority of that eighty six
Speaker 3: percent was on AI infrastructure. But renting out compute capacity
Speaker 3: or computing power to companies like Google and Thropic is
Speaker 3: becoming a major business, and they gave lots of evidence
Speaker 3: of that. Second, like where is the growth? SpaceX said
Speaker 3: they will hit one hundred billion dollars in annual revenue
Speaker 3: run er EATE by the end of this year, and
Speaker 3: Musk even went a step further saying they have line
Speaker 3: of sight like complete confidence that SpaceX will hit one
Speaker 3: trillion dollars of real revenue in twenty thirty.
Speaker 1: Ed Ludlow says SpaceX's results kappa roller coaster rides. Since
Speaker 1: the company's records stock market debut in June, post IPO,
Speaker 1: volatility has wiped more than one trillion dollars from SpaceX's
Speaker 1: market value, ending elon Musk's brief run as the world's
Speaker 1: first trillionaire.
Speaker 2: Meanwhile, AMD shares plunged almost nine ten percent in late
Speaker 2: trading after the chip maker's sales outlook failed to match
Speaker 2: investors lofty expectations. The company says it expects third quarter
Speaker 2: revenue of about thirteen billion dollars with AI valuations so high.
Speaker 2: Our Market's reporter Anthony Stephens says that even great results
Speaker 2: are no longer good enough.
Speaker 4: Some of the stock based reaction has to be put
Speaker 4: into context with the year to date performance of that stock.
Speaker 4: That stock is up triple digits, so it's up aroun
Speaker 4: one hundred and forty percent year to date. It's on
Speaker 4: eight percent replacement. When the earnings fail to clear the
Speaker 4: best estimates is kind of understandable.
Speaker 2: Anthony Stephens on AMD's results, which come just weeks after
Speaker 2: COEO Lisa Sue unveiled a new AI chip that the
Speaker 2: company believes will outperform and videos.
Speaker 1: Recent tests on AI technology have revealed some parts carried
Speaker 1: out unsanctioned actions. According to a UK government organization. The
Speaker 1: findings have led to calls for more oversight and rigorous
Speaker 1: safety training of the technology. The Blue Work's tawa at
Speaker 1: A Bio has more AI.
Speaker 5: Models developed by OpenAI and Anthropic engaged in potentially harmful activity,
Speaker 5: including creating fake identities and writing malicious code. That's according
Speaker 5: to the UK's AI Security Institute, which shared the conclusions
Speaker 5: from its latest evaluation earlier this week. During testing, the
Speaker 5: institute intentionally allowed the model's Internet access and used them
Speaker 5: without certain safety filters to test their capabilities. In a
Speaker 5: post on social media, the body said the results are
Speaker 5: the first time they have seen the risks around autonomy
Speaker 5: and deception manifest so clearly in the real world. The
Speaker 5: news comes as Bloomberg understands the White House has told
Speaker 5: top USAI companies that Chinese open weight models won't be
Speaker 5: subject to testing under the government's new safety framework. In London,
Speaker 5: ta At a bio Bloomberg Radio.
Speaker 2: Hopes are arising that the US in Iran could be
Speaker 2: close to an interim agreement to reopen the Strait of Homer's.
Speaker 2: President Trump told reporters that talks are moving along very nicely,
Speaker 2: adding will know in forty eight hours, and speaking to
Speaker 2: Fox News in a separate interview recorded earlier on Tuesday,
Speaker 2: the US President had this to say on the talks.
Speaker 6: The strait's going to be opened very soon, or they're
Speaker 6: going to get hit very hard, and then the street's
Speaker 6: going to be open. And we were going to a
Speaker 6: tremendous attack, the biggest since World War Two. And they
Speaker 6: called me and said, very politely, please can we talk?
Speaker 6: Can we talk that in one And I said, yes,
Speaker 6: we could talk. Let's get it done. Finally, let's get
Speaker 6: it done.
Speaker 2: The US president there, speaking to Fox News as Axios
Speaker 2: reports that the US, Yron, and Oman could announce a
Speaker 2: temporary agreement as soon as today. The proposal would reopen
Speaker 2: shipping through the strategic Waterway under a sixty day arrangement,
Speaker 2: but US and Katari officials cautioned there's still no agreement
Speaker 2: despite growing optimism, and while a short term deal could
Speaker 2: help normalize commercial ship in the Strait, it might still
Speaker 2: fail to end the war or resolve President Trump's concerns
Speaker 2: about Iran's nuclear program.
Speaker 1: Bloomberg has learned that former senior officials from Russia, the UK, France,
Speaker 1: and Germany privately met in Vienna to explore ways to
Speaker 1: end the war in Ukraine. Are reporting on The gathering
Speaker 1: comes as Europe's three biggest powers have been working on
Speaker 1: ways to establish direct contact with the Kremlin. Bloomberg Exchanmes
Speaker 1: Wilcock has more.
Speaker 7: It's not unknown for former officials to engage in informal
Speaker 7: diplomatic talks at arm's lengths from their governments. These so
Speaker 7: called Track two meetings aimed to exchange ideas that might
Speaker 7: later feedback into government channels. Now all four countries either
Speaker 7: declined to comment or told Bloomberg they were not aware
Speaker 7: of those discussions between some of their seasoned diplomats and
Speaker 7: former national security officials which happened last month in Vienna.
Speaker 7: But the news of the meeting comes as Europe tries
Speaker 7: to take a big role in discussions with Russia, which
Speaker 7: so far have been dominated by the US. In London,
Speaker 7: walk Gradient.
Speaker 1: And just one of the new story of note, the
Speaker 1: UK's Foreign Secretary at Miliban travels to Washington, d C.
Speaker 1: Today for the first time since taking office. Miliband and
Speaker 1: the US Secretary of State Marco Rubi are expected to
Speaker 1: discuss reopening the Strait of Hormuz and Ukraine. The latest
Speaker 1: polling shows at Miliband's Labor Party is riding a wave
Speaker 1: of optimism under new leader Andy Burnham. The left wing
Speaker 1: party has overtaken Niger Faraja's Reform UK for the first
Speaker 1: time in a year, according to the pollster JL Partners.
Speaker 2: And those are our top stories for you this morning. Now,
Speaker 2: in terms of the stocks that we're looking at today,
Speaker 2: Asian equities are climbing. They are now at their highest
Speaker 2: levels that we've seen in about a month. So the
Speaker 2: Cosby this morning is up by four point five percent.
Speaker 2: The MSCIAS PACIFICI Index up by two point one percent.
Speaker 2: Remember yesterday European and US stocks clothes at record high.
Speaker 2: It's the stock six hundred actually adding seven tenths of
Speaker 2: one percent of the clothes. With the mining rally and
Speaker 2: very positive earnings. The oil this morning retreating half of
Speaker 2: one percent. The seventy eight dollars ninety three now for
Speaker 2: breakthrough futures as the dollars also dropped on this optimism
Speaker 2: over an interim US deal. And then watching also bond markets,
Speaker 2: especially on the long end of the curve given recent
Speaker 2: run ups. Looking at that thirty year long bond in
Speaker 2: the US with down almost two basis points this morning
Speaker 2: at five sixteen. Those are the markets now.
Speaker 1: In a moment, we'll bring you more on what we
Speaker 1: learned from SpaceX's first quarterly results as a public company,
Speaker 1: plus how the drop on the level of the Danube
Speaker 1: River is posing a high risk to economies in central
Speaker 1: and southeastern Europe. The first a word on another story
Speaker 1: that we've been reading this morning are new ways to
Speaker 1: cool down as temperatures rise. Yue Jisebe has been writing
Speaker 1: about a new kind of innovation from Japan, a sort
Speaker 1: of fridge for humans. The dough Heimen box is about
Speaker 1: the size of a phone box if you're also remember
Speaker 1: what those are. It has a glass door and a
Speaker 1: seat inside, and it's cold, most importantly, are in fifteen
Speaker 1: degrees and blows jets of five degrees air when someone
Speaker 1: sits down inside it. Now it's designed to offer quick
Speaker 1: relief from potential heat exhaustion or heat stroke in places
Speaker 1: where our conditioning might not be available, think construction sites
Speaker 1: are particularly crowded venues. The company actually sent them to
Speaker 1: evacuation shelters after last week's earthquake in Japan. Now they
Speaker 1: sell for around nine five hundred dollars. They could be
Speaker 1: plugged in like any appliance. But this is another example
Speaker 1: of how places like Japan are dealing with hotter and
Speaker 1: more humid summers as well. I mean it's it's I
Speaker 1: don't think it's a sort of a pleasant place to
Speaker 1: spend time so much as perhaps something it's becoming a
Speaker 1: little bit more essential in these extreme temperatures. But it
Speaker 1: is a solution, if a slightly odd one to look at.
Speaker 2: It is a bit funny to look cat, mind you
Speaker 2: I've seen heat cabins like that kind of sauna. So
Speaker 2: this is like the opposite soy to cool you down.
Speaker 2: I mean, yes, I can understand why, especially as you say,
Speaker 2: in places where they might not be ac and you
Speaker 2: know a lot of con who's worried about heat related
Speaker 2: death in Japan and South Korea going through this very
Speaker 2: very hot phase. I mean, even making headlines here in
Speaker 2: Europe was the fact that in the Tokyo Zoo the
Speaker 2: heat seems to have killed three lions, and so it's
Speaker 2: humans and animals that is suffering here. And there are also,
Speaker 2: interestingly in Japan apparently tighter regulations that are coming into
Speaker 2: force to try to keep people cool. I mean that's
Speaker 2: a conversation only just beginning in Europe.
Speaker 4: Really.
Speaker 1: Yeah, indeed, and perhaps theres some lessons to be learned
Speaker 1: as well as to how countries like Japan are dealing
Speaker 1: with the changing climate. There to really interesting read about
Speaker 1: this particular innovation, will but link to it in our
Speaker 1: podcast show notes. Well, that's bringing more details now on
Speaker 1: the results from SpaceX. One of the key stories on
Speaker 1: markets shares tumbling over seven percent and after ours trading,
Speaker 1: our aerospace reporter Lina Rashdan joins us now from Mora Lean.
Speaker 1: Good morning, investors, focusing on the AI capital expenditure numbers
Speaker 1: from SpaceX. What didn't they like?
Speaker 8: The stock is already under pressure, it's fallen below its
Speaker 8: IPO price, and that always kind of bursts the bubble
Speaker 8: that bankers and the company has built around, you know,
Speaker 8: the appetite for the shares. We also have about one
Speaker 8: hundred billion ensures that are about to be eligible to sell,
Speaker 8: so you can see where like investors were looking to
Speaker 8: the earnings, and a main focus was the expenses around
Speaker 8: the business, because that's a huge part of the company
Speaker 8: and because of how capital intensive that division is. So
Speaker 8: it almost doubled the figure to the figure for those
Speaker 8: expenses doubled to fifteen point eight billion, and that's a
Speaker 8: few billion more than analysts expected. And the company also
Speaker 8: said that these expenses will continue in the third and
Speaker 8: fourth quarter. So investors didn't react well to those figures.
Speaker 2: Okay, So then in terms of the underlying business performance,
Speaker 2: because this is the other unusual thing about SpaceX, I mean,
Speaker 2: these huge lofty ambitions based on things that are yet
Speaker 2: to come in the future. And then actually the nuts
Speaker 2: and bolts of what is making money?
Speaker 8: They accompanied it. Overall, well, the Bea revenue estimates, the
Speaker 8: loss per share came in at nine unless had expected
Speaker 8: twenty four, So overall those numbers were good. Then we
Speaker 8: have the Startling subscriptions, which fell slightly below endless estimates,
Speaker 8: and that's the only profitable part of the business. But
Speaker 8: on the other hand, we have some of the executives
Speaker 8: that kind of touted the new market that the company
Speaker 8: Startling could enter, and that's for mobile services. So they
Speaker 8: said they could compete with AT and T and Verizon
Speaker 8: and they could unlock revenue that could be hundreds of
Speaker 8: billions a year. So that kind of gave investors more hope.
Speaker 8: That kind of cleared a path for that business for
Speaker 8: consumer Wife to be a consumer wireless operator, which we
Speaker 8: didn't really have before.
Speaker 1: We also heard, of course, may a lot of mosk
Speaker 1: on the earnings call as well. Stood out from his comments.
Speaker 8: Well, we couldn't really predict what Mosco was going to
Speaker 8: be saying going into this, but we knew he'd make
Speaker 8: some bold predictions. He said that he expected annual run
Speaker 8: rate revenue to reach one hundred billion by year end.
Speaker 8: Bloomberg Analystslice pulled by Bloomberg expected thirty eight point six billions,
Speaker 8: so you can see that kind of huge divide, but
Speaker 8: he seemed very confident of the number. He said that
Speaker 8: that was in a question mark that they were going
Speaker 8: to achieve that number. They basically, he said, they basically
Speaker 8: could do nothing and reach that figure. He also pulled
Speaker 8: forward the figure for reaching one trillion in revenue by
Speaker 8: twenty thirty, that's a year ahead of schedule. He even
Speaker 8: said they could achieve it by twenty twenty nine. Anless
Speaker 8: asked him about Starship, which kind of encapsulates Musque's big
Speaker 8: plans for space, for sending people, for also startling to
Speaker 8: be able to get more satellites up there, and he
Speaker 8: said the decadence of flights would increase rapidly. He said
Speaker 8: the heat shield, which was a concern for some investors
Speaker 8: on the rocket, that it's looking very robust. So that
Speaker 8: also kind of is some concerns. Is confidence in Starship
Speaker 8: and in reaching that revenue. He also touted this the
Speaker 8: larger V three satellites that could be a huge revenue
Speaker 8: generator for Starlink, and he said that that should be
Speaker 8: coming very soon.
Speaker 2: Okay, pretty interesting, Lene, Thank you so much then for
Speaker 2: giving us the assessment then from investment perspective, from the
Speaker 2: analysis of what Mosque had to say. That is our
Speaker 2: aerospace report at lean al lush Dan.
Speaker 1: Thank you.
Speaker 2: Stay with us. More from Bloomberg Daybacube coming up after this.
Speaker 1: The record low levels and the Danube River disrupting shipping
Speaker 1: and crucial power generation along its route in central and
Speaker 1: southeastern Europe. In Romania works a rounder way to increase
Speaker 1: the water level by a few cents meters to maintain
Speaker 1: electricity supplies. Our prigrilor chief Andreade it joins us now
Speaker 1: for more on this story. Andre You've been reporting with
Speaker 1: colleagues from across the region on how this is affecting economies.
Speaker 1: How widespread is the disruption from this hot weather which
Speaker 1: is pushed water levels in the Danube to such lows.
Speaker 9: The situation is quite dire and widespread and expected to
Speaker 9: get worse in the coming days. It's impacting trade, disrupting
Speaker 9: tourist cruises and also power generation, which is key in
Speaker 9: countries such as Romania and Hungary where the Danube River
Speaker 9: is used to cool off the country's nuclear power plants,
Speaker 9: and some of the units have to be shut down,
Speaker 9: and authorities are trying to do everything to avoid a
Speaker 9: full shutdown because these nuclear power plants are key for
Speaker 9: power generation in these countries.
Speaker 2: So what is being done then in response to the situation.
Speaker 9: Well, in some countries, authorities are just waiting for rain
Speaker 9: to come and there's and we're inside. But a lot
Speaker 9: of activity has been happening in Romania. On Monday, authorities
Speaker 9: there used four hundred pounds of explosives to blast a
Speaker 9: rock formation in the river to divert some of the
Speaker 9: river flow towards towards the nuclear plant. Yesterday, dozens of
Speaker 9: workers we're using heavy machinery machinery to break up these
Speaker 9: rocks and load them onto barges that are expected to
Speaker 9: be sunk into the river today to divert more water
Speaker 9: toward the water toward the nuclear plant to avoid a
Speaker 9: full shutdown. All of this is happening at extreme temperatures.
Speaker 9: Yesterday in the area of Romania, temperatures reached around forty
Speaker 9: one degree celsius, so really difficult conditions and there's no
Speaker 9: relief insight of rain coming in for the rest of
Speaker 9: the week.
Speaker 1: What sort of broader economic damage is this causing? Andrea,
Speaker 1: Because we're talking about a river that are course serves
Speaker 1: a multitude of functions for shipping. But you know, this
Speaker 1: effect on power supply is something that has a really
Speaker 1: significant effect, right.
Speaker 9: I mean, it's the second longest river in Europe that
Speaker 9: flows through ten countries. So, and this situation has been
Speaker 9: lasting for days now, so it's very hard to estimate
Speaker 9: economic impact. By what we've seen so far. Authorities in Romania, Hungary,
Speaker 9: Slovakia are actually asking citizens to lower power consumption, companies
Speaker 9: to voluntary decrease their power consumption, so some of them
Speaker 9: have already done so. Carmakers in Romania and Hungary have
Speaker 9: cut down on production or shut down some production. So
Speaker 9: we're seeing is and this is happening. It's sort of
Speaker 9: a worse time, especially for Romania, which has been dealing
Speaker 9: with high deficits and inflation and has an interium government
Speaker 9: in place after months of political instability. So it's to
Speaker 9: be seen that this is not a good time for
Speaker 9: some of these economies to be dealing with such natural problems.
Speaker 1: Thanks for listening to Bloomberg Daybreak Europe.
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