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17:53
PDT

Trump's address may influence market sentiment ahead of the midterms.

President Trump Congressman Jim Himes United States US Bloomberg Money Wall Street Week Bloomberg This Weekend Bloomberg Television Joe Matthews So Joe East Room White House PRIVATE

– Focus on election security could indicate rising political tensions.

– Uncertainty around the speech content may lead to market volatility.

– Historical context suggests presidential addresses can sway investor confidence.

– The unusual nature of the address raises questions about its implications.

political volatilityelection security

▸ Full transcript

Good morning. This is Bloomberg surveillance. Welcome back to the opening trade. It's Bloomberg Money. This is the Asia trade. This is Wall Street Week. Welcome to Balance of Power. You're watching Bloomberg deals. Welcome to Bloomberg This Weekend. This is Bloomberg Television. President Trump is set to deliver a rare address to the nation in a few minutes from now, four months out from the US midterms. The president has indicated that election security may be one focus of his comments. Let's go to Washington, bringing in Balance of Power co-anchor Joe Matthews. So Joe, we're watching out; there has been so much speculation on what the president's going to say. What is your sense of, you know, give us a preview? Well, it's pretty difficult too. It's highly unusual to have a presidential primetime address, something that is typically very carefully choreographed and telegraphed to news networks about the purpose of the speech, that we actually have no real idea what he is going to say just about five minutes from now. They're likely loading that speech into the teleprompter right now. He's going to be in the East Room of the White House. It's unclear if he will have an audience in the room as he did in his most recent primetime address, an off-camera audience allowing him to kind of look at people and get the vibe in the room. But Congressman Jim Himes, a Democrat from the state of Connecticut, actually wrote a...

Analysis

President Trump is set to deliver a rare address to the nation, focusing on election security as the US midterms approach. The lack of clarity surrounding the content of his speech raises uncertainty in the market, as such addresses are typically well-prepared and choreographed.

Smart money should note the unusual timing and lack of transparency regarding the speech, which could indicate potential volatility in markets as investors react to unexpected developments. Additionally, the focus on election security may signal heightened political tensions that could impact market sentiment leading up to the elections.

17:49
PDT

Stock priced at 5.9x 2026 earnings indicates potential upside.

TSMC AI K-Pak DXY

– Revenues surged 700% year-over-year in Q1.

– TSMC raised revenue expectations but concerns about overspending persist.

– Projected K-Pak spending for 2026 is $60 billion, $4 billion above expectations.

– Market sentiment is cautious despite strong earnings.

AI tradespending concernstech stock performance

▸ Full transcript

It comes down to about 5.9 times for its multiples against its 2026 earnings while consensus is about 20 times. So that means if you buy the stock at this pricing, it's going to potentially provide you an extremely big upside when the stock rallies. Of course, there is some concern if that's going to be the market peak when it actually had that initial pop. However, when you also look at the even more fundamental side of things, revenues jumped 700 times or so for its first quarter compared to the previous year. So that is a lot of excitement there as well. Yeah, I mean, Winnie, this is also coming at a time where there seems to be a rethink on where we go from here on the AI trade, right? TSMC's earnings did well, but that didn't seem to be enough for investors. Yeah, exactly. The profits were pretty good and they even raised their expectations for both revenue and spending. But it seems like there is a bit more concern when it comes to the K-Pak side of things, expecting $60 to $60 billion for 2026, and that is at least $4 billion higher than the expected range. So a little bit of concern when it comes to potentially overspending.

Analysis

The stock is currently priced at about 5.9 times its 2026 earnings, suggesting a significant upside potential if a rally occurs. However, concerns linger regarding whether this represents a market peak following an initial surge, despite revenues jumping 700 times year-over-year in the first quarter.

Investors are re-evaluating the AI trade, as TSMC's strong earnings and raised revenue expectations have not alleviated concerns about potential overspending, particularly with projected K-Pak spending reaching $60 billion for 2026, exceeding previous estimates by $4 billion. This indicates a cautious sentiment in the market despite positive revenue growth, highlighting the need for careful scrutiny of spending versus profitability.

17:46
PDT

Xi's speech at the World AI Conference underscores China's commitment to AI.

Xi Jinping CXMT China World AI Conference AI IPO President Xi Min Min Lo USDCNH

– CXMT's IPO is expected to generate significant retail investor interest.

– China is positioning AI as a major export driver, similar to EVs and solar panels.

– Geopolitical tensions may influence AI regulations and collaboration efforts.

– The tech landscape is shifting with the potential influx of affordable chips.

AI governanceChinese tech growthIPO market dynamics

▸ Full transcript

For our company, the keys to do what we can do best. We do believe that making such differentiation between tech companies based on geographical proximity is a biased approach and not a very correct path to take. But for us, we will focus on doing what we are capable of. So we just got a line from state media saying and confirming that President Xi will be speaking at the World AI Conference at the opening ceremony very shortly. Not exactly sure what the starting time is, but certainly something that we'll be watching out for. And this is coming as the Chinese government has been promoting tokens as the next big AI export and driver of growth for China, following the likes of EVs and solar panels. And so the world is now thinking about, you know, not just China shock 2.0, but China shock 3.0. Is the world ready for an influx of affordable and good enough chips from giants like CXMT as we look ahead to the blockbuster IPO next week? Yep, that's coming. Min Min Lo in Shanghai for us. In fact, just on that very note, right? So we've been having this conversation around the physical stack and some of the bottlenecks there. Memory comes to mind. CXMT, the big one. I cannot underscore that enough. It really ignited this rush among retail investors. So we now have a better understanding of how massive that rush was or is currently a retail portion of the.

Analysis

President Xi is set to speak at the World AI Conference, highlighting China's focus on AI as a key growth driver, alongside EVs and solar panels. The anticipated influx of affordable chips from companies like CXMT could signal a significant shift in the tech landscape, potentially leading to a new wave of investment opportunities.

Smart money should note the geopolitical implications of AI advancements, as both the US and China are recognizing the need for stronger regulations and collaboration in AI governance. The upcoming IPO of CXMT is likely to attract considerable retail interest, reflecting a broader trend of investment in Chinese tech amid rising global competition.

17:44
PDT

Company has shifted focus from surveillance to generative AI.

Panentete AI China CEO USDCNH

– Computer vision now represents only 20% of the business.

– High profit margins maintained despite resource scarcity.

– Strategic pivot towards visual perception in AI models.

– Potential for growth in a competitive AI landscape.

AI innovationprofitability in techresource optimization

▸ Full transcript

I mean, Panentete clearly, give us a sense of your time with the CEO and co-founder. Yeah, it was a long conversation. We spoke for about an hour yesterday and again this is a company that has, you know, many years ago come under the spotlight for its capabilities when it comes to surveillance and facial recognition. It was the market leader at the time. It was all over the smart city project taking a lot of government contracts in China at the time but now it's completely reinvented itself. That computer vision sort of segment of the business is just 20% of the business now. It's moved on to generative AI and it's going back to its roots in computer vision and building native multi-model models that really center on vision sort of visual perception and thinking as the primary driver of processing rather than linguistic thinking. So that is their edge when it comes to their core AI model. Have you listened to what the founder and CEO told me? Because of the current scarcity of computing resources and the need for optimization, even with significant resource investment, the current pricing and profit margins are very high. Therefore, it can still be considered a very profitable software business. You talked about the strength of your computational capabilities. I know when you started back in 2014, I believe the export controls are not in place.

Analysis

The conversation highlighted a company's shift from surveillance and facial recognition to generative AI and advanced computer vision, now comprising only 20% of its business. Despite high resource investment, the company maintains strong profit margins, indicating a robust software business model amidst current computing resource scarcity.

Smart money should note the strategic pivot towards multi-modal AI models that prioritize visual perception, which could position the company favorably in a competitive landscape. The emphasis on profitability despite resource constraints suggests resilience and potential for growth in a challenging market environment.

17:41
PDT

Xi Jinping to address AI conference, highlighting its importance to China.

Xi Jinping China US AI Chinese state media foreign ministry On Bloomberg CL=F PRIVATE USDCNH

– Focus on avoiding tech monopolies and fragmentation in AI.

– Emphasis on bridging the digital divide between East and West.

– Potential for increased investment in inclusive AI technologies.

– Geopolitical dynamics may influence global AI market opportunities.

AI developmentUS-China relationstech regulation

▸ Full transcript

On Bloomberg. Now, as we've been discussing, the Chinese presidency, Jinping, is expected to make his first appearance today at the country's flagship AI conference. This signals the growing importance that Beijing is attaching to the technology as its rivalry with the US intensifies. Let's bring out China correspondent Mimilou in Shanghai. Mimil, talk to us about what Xi might say during this address at a time where we're hearing potentially yet more development and progress when it comes to AI and models. Certainly when it comes to these advancements in AI models, it really shows how China is narrowing the gap with the US. So, national security has become a major concern for both the US and China. And when it comes to what the presidency will speak about, it's likely to touch on bridging the digital divide between the East and West, between the global South and the advanced nations. If you look at what Chinese state media has been publishing and what the foreign ministry has been saying, there is saying that AI should not become tech monopolies. They are warning against fragmentation, the AI iron curtain, and really likening this to the idea of the oil mindset versus the water mindset, the oil mindset, thinking of AI and computing resources as a scarce...

Analysis

Chinese President Xi Jinping's anticipated address at the AI conference underscores Beijing's commitment to advancing its AI capabilities amid escalating US-China tensions. His speech is expected to address the need for collaboration and regulation in AI to prevent monopolistic practices and fragmentation in the tech landscape.

Smart money should note the emphasis on bridging the digital divide, which signals potential opportunities for investment in AI technologies that promote inclusivity. The mention of avoiding an 'AI iron curtain' suggests that geopolitical dynamics may create both risks and opportunities in the global AI market.

17:37
PDT

Jipoo's valuation has surged significantly post-IPO.

Jipoo DeepSeek Xi Jinping WAC US China IPO AI AAC Hong Kong USDCNH DXY

– AI labs are aggressively fundraising due to high training costs.

– Geopolitical tensions may open avenues for US-China AI collaboration.

– Chinese government is focusing on stronger AI regulations.

– WAC serves as a platform for launching AI governance initiatives.

AI investmentUS-China relationsregulatory environment

▸ Full transcript

Clearly, they're making a lot of money. Jipoo's IPO was roughly around six to eight billion dollars in Hong Kong earlier this year; it's now valued at about a hundred billion dollars. People see a lot of potential. I don't think open source is a bottleneck to profitability; however, training these models is extremely expensive. You are seeing all these labs fundraising aggressively right now, with DeepSeek reportedly announcing another round of fundraising yesterday. There's a bit of an overhang race. Everyone's singing poor here, by the way, on overseas access for China AI models. Sorry to bring geopolitics into the mix here, but given the scare that we got with Fable and Mythos, do you think there is an opening here for the US and China to maybe collaborate on AI guardrails? Yes, definitely. I think that's exactly one of the key talking points Xi Jinping will be addressing. AAC is not only a technological exhibition anymore; it's actually a place where the Chinese government has been releasing or launching some of their grander AI governance initiatives over the last few years. If you think about what's been happening, whether in the US or China, there is a great reckoning amongst the leadership and industry that there needs to be stronger regulation, from what I've heard from think tankers from the US side that are attending WAC.

Analysis

China's AI sector is witnessing significant financial growth, with Jipoo's IPO skyrocketing from an initial valuation of $6-8 billion to around $100 billion. The ongoing fundraising efforts by AI labs, such as DeepSeek, highlight the expensive nature of training AI models and the potential for collaboration between the US and China on AI governance amidst geopolitical tensions.

Smart money should note that the Chinese government is increasingly using AI exhibitions to launch regulatory initiatives, indicating a shift towards stronger governance in the tech sector. This could create both opportunities and challenges for investors as the landscape evolves, particularly with the potential for US-China collaboration on AI guardrails becoming a focal point in discussions at major events like the WAC.

17:33
PDT

Market down 3.6%, indicating potential correction.

David Grace Xiao AI Prom Xi Jinping China World AI Conference Shanghai AI WIC Uncle David Hong Kong Tech Research USDCNH

– World AI Conference in Shanghai is a key event.

– Xi Jinping's attendance underscores AI's importance.

– Focus on the tone of speeches for market signals.

– China aims to set its own AI narrative globally.

AI developmentChina's tech policymarket volatility

▸ Full transcript

Market, I suggest don't look at it. Close your eyes and just listen to Uncle David here. That's an ugly session. 3.6% to the downside. We are set for a correction that's 10% down. And if you're long, Kiochia, which we discussed earlier on, some of the chip plays and AI plays there, that's not done 50%, 5% 0% over the last, what, 3 and a half weeks or so. That's really not the best setup as we go into, of course, a very big day today in Shanghai. It's the World AI Conference, of course, taking place there. Really, just to get into the weeds of things here, China's AI landscape. Joining us here on set here in Hong Kong is Grace Xiao, founder and analyst at Tech Research firm AI Prom. Good morning. Nice to see you. Good to meet you, David. Okay. So what's going to be different about the 2026 version of this conference? Yeah. Well, like you said, it's the annual conference in Shanghai. It's the biggest event in Beijing, in China on AI. And I think this year is going to be very interesting because Chinese state media has reported that Chinese President Xi Jinping will be attending. It signifies, I think, the importance of AI for him, for the Chinese government right now, whether as looking at it as like an economic driver, industrial planning component, or even technological competition, or looking at it as international diplomacy. WIC 2016 is going to be a stage for China to set their own AI narrative globally. Okay, so what do we need to be focused on? Is it the tone of the speeches? Is it the actual technology?

Analysis

The market is experiencing a significant downturn, with a 3.6% drop indicating a potential correction of 10%. The upcoming World AI Conference in Shanghai, attended by President Xi Jinping, highlights the Chinese government's focus on AI as a key economic and technological driver.

Smart money should note that the tone and content of speeches at the conference could shape global perceptions of China's AI strategy. The emphasis on AI as a tool for international diplomacy may signal a shift in how China positions itself in the global tech landscape, impacting investor sentiment and market dynamics.

17:31
PDT

Singapore's growth is slowing amid US-Iran tensions.

Singapore US Iran Straits Times Index Singapore Dollar US Dollar hyperscalers AI SDI Sing Dollar And Singapore DXY

– The Singapore Dollar is outperforming, supported by strong bank performance.

– Straits Times Index reaches record highs.

– Concerns arise over hyperscalers' massive spending in AI.

– US Dollar's reversal may impact Singapore Dollar strength.

geopolitical riskAI sector dynamicscurrency performance

▸ Full transcript

Still benefiting from the AI boom at a time where perhaps there are still some concerns when it comes to petrol camps, maybe to some extent as well, pharmaceutical exports. We have been seeing though Singapore's growth slowing in the second quarter with the backdrop looking a bit more certain given this latest flap of tensions between the US and Iran to what extent this hits the very export reliant country. Of course, in terms of the markets, we have been seeing the Sing Dollar more or less outperforming this year. And Singapore stocks, you're seeing them at a record, of course, will track how they fare about 30 minutes from now. But the banks have really been doing the heavy lifting, and that's helped to propel the SDI to records on a day where, of course, when we look at the US Dollar and the extent in which it has reversed some of the earlier strength. That also seems to be supportive for the Sing Dollar. You're looking at US Sing Dollar just under the 130 handle. Now, just checking as well, I mean, what we're seeing broader base when it comes to what the impact of some of these markets is looking like, given how the AI boom is playing out in market's investors seem to be a bit more concerned now about the massive spending that the hyperscalers are undertaking at the time.

Analysis

Singapore's growth is slowing amid rising tensions between the US and Iran, impacting its export-reliant economy. Despite this, the Singapore Dollar is outperforming this year, supported by strong bank performance propelling the Straits Times Index to record highs.

Investors should note the potential risks associated with the massive spending by hyperscalers in the AI sector, which may lead to volatility. The interplay between the US Dollar's recent reversal and the strength of the Singapore Dollar could indicate shifting market dynamics that warrant close attention.

17:26
PDT

Japan's finance minister is pushing for asset repatriation.

Japan Gerold Takaheechi GPIF Prime Minister Takaheechi Gerard Verdi PRIVATE

– Internal disagreements among ministers may impede policy changes.

– Prime Minister's sales tax cut proposal is facing difficulties.

– There is a significant gap between policy discussions and implementation.

– Market volatility in the yen is likely as investors assess policy effectiveness.

Japanese fiscal policyasset repatriationmarket volatility

▸ Full transcript

So it only makes sense, I think, for those assets to come home. And I think that's what you see the finance minister pushing this week. Gerold, talk to us about the approach in policymaking in Japan, though, because for any tweak, they do seem to be quite conservative about this. Are you optimistic that this is going to really come through this time around? That's really the key issue here, is that we have already seen disagreement between the finance minister and the health minister who actually oversees the GPIF, who is going to be the big player here. I think what you're seeing now is ideas being put out there. Whether these ideas materialize or not is a very, very different issue. This week we're already seeing maybe Prime Minister Takaheechi's plan to cut sales tax on food. That is in a little bit of trouble this week as well. So there's a big difference between actually talking about stuff and making it happen, and I think that's what people need to pay attention to over the weeks and months ahead. Yeah for the yen and those funds to come home. Gerard, thank you. Always great to chat Bloomberg, opinion columnist Gerard Verdi for us. So we have more head on the Asia trade. This is Bloomberg.

Analysis

Japan's finance minister is advocating for the repatriation of assets, but there are signs of internal disagreement regarding policy direction, particularly with the health minister overseeing the GPIF. Prime Minister Takaheechi's proposed sales tax cut on food is facing challenges, highlighting the gap between policy discussions and actual implementation.

Smart money should note the cautious approach of Japanese policymakers, which may hinder timely economic adjustments. The divergence between proposed ideas and their execution could lead to volatility in the yen and related markets as investors weigh the effectiveness of these policies over the coming months.

17:20
PDT

Caution prevails in markets due to U.S.-Iran tensions.

Trump Iran U.S.Gulf allies John Herzkovitz Nicholas Luar Bloomberg Since April Bloomberg Oil If Trump PRIVATE CL=F

– Traders are closing positions ahead of the weekend.

– Consumer sentiment is affected by rising fuel prices.

– Profit-taking is observed as the week ends.

– Escalation rhetoric is not new, but market reactions may be exaggerated.

geopolitical riskconsumer sentimentoil market volatility

▸ Full transcript

Since April, Nicholas Luar, our Bloomberg Oil reporter, joins us now. So, Nick, talk to us about how markets were positioned coming into this week and what they are positioning for ahead. I think what was very clear was that this was going to be a week of escalation, and things bore out exactly as we saw. It's true. I think Trump has vacillated a bit on some policies that stuff early in the week about a 20% fee on all traffic paid to the U.S. That's obviously been rolled back, and he had that because of some push from the Gulf allies. So I think what's clear is that escalation is still the story. And as John has already pointed out, I think positioning into next week is challenging because it's not clear if the escalations will keep going. Let's look at what's on the table. Iran has traded very explosive rhetoric with Trump. We've seen strikes. We've seen that exchange fire. But in some ways, in the grand scheme of things versus early in the war, this isn't exactly new. We've had weeks of escalation before. And so I think that's why people are also wondering about caution going into the weekend. No one wants to be caught if the market decides to move in the opposite direction. If Trump says something de-escalatory, and so people have been closing their positions. And I think that's why, while there is still strength coming into Friday, that will tend to people off a bit as we head into the end of Friday. Hence the profit-taking I suppose that we're seeing. Talk to us as well about what consumers are feeling, the prices at the pump. We are watching out for the U.S. President's speech later. I think what's very clear...

Analysis

Markets are experiencing caution ahead of potential escalations in U.S.-Iran tensions, with traders closing positions to avoid losses if de-escalation occurs. The consumer sentiment remains mixed, particularly regarding rising fuel prices, which could impact spending behavior in the near term.

Smart money should note that while the rhetoric is explosive, the market has seen similar patterns of escalation before, suggesting that traders may be overreacting. The potential for a shift in U.S. policy could create volatility, making it essential to monitor developments closely.

17:18
PDT

Iran has instructed Houthis to target Red Sea shipping.

Iran Houthis U.S.Central Command Trump MOU Red Sea

– Diplomatic relations between the U.S. and Iran are strained but not entirely closed off.

– The release of a U.S.-Iranian dual national may indicate a potential for future negotiations.

– The situation could lead to increased volatility in shipping and energy markets.

– Both sides accuse each other of violating the current memorandum of understanding.

geopolitical riskdiplomatic relations

▸ Full transcript

If it were attacked, if its infrastructure were attacked. And there was a Reuters report that Iran has instructed the Houthis to go after Red Sea shipping if it were to suffer severe attacks to its infrastructure. So we've seen this going on for about a week. The U.S. is, we're still waiting for Central Command to say what was hit in the latest round of strikes, but it's within parameters that have gradually expanded. And that's what we've seen back and forth, the attacks between these two adversaries for about a week's duration. John, the hope is that there is still an off-ramp though. Are there any indications that can be a return to diplomacy? Yeah, I mean both sides have said that the MOU, the memorandum of understanding is just it's off, they both accuse each other of violating it, don't see it as being workable but they haven't ruled out diplomacy yet. That diplomacy is in really bad shape, but we've seen things change quickly. We've had Iran's chief negotiator saying that the MOU just isn't working, but didn't see diplomacy as dead. We also had the release of a U.S. citizen, a U.S.-Iranian dual national was held by Iran. Trump said this was a goodwill gesture. You know, it may or may not open the door, but it's something that was there before. So at this point, no indications.

Analysis

The ongoing conflict between the U.S. and Iran has escalated, with Iran reportedly instructing the Houthis to target Red Sea shipping in response to attacks on its infrastructure. Despite the deteriorating diplomatic situation, both sides have not completely ruled out the possibility of returning to negotiations, although the current memorandum of understanding is deemed unworkable.

Smart money should note that while tensions remain high, the release of a U.S.-Iranian dual national could signal a potential thaw in relations, albeit a fragile one. The market should remain vigilant as geopolitical risks could impact shipping and energy sectors significantly, especially in light of the ongoing hostilities in the Middle East.

17:15
PDT

Nikkei down 3%, indicating a technical correction.

Nikkei Iran US Strait of Hormuz John Herzkovitz Deanna Rafidi Wall Street Bloomberg This Weekend Middle East East Asia PRIVATE

– US attacks on Iran escalate for the fifth consecutive day.

– Shipping traffic in the Strait of Hormuz is declining.

– Market aversion is rising due to geopolitical tensions.

– Potential supply chain disruptions in energy markets.

▸ Full transcript

Deanna Rafidi, we're tracking breaking news today from Wall Street to Washington. Let's start over. Bloomberg This Weekend, bringing a little Bloomberg into your weekend routine. Watch, listen, stream. Right. Welcome back. Sixty minutes of the cash market session. Nikkei is rolling out of bed at the moment. Can't find the floor though. Session lows and we are set for a technical correction. That's about 10% from a recent peak. Nikkei is off now about 3%. Right. So let's have a look at the other story we're tracking today and perhaps also the reason why we're looking at some aversion out there in markets. The US has attacked Iran for a fifth straight day. You have hostilities, of course, across the Middle East continuing to escalate and shipping traffic slumps in the Strait of Hormuz. Let's get the details down where we are in the story. John Herzkovitz, our East Asia government editor, is with us right now. John, we've talked every day this week latest set of strikes we're going into the weekend what have we seen and what has changed?

Analysis

The Nikkei is experiencing a technical correction, down about 3% from a recent peak, indicating potential market volatility. Concurrently, escalating hostilities in the Middle East, particularly the ongoing US attacks on Iran, are contributing to market aversion and slumping shipping traffic in the Strait of Hormuz.

Smart money should note that the geopolitical tensions could exacerbate supply chain disruptions, particularly in energy markets, which may lead to increased volatility in related equities. Additionally, the technical correction in the Nikkei suggests a broader risk-off sentiment that could impact global markets, especially in sectors sensitive to geopolitical risks.

17:11
PDT

US bond market remains structurally strong despite fiscal concerns.

US UK Davidch Cross

– Inflation expectations are currently stable.

– Flat yield curve is expected to persist in the near term.

– Credit conditions in the US market appear broadly okay.

– Fiscal sustainability questions will continue to arise.

US bond market stabilityFiscal concernsInflation expectationsCredit conditions

▸ Full transcript

The litmus test would be the driver as well. Expanding economic conditions with inflation expectations in check is a reasonable situation, and therefore that flatener at the long end is the theme. Working through the portfolio for the way to Davidch Cross the capital, etc., and just filters all the way through. What about the fiscal concerns? That's something that was also weighing on the long end. Without a doubt, we're always concerned about fiscal, fiscal US, fiscal right across the world, and there will be a time when the bond market has to make that call. So that is true, and the new issuance has to continue at whatever pace it may be. But structurally, the US bond market is the financial engineering of the globe, that's first and foremost. Incrementally, each quarter, each half, each year, the questions will be made about the serviceability of it, which it will be serviced because it's the biggest bond market. It won't be financially engineered but not to the same extent that the Japanese have done for decades. So there are many moving parts there, and that question should always be asked. But at the end of the day, for the next six to twelve months, we believe the flatner, we believe inflation expectations broadly in check, and we believe credit conditions are broadly okay in the US market, and that's the thesis for that flatner notwithstanding concerns about the fiscal situation, also concern about the relativity, the deteriorating fiscal situation say in the UK, but they can deteriorate a bit further.

Analysis

The US bond market is facing scrutiny over fiscal concerns, but the belief in a flat yield curve persists as inflation expectations remain in check. Despite worries about fiscal sustainability, the US bond market is viewed as the cornerstone of global finance, with credit conditions appearing stable for the next six to twelve months.

Smart money should note that while fiscal issues are a concern, the US bond market's structural strength may mitigate immediate risks. The ongoing flatness in the yield curve suggests a cautious optimism about economic conditions, which could influence investment strategies in the coming months.

17:09
PDT

U.S. domestic demand remains reasonable despite challenges.

U.S.China IMF USA GDP US Now China USDCNH

– China's domestic demand issues persist, impacting its economic outlook.

– The IMF may upgrade U.S. economic forecasts in the second half of the year.

– U.S. export sector performance is strong, contrasting with China's domestic woes.

– Duration in U.S. treasuries is favored due to current market conditions.

U.S. economic resilienceChina domestic demandIMF forecastsTreasury duration

▸ Full transcript

The PMIs again seem reasonable. There's a resilience out there, very uneven, but there's a resilience to the consumer. The tax cuts came through in mid-April as the peak of the energy was hitting the gas pumps over in the USA. It just seems to be holding up in a reasonably better condition for an upgrade by the IMF economists in the second half of the year relative to all other areas. Now China in itself, if I can quickly just bring it in, their domestic demand woes will continue into its fifth year, demand destruction continuing, the balance sheet recession is going on at the household, but their export sector is second to none and that's where their GDP is coming from. So you've effectively got number one, number two economy for different reasons. The US is in a reasonable situation regarding domestic demand and reasonable on the export sector. China is very, you know, it's got a bad situation when it comes to domestic demand, but obviously, it's exceptional. You can use the exceptionalism on the export sector. You're trying to use that word narrative and that's a position our portfolios, regardless of what part of the capital structure we're in. So the US just seems to have that many, many moats relative to others just for the foreseeable future of the next six to twelve months. Yeah, it's all relative, right, as we say. George, is that what's informing your thesis about the rally that could come for the long end of treasuries? Spot on. So we do like duration in the US given on the break evens where they're indicating we see that the flatness.

Analysis

The U.S. economy shows resilience with reasonable domestic demand and export performance, while China's domestic demand struggles continue into their fifth year. This divergence positions the U.S. favorably for potential upgrades by the IMF, suggesting a stronger outlook compared to other regions.

Smart money should note that despite China's export strength, its ongoing balance sheet recession could hinder overall economic recovery. The U.S. appears to have a significant competitive advantage, which may influence investment strategies over the next six to twelve months.

17:06
PDT

Rotation into materials, resources, and energy sectors.

DMM US Europe Russell 2000 North American North America

– US financials favored over European financials.

– Mid-cap stocks like Russell 2000 gaining attention.

– North America showing resilience in economic conditions.

– Emerging markets underweight due to lack of diversification.

sector rotationUS financialsmid-cap stockseconomic resilience

▸ Full transcript

Within the equity space, particularly with DMM, there is a rotation in the second half of last year and early this year into materials, resources more generally, energy, and real assets. Within financial services and financials in general, we have favored US financials over the past year and maintained that position, believing the broadening out goes into utilities and transport within the US North American market. We also like parts of Europe and similar sectors, except for financials there, given the valuation. This broadening out has included mid-cap stocks like the Russell 2000 with some active plays over the past 12 to 18 months, albeit a little early. They are broadening out to take advantage of the resilience in the US underlying conditions. There is volatility in the PMIs, but the poll seems to be quite reasonable. It is a very uneven landscape, but when looking at the platform for upgrades on economic activity and improving credit conditions relative to other markets, it seems to be North America first, second, and third. Even though we are neutral on equities and underweight emerging markets, we like the US market within those segments, including financials, US transport, utilities, and healthcare.

Analysis

The equity space is seeing a rotation into materials, resources, energy, and real assets, particularly within US financials, which are favored over European counterparts due to valuation concerns. Despite volatility in PMIs, North America is positioned for economic upgrades, with a focus on mid-cap stocks like the Russell 2000, indicating resilience in underlying conditions.

Smart money should note the broadening out into cyclical sectors, suggesting a strategic shift towards areas that may benefit from improving credit conditions. The emphasis on US financials, transport, utilities, and healthcare reflects a cautious optimism about the economic landscape, while emerging markets remain underweight due to lack of diversification in the current rally.

17:04
PDT

Chinese chip makers are increasing competition but won't catch up quickly.

Changseng Memory Taiwanese chip makers Dutch chip makers China emerging markets US AI EM EPS USDCNH

– Emerging markets are underweighted due to lack of diversification.

– Extraordinary EPS upgrades are occurring in the chip sector.

– No legitimate moat exists for medium-term chip makers.

– Market leadership is likely to remain with established players.

chip sector competitionemerging marketsEPS upgrades

▸ Full transcript

The likes of Chinese chip makers like Changseng Memory are really giving some of these other chip giants a run for their money, trying to make some headway at least in that space. Talk to us about the specter of competition that you see that could affect market leadership. Yeah, the specter of competition is there, but not to the degree that some are leading to. So obviously the biggest chip makers, the Dutch base and Taiwanese base, then there's a broader growth out there in the US. China is coming, but it is going to be a lagged effect. Not understanding people are making the case that that competition can really broaden out very quickly, but we don't believe that will happen. And that is why we're underweight emerging markets pretty much for a few months now. Given that emerging markets have been concentrated with the AI sort of rally, and it's been, you're not getting the diversification of the EM market that you normally would. So getting back to China, yes they'll continue to roll out as much competition as possible at the quickest pace possible, but we just don't believe we'll catch up to the same extent. But to reinforce what you said as well, and what I was also saying previously is that there's no real legitimate moat for the medium term in chip makers, and that has been reinforced by this rotation as being amplified. But remember, this is an extraordinary EPS upgrade for the sector year to date, and some of these companies into the second and third upgrades within it. This is not normal.

Analysis

Chinese chip makers like Changseng Memory are emerging as competitors to established giants, but the impact on market leadership is expected to be limited. Despite the rapid rollout of competition from China, analysts remain underweight on emerging markets due to a lack of diversification and the extraordinary EPS upgrades in the sector this year.

The anticipated competition from China may not materialize as quickly as some expect, suggesting that established players will maintain their dominance for the foreseeable future. The current environment reflects a significant upgrade cycle in earnings per share for the chip sector, indicating potential volatility as companies navigate this competitive landscape.

17:00
PDT

Asia Pacific markets are set for a significant downturn.

Asia Pacific SOX index TSMC SK Hynix Dollar Yen 10-year yield JGP AI SOX NAKA SK NAKA DXY

– SOX index indicates potential worst week since Liberation Week.

– TSMC's earnings did not bolster market confidence.

– Lack of risk appetite observed as trading begins.

– Lower yields may be necessary for mega-cap stock growth.

semiconductor market trendsinterest rate impactAsia Pacific market sentiment

▸ Full transcript

Companies that have a lot of AI spending versus what we saw, say, in the first half of the year. Yeah, let me rephrase that then. The indigestion we've seen so far across some of the very high-profile names, and I think to your point, we are waking up here in the Asia Pacific. By the way, thanks for having me on your show, guys. To a further chip sell-off on the SOX index, I think we are set for the worst week going back to Liberation Day, Liberation Week about 14-15 months ago. So we are going to feel that, and we are at the open. When you look at the NAKA, we're off about 3%, topics 1.5% to the downside. Okay, that's correct that then as we move into the thick of trading here. It's also worth pointing out that Korea would be worth looking at its constitution dates and no cash market trading in Korea. That's also just to say when we talked about TSMC and the really good earnings overnight, and this is really going to play it across this market when Taiwan opens up. TSMC fell overnight. SK Hynix's ADR, SpaceX is another one. So really put everything together. We're going into the Friday session here, Averil, with not a lot of risk appetite on the table. Dollar yen, 162 right now, and the 10-year yield currently at about 271 there. That's on the 10-year JGP. Averil. Yeah, it also makes you wonder, right, for some of these mega-cap stocks, do they need lower yields that could perhaps support loan growth or just growth overall, given how they've been borrowing so much?

Analysis

The Asia Pacific markets are bracing for a significant downturn, with the SOX index indicating a potential worst week since Liberation Week 14-15 months ago. TSMC's recent earnings report has not provided the expected support, leading to a lack of risk appetite as trading begins on Friday.

Investors should note the implications of lower yields on mega-cap stocks, which may be necessary to support loan growth and overall market expansion. The current market sentiment reflects a cautious approach, particularly in the semiconductor sector, as evidenced by the declines in TSMC and SK Hynix's ADRs.

16:53
PDT

Hormones trade significantly impacts global oil and gas supply.

Iran Middle East Bloomberg Iranian Revolution CL=F PRIVATE

– Initial market fears of price spikes did not materialize.

– Resilience in energy markets suggests a potential peak in geopolitical risk.

– Banks had projected prices as high as $200 per barrel.

– Market adjustments indicate strong coping mechanisms in energy supply.

geopolitical riskenergy market resilience

▸ Full transcript

The trade of hormones is responsible for 20 to 25% of the world's oil as well as gas seaborn trade. So we're talking about 20 million barrels per day. It also meant that a lot of food supplies, fertilizers, and other essential commodities were stuck. Ever since the Iranian Revolution in the 70s, the idea that hormones have been important has been known through the state of hormones. But it's always been a back burner issue. Prices and shortages were expected to soar. There is worry in the market that there is no end in sight. That knock-on effect really is being felt. People were really wondering how the world would cope with such a disruption. Many of the banks were talking $150 a barrel, $200 a barrel. But then it didn't happen. Markets barely blinked at some of the challenging headlines coming from the Middle East. The market has been pretty resilient. Although we did see prices top $126 a barrel, many of those worst fears were never materialized. We saw the market adjust to the crisis in somewhat surprising ways. Price response actually shows how resilient markets can be. So how was the biggest energy crisis in a generation so easily swallowed? And does this ability to cope mean the world has reached peak hormones? Subscribers can watch their documentary in full right now on the terminal and at Bloomberg.com.

Analysis

The trade of hormones accounts for 20 to 25% of the world's oil and gas seaborn trade, equating to approximately 20 million barrels per day. Despite initial fears of soaring prices and shortages due to geopolitical tensions, the market has shown resilience, with prices peaking at $126 a barrel without significant long-term disruption.

16:49
PDT

CXMT's IPO oversubscribed 212 times, indicating strong retail interest.

CXMT Netflix Honda General Motors China AI IPO DRAM US SUV China Show Wall Street USDCNH PRIVATE

– Netflix forecasts slower revenue growth for the second consecutive quarter.

– Honda to cease EV sales in the US due to weak demand, focusing on hybrids instead.

– Generative AI is becoming a key focus for Netflix to enhance content production.

– CXMT's IPO could signal a bullish trend for semiconductor investments.

IPO demandtech growth concernsEV market dynamicsgenerative AI

▸ Full transcript

China Show talks to the founder and chairman of many core tech, one of the country's fastest-growing AI startups. More from the corporate front, CXMT's blockbuster IPO is drawing intense interest from retail investors, with the offering 212 times oversubscribed. A filing shows that individual investors placed 9.4 million orders despite a clawback mechanism. The world's fourth-largest DRAM maker is seeking to raise as much as $9.8 billion, making it the second-largest IPO in China's history. Netflix shares fell in late trade after it forecast a second straight quarter of slower revenue growth. Sales are expected to reach $12.9 billion, slightly below Wall Street estimates. As investors question the platform's growth trajectory, the streaming giant is betting on new offerings such as live sports and video podcasts. It's also touting its use of generative AI to cut costs and speed up content production. Honda is ending sales of its electric vehicles in the US, citing weak demand. The Japanese automaker has told dealers that production of the Prologue SUV developed with General Motors will end later this year. Honda says they'll instead focus on hybrid and gasoline-powered models in the US while continuing to sell EVs in other markets but left the door open to a future return. With more head on the Asia trade, this is Bloomberg.

Analysis

CXMT's IPO is generating significant interest, being oversubscribed by 212 times, with individual investors placing 9.4 million orders. This offering aims to raise up to $9.8 billion, marking it as the second largest IPO in China's history, highlighting the robust demand for semiconductor stocks.

Netflix's shares declined after forecasting a second consecutive quarter of slower revenue growth, with sales expected to hit $12.9 billion, falling short of Wall Street estimates. The company's pivot towards generative AI for cost-cutting and new offerings like live sports indicates a strategic shift to regain investor confidence amidst growth concerns.

16:47
PDT

Supply constraints in the GPU market persist.

Sennstheim NVIDIA CXMT U.S. Commerce Department China Commerce Department NVDA

– Companies are adapting to export controls with hybrid chip solutions.

– Sennstheim has pivoted from its original business model.

– CXMT's debut in Shanghai is imminent.

– Geopolitical factors are reshaping tech company strategies.

supply chain riskgeopolitical tensionssemiconductor market dynamics

▸ Full transcript

them on their development journey, exploring how to compensate with better software. What is the availability of these domestic GPUs now? If you want to buy them, do you have to wait a long time? Is there a supply constraint right now? To a certain extent, some chips do have supply cycles. But because of the many partners we have, the overall industry development remains relatively healthy. I do want to ask about the geopolitical risks that you're facing because you've even been placed on the Commerce Department entity list. So that restricts your access to U.S. technology. How have you been able to navigate that? What's the journey been like since then? Many years ago, we actually closed our offices in the U.S. Firstly, we felt that geographical factors were unavoidable. For our company, the key is to do what we can do best. We do believe that making such differentiation between tech companies based on geographical proximity is a biased approach and not a very correct path to take. But for us, we will focus on doing what we are capable of. So many companies like Sennstheim have been working around those export controls relying on this hybrid method, a mix of NVIDIA chips as well as local homegrown chips. And of course, we have CXMT expected to debut in Shanghai sometime very soon next week in fact and so there has been a lot of.

Analysis

The conversation highlights the ongoing supply constraints in the GPU market, with companies like Sennstheim navigating geopolitical risks and export controls by utilizing a mix of NVIDIA and local chips. This strategy underscores the resilience of firms in adapting to restrictions while maintaining a focus on their core competencies.

Smart money should note that the reliance on hybrid chip solutions may indicate a longer-term shift in the tech landscape, where companies prioritize local resources amidst geopolitical tensions. The upcoming debut of CXMT in Shanghai could further influence the competitive dynamics in the semiconductor sector.

16:45
PDT

China prioritizes open-source AI governance.

China SENS Time AI Cooperation Organization AI SENS CEO USDCNH

– SENS Time has shifted focus from surveillance to generative AI.

– Generative AI is experiencing rapid growth, with high profit margins.

– The AI sector is becoming increasingly competitive.

– Market dynamics may shift as companies adapt to new AI demands.

AI governancegenerative AI growth

▸ Full transcript

Open source models are seen as an important path forward and are in stark contrast to the proprietary models favored by some Western countries. Clearly, this is China focusing on ensuring AI governance and safety while keeping AI open and accessible to everyone. Among the corporates, companies that have been in the spotlight due to the AI boom include SENS Time. I spent an hour with the CEO and co-founder yesterday, and it was a really in-depth conversation. This company has reinvented itself significantly from when it first started. It was well known for facial recognition and smart city surveillance technology, which used to be the entirety of their business; now it accounts for just 20 percent. They have pivoted to generative AI, which has been growing at a rate of 50 to 60 percent a year, and they expect to maintain that pace. Highlights from the interview include the current scarcity of computing resources and the need for optimization. Even with significant resource investment, the current pricing and profit margins are very high, making it a very profitable software business.

Analysis

China is emphasizing open-source AI models as a path forward, contrasting with proprietary models favored by Western countries. This shift indicates a strategic focus on AI governance and accessibility, which could reshape global AI standards and influence market dynamics.

The pivot of companies like SENS Time from surveillance technology to generative AI highlights a significant trend in the tech sector, with growth rates of 50-60% expected. This transition suggests that firms are adapting to market demands for innovative AI solutions, potentially leading to increased competition and profitability in the software space.

16:43
PDT

30 countries signed onto the World AI Cooperation Organization.

China Xi Jinping Thailand Cambodia Kazakhstan World AI Cooperation Organization AI Thai Prime Minister Cambodian Prime Minister Kazakh President Cooperation Organization USDCNH

– Xi Jinping's address may focus on global cooperation in AI.

– Diplomatic attendance includes leaders from Thailand, Cambodia, and Kazakhstan.

– China's influence in AI governance is expanding.

– Potential for increased investment in AI sectors.

AI governancegeopolitical alliances

▸ Full transcript

But everything has been kept under tight wraps. We aren't exactly sure what time he's speaking, whether today or tomorrow morning. But most likely, as far as we understand it, it should be happening later this morning at the opening ceremony. And yes, bigger than ever before. It's 100,000 square meters of floor space. That's a record. So I'm getting ready to get all my 20,000 steps in today with more than a thousand companies participating, more than a thousand guests from academics to venture capitalists to industry representatives, but of course, government officials as well. This time, you have the Thai Prime Minister, the Cambodian Prime Minister, and the Kazakh President attending. So, there are some diplomatic activities at the sidelines as well. Yesterday, some 30 countries had a signing ceremony to be part of this World AI Cooperation Organization. And that is just another platform that would give China some sway in influencing global AI rule setting. Yes, that really highlights the importance of AI in this day and age. What message is Xi likely to send? What is he likely to speak about in his address? Yes, so I think we can maybe get a hint of what he might speak about from what the editorials on Chinese state media have been publishing in recent days, right? What the foreign ministry has told us as well at the press conference. She talked about how it's important to bridge that global divide.

Analysis

The World AI Cooperation Organization has gained traction with 30 countries signing on, indicating China's growing influence in global AI governance. Xi Jinping's upcoming address is expected to emphasize bridging global divides, reflecting China's strategic positioning in the AI landscape.

Smart money should note the diplomatic presence at the event, including leaders from Thailand, Cambodia, and Kazakhstan, which may signal a shift in geopolitical alliances centered around technology. The focus on AI cooperation could lead to increased investments in AI-related sectors and influence regulatory frameworks globally.

16:38
PDT

Republicans aim to address affordability concerns in their messaging.

Republicans Trump administration Biden administration U.S. Congress So Republicans USDCNH

– Recent bipartisan housing bill highlights potential for cross-party collaboration.

– Constituents express dissatisfaction with the Trump administration's promises.

– Economic issues are top of mind for voters ahead of midterms.

– Bipartisan cooperation may be limited by the current administration's stance.

bipartisan cooperationaffordabilitymidterm elections

▸ Full transcript

I think Republicans want to come to the table to their constituents to say that they have real policy answers to some of the problems. For example, the recent housing bill was a bipartisan bill. Americans also expressed concern about people's ability to work across the aisle, and Republicans can demonstrate in that bill that they did work across the aisle. However, there are people who are expressing major concerns about the entire approach of the Trump administration, feeling as if the things that were promised by the Republicans are not being delivered on. As I have said, top of mind on that issue is affordability. So Republicans are going to try to reframe the issue to say that they have answers and policy answers to these problems and that their leadership will be able to work closely with Democrats in Congress on this. However, that really does go against what the president has indicated that he wants Republicans to do. He does not express a lot of desire for bipartisan cooperation. Do you think, Rachel, that China might figure into the communications that the U.S. president is going to put out shortly? I have to say, I am not well-versed on the answer to that. So I think it's better for me to...

Analysis

Republicans are attempting to reframe their messaging around affordability and bipartisan cooperation, particularly in light of a recent bipartisan housing bill. However, there is growing concern among constituents that the promises made by the Trump administration are not being fulfilled, which could impact Republican credibility ahead of the midterm elections.

Smart money should note that while Republicans seek to present themselves as problem solvers, the lack of genuine bipartisan cooperation from the Biden administration may hinder their efforts. The focus on affordability and economic issues suggests that upcoming electoral strategies will heavily revolve around domestic economic conditions, potentially influencing market sentiment.

16:36
PDT

Affordability and job security are key voter concerns.

Bank of America Tommy Scho Bloomberg South Korea Japan Taiwan Iran Kuwait Bill Clinton U.S. Senate U.S. Congress AI

– Elections are likely to focus on economic issues rather than foreign policy.

– AI's impact on jobs is a growing concern among constituents.

– Healthcare access and social security are under-discussed but critical issues.

– Political engagement is shifting towards bread-and-butter issues.

economic stabilitypolitical engagementAI impact on jobshealthcare access

▸ Full transcript

When you say consideration, you're talking about what are the things that are really driving people at the moment? Yeah, their concerns. You know, what are the ballot box issues that will really be at play at the stage? I think truly the issues that are concerning Americans are affordability, jobs, things about the, as they look to the future and what is potentially happening, the prices of things like a college education, and they're concerned about that. They're concerned about where the jobs are going to be in the future. Elections are about the future and what we are going to do as a nation toward these policies. People are concerned about AI. They are concerned about all of the things that are really affecting their pocketbooks and their likelihood of not only their own jobs, but the jobs of their children. And so those are the kinds of things that elected officials are having conversations with their constituents about. And there are other, you know, sort of—they're under the radar in terms of national issues, but certainly issues that are affecting people every day, as we are dealing with crisis of care and whether people are able to access the care that they need for the elderly and concerns about social security. So there are so many, essentially, pocketbook, bread and butter issues that are driving how people are responding to the...

Analysis

Concerns about affordability, job security, and the future of education are dominating the political landscape as Americans express anxiety over economic stability. Elected officials are increasingly engaging with constituents on these pocketbook issues, which could significantly influence upcoming elections.

Smart money should note that the focus on affordability and job prospects may lead to shifts in policy that could impact sectors like education and healthcare. Additionally, the rising concerns around AI and its implications for employment suggest a potential pivot in investment strategies towards technology and workforce development initiatives.

16:34
PDT

Republicans prioritize economic issues over election integrity.

Republicans Bill Clinton Iran U.S. Senate U.S. Congress

– Voter concerns center on gas prices and inflation.

– Domestic focus may shift campaign strategies.

– Foreign policy issues are less impactful on midterm elections.

– Economic messaging aligns with historical voter priorities.

midterm electionsinflation concernsdomestic policy focus

▸ Full transcript

Yeah, I suppose to your point Republicans can't really have it both ways. But there is a slight nuance here I suppose when it comes to the messaging that he's trying to deliver and maybe reframe around the midterm elections four months ahead of it. And what message is actually landing with the electorate? What is your assessment of that? Well, my assessment when you look at polls, what the American people are saying that they're most concerned about right now are gas prices and food prices and inflation and the economy. And it goes back to Bill Clinton. It's the economy, stupid. This time around is no different. And gas prices have gone up. There are a lot of prices that have gone up since the beginning of his presidency rather than down. So that is the issue that Republicans who are running for the U.S. Senate and for U.S. Congress would like to be talking about. They do not, I think, really want to be talking about election integrity at this point. We also have a war with Iran and many other key issues that are really domestically focused. Midterm elections tend not to be foreign policy focused, but the domestic focus is not that election integrity is not polling at a high rate. Although it is something that, when you ask Republicans versus Democrats how they feel about it, Republicans are likely to express.

Analysis

Republicans are focusing on domestic issues like gas prices and inflation as key concerns for voters ahead of the midterm elections, rather than election integrity. This shift in messaging reflects a strategic pivot to address the electorate's immediate economic worries, which have intensified since the start of the current administration.

Smart money should note that while foreign policy issues like the war with Iran are significant, they are not resonating with voters as strongly as economic concerns. This could influence campaign strategies and voter turnout, potentially impacting market sentiment around sectors sensitive to consumer spending and inflation.

16:29
PDT

Oil prices are stable near $80 on WTI.

Bloomberg US Iran Kuwait South Korea Nake PM WTI Watch Bloomberg Real Yield Middle East PRIVATE WTI CL=F

– Geopolitical tensions are rising between the US and Iran.

– Kuwait has intercepted hostile targets, indicating regional instability.

– South Korea's market closure is contributing to declines in Nake futures.

– The macroeconomic impact of Middle Eastern conflicts is under scrutiny.

geopolitical riskenergy market dynamics

▸ Full transcript

Watch Bloomberg Real Yield now at its new time, Thursdays at 12 PM Eastern, right here on Bloomberg. Now we're watching geopolitics as they sort of progress as well and develop. Take a look at how oil is faring; you're still near 80 on WTI. We'll see how Brent opens in the next hour. Given the hostilities between the US and Iran, we've been watching whether things spread beyond just what we're seeing in Iran or around Tehran. We're hearing from Kuwait that air defense systems have been intercepting hostile targets. As we watch the conflict in the Middle East, to what extent does that play out in the macro picture in trade today? Of course, when it comes to markets, South Korea shuts, but we are watching the Nake futures pointing to declines. All this is coming on a day when the US President.

Analysis

Oil prices remain near $80 on WTI amid escalating tensions between the US and Iran, with reports of Kuwait intercepting hostile targets. The geopolitical landscape is influencing market sentiment, particularly as South Korea shuts down, leading to declines in Nake futures.

Smart money should note that the ongoing conflict in the Middle East could have broader implications for global trade dynamics, potentially affecting energy prices and market stability. The interplay between geopolitical tensions and economic indicators will be crucial for assessing future market movements.

16:25
PDT

Borrowing is driven by opportunities in investment rather than cash accumulation.

Bank of America Brian Moynihan SK Highdakes Tommy Scho SK

– Traditional banks are recovering market share from alternative asset managers.

– Concerns about inflation are influencing profit margin considerations.

– Investor confidence appears to be shifting towards traditional financial institutions.

– Private capital fund inflows are slowing, indicating potential market caution.

borrowing trendsmarket share recoveryinflation concernsprivate capital dynamics

▸ Full transcript

What people talk about. You're not going to issue debt and increase interest costs and just sit there because the arbitrage, if you don't issue below treasuries, which no borrower does, you're going to pay three to four hundred basis points to let money sit there. It's just not going to work. So people are borrowing because they see opportunity, whether it's equipment buying, hiring, building a plant, or inventory buildup. They're going to be more worried about whether they can get the margin on that. That's the question of inflation coming through the system later on. They're going to be more worried about whether the demand is going to stay there, whether it's consumer-driven or supply chain-driven. So I think the markets will stay there if the companies see opportunities, whether small, medium, or large size. It'll stay there as long as they have something to do with the money. Nobody borrows money just to have it sit around. Despite what people think about SK Highdakes and what just happened, I mean, just say one could say. One thing. They've got to have a viewer. They're going to do something. They just ate into the profit margin. So whatever they're going to do with it, they're thinking about something. One thing that you noted, the mortgages, is something that Tommy Scho mentioned earlier. He was saying that you've seen a lot of the traditional financial institutions gain market share back from alternative asset managers. And that's one of the reasons why the regulatory pullback has been so beneficial. Has that been your experience as well? Well, I think also the investor money going into the private capital funds and stuff has been slowed, and there's been withdrawals and people getting out, and that then slows down the activity.

Analysis

Market participants are increasingly borrowing due to perceived opportunities in equipment purchases, hiring, and inventory buildup, despite concerns about inflation impacting profit margins. Traditional banks are regaining market share from private credit, indicating a shift in investor confidence and behavior in the financial landscape.

The focus on borrowing for productive investments rather than holding cash suggests a resilient economic outlook among businesses. Additionally, the slowdown in private capital fund inflows may indicate a cautious approach from investors, which could impact market dynamics moving forward.

16:23
PDT

Traditional banks are winning back market share from private credit.

Bank of America Brian Moynihan CEO Guy Johnson Anna Edwards Tom Mc

– Consumer and business borrowing remains strong despite higher interest rates.

– 30% increase in mortgage production indicates a shift in consumer behavior.

– Resilient demand suggests potential economic recovery.

– Banks may see increased profitability from sustained borrowing.

banking sector recoveryconsumer borrowing trends

▸ Full transcript

Active ETFs from the home of Active ETFs. Benchmarks for today's equity markets. The opening trade brings you everything you need to know as markets open across Europe. I'm Guy Johnson. I'm Anna Edwards. And I'm Tom McKenzie. This is your opening trade. Only on Blingback. Bank of America CEO Brian Moynihan says traditional banks are winning back market share from private credit. He also told us that sustained consumer and business borrowing despite higher interest rates is the sign of resilient demand across the economy. We were 30% up in production and mortgages this quarter. So as people get used to environments, they start to behave differently. And so the consumer borrowing is strong, but there's a lot of capacity left.

Analysis

Bank of America CEO Brian Moynihan indicated that traditional banks are regaining market share from private credit, highlighting strong consumer and business borrowing despite higher interest rates. This resilience in demand suggests a shift in consumer behavior as they adapt to the current economic environment.

The significant 30% increase in mortgage production this quarter signals that consumers are becoming more comfortable with borrowing, which could indicate a broader economic recovery. Smart money should note the potential for banks to capitalize on this trend, as sustained borrowing may lead to increased profitability in the banking sector.

16:20
PDT

Affordability is a key voter concern ahead of elections.

Bank of America JP Morgan Donald Trump Iran Gulf states FIFA World Cup 2026 AI American South

– Republicans are focusing on economic accessibility to retain support.

– AI's impact on hiring could complicate job market dynamics.

– Voter sentiment may shift priorities in upcoming elections.

– Economic issues are likely to dominate political discourse.

affordabilityelection dynamicsAI impact on jobs

▸ Full transcript

Their elections to be secure. So that is a fundamental underpinning. Any question that they're not, any question that there's some breaking of the system is something that's going to set off alarm bells on the left and the right, but in different sort of ways. But I will say that the overarching theme of the elections is affordability, not just a question of inflation and how much your price is rising, but this fundamental through line of is the American dream as it has been laid out over the years still really accessible to people? Can you afford a house? Can you afford childcare? Can you afford to save for retirement? Can you afford health care if something comes up? What's the deal with the idea that, you know, maybe people aren't getting fired a lot, but not a lot of people are getting hired, and maybe it's getting harder to do that with AI? All of these questions are percolating, and they're really big issues. You know, I was on a road trip the other week across a lot of red states, in Texas, to Florida, to Georgia, Alabama. I kept hearing from people about affordability as a key thing, and in districts that Republicans need to hold that they currently hold but they need to continue to hold going forward all across the American South. This was a thing I kept hearing and I think that's what Republicans want to be talking about rank and file. Let's see where the president's mind is at. This is going to be a really interesting question.

Analysis

The overarching theme of the upcoming elections is affordability, with voters expressing concerns about housing, childcare, retirement savings, and healthcare costs. This sentiment is particularly pronounced in Republican-held districts across the South, indicating a potential shift in voter priorities that could impact election outcomes.

Smart money should note that while job security remains stable, hiring challenges exacerbated by AI advancements could further strain affordability issues. This evolving landscape may influence Republican strategies as they seek to maintain their foothold in key districts, making affordability a critical talking point in their campaigns.

16:18
PDT

Trump's speech will address election security issues.

Donald Trump Joe Biden Republican Party Democratic Party White House ID

– Concerns exist among Republicans about focusing on past elections.

– Trump's nominees avoid directly acknowledging Biden's win.

– Political volatility may increase as elections approach.

– Legislative progress could be hindered by party divisions.

political volatilityelection security

▸ Full transcript

Trump was going to say, you know, the White House has said, look, stay tuned. They're not really super previewing this. But we do have an indication this is going to be primarily related to election security. Now, Donald Trump has talked for a very, very long time about election issues. He has pushed very hard for a piece of legislation that currently doesn't have the votes in the Republican-held Senate to be able to advance, that would do a lot of different things, but among them kind of restrict how you can vote absentee, would add some voter ID rules, you know, some other things alongside that. But this is something that Donald Trump's talked an awful lot about, including in relation to the 2020 elections, which he lost to Joe Biden. Now, this is a touchy point for Trump and the White House, you'll notice that when his nominees go before Congress, they regularly do get asked by Democrats who won the 2020 election, and they regularly do not say explicitly, Joe Biden won the election. They'll come up with a bunch of things that might say like Joe Biden was certified or similar things like that. This is a touch point for the president. There's no question about that. But there is some concern. You asked about the election upcoming there is some concern among Republicans that this is going to be a really backward-facing speech and I think they really want to think.

Analysis

Trump's upcoming speech is expected to focus on election security, reflecting his long-standing concerns about absentee voting and voter ID regulations. This backward-looking approach may alienate some Republicans who are wary of revisiting the contentious 2020 election narrative.

Smart money should note the potential for increased political volatility as Trump continues to emphasize election issues, which could impact market sentiment ahead of the upcoming elections. The reluctance of Trump's nominees to explicitly acknowledge Biden's victory signals ongoing divisions within the Republican Party that could affect legislative progress.

16:16
PDT

Iran's hardliners are prioritizing vengeance over economic talks.

Iran President Trump Gulf states

– President Trump is considering escalating military actions against Iran.

– Potential for retaliatory strikes from Iran on Gulf states.

– Geopolitical tensions could impact oil prices and market stability.

– Investor sentiment may shift based on developments in U.S.-Iran relations.

geopolitical riskenergy market volatility

▸ Full transcript

To a head during the funeral of the supreme leader, the hardliners have really come out, stepped forward in a way and said, you know, vengeance is much more important than any economic relief here, etc., and that the U.S. has to pay for what it's done. Those who are sort of a bit more pragmatic are still trying to keep open an option that talks could continue. We've heard President Trump say that Iran does want to talk, and certainly they don't seem to be closing the door on it, but it's really hard to see.

Analysis

Tensions are escalating as hardliners in Iran prioritize vengeance over economic relief, signaling a potential for increased conflict. President Trump has indicated a willingness to escalate military actions against Iran's infrastructure, which could provoke retaliatory measures from Iran against Gulf states.

Smart money should note the precarious balance between hardline and pragmatic factions in Iran, as this could impact geopolitical stability and oil prices. The potential for military escalation may lead to increased volatility in energy markets and heightened risk for Gulf investments.

16:14
PDT

Fifth consecutive day of attacks on Iran targeting shipping-related equipment.

Iran President Trump Gulf states But President Trump And Iran

– Trump's potential escalation could target Iran's infrastructure.

– Iran threatens retaliation against Gulf states if escalated.

– Current strikes are lower intensity compared to initial war stages.

– Focus on minimizing civilian impact while disrupting military capabilities.

geopolitical riskenergy market volatility

▸ Full transcript

We know in this latest escalation what President Trump could do next? Yes, Sherry. So this was, as you mentioned, it was the fifth straight day of attacks on Iran. And again, they sort of seem to be targeting these coastal equipment basically that's being used to attack shipping that's going through the straits. So far, it's a much lower intensity than it was in the initial stages of the war. And there's not really targeting of Tehran or the major sort of population centers. They really seem to be trying to target radar, target these smaller ships and missiles that are used to create all sorts of trouble for shipping. So yes, it's a repeat of that. But President Trump has said that he's willing to escalate perhaps next week to hit Iran's power and those more infrastructure-based equipment. And Iran in turn has said that if the U.S. does that, then it's going to do the same for Gulf, attacking the infrastructure of Gulf states. So that would bring us back to some of the worst parts of what we were seeing when the conflict was at its height. So it does look like we might be on the verge of an escalation here. So what does that also mean for any potential for talks than Mike?

Analysis

The recent escalation of attacks on Iran marks the fifth consecutive day of targeted strikes, primarily aimed at coastal equipment affecting shipping routes. President Trump has indicated a willingness to escalate further, potentially targeting Iran's infrastructure, which could provoke retaliatory actions from Iran against Gulf states.

Smart money should note that the current military strategy appears focused on minimizing civilian impact while still aiming to disrupt Iran's operational capabilities. However, the potential for a broader conflict looms, which could significantly affect regional stability and energy markets.

16:09
PDT

South Korean market regulators are taking action to address leverage issues.

South Korea Samsung Electronics SK Hynix M Live Dave Savage Aval Hong Sherianne Gaffrey Reynolds Tokyo Electron SoftBank Taiwan ETF

– Investor minimums may not be sufficient to deter retail participation.

– Concentration of flows into major stocks could heighten volatility.

– The AI investment boom is facing scrutiny regarding returns.

– Broad-based selling pressure is impacting semiconductor stocks.

market volatilityleverage concernsAI investment scrutiny

▸ Full transcript

That is made much uglier by the fact that you've had a very sharp amount of gains and embedded leverage in parts of this market. Dave, this leverage is also interesting because it's become an issue in the way that Korea sometimes trades down or up and then you get the signals in the U.S., so it is becoming an issue for the Nasdaq as well. I wonder what's your take on these measures coming in from South Korean regulators in the sense that, you know, does this all come a little too late? As the M Live team has been highlighting, the ETF Genie is already out of the bottle. I think that's right. And certainly, it's the most tangible actions we've seen yet of authorities, you know, looking to reel in these products and the impact they're having on market volatility. But you know, I think for one, you know, the investor minimums probably look to me a little low to really sufficiently deter retail investors from continuing to use these products to buy any dips we see in the Korean market. In terms of halting further listings, I think on the surface that could be beneficial, but I think the flip side to that is all that's doing is concentrating more flows into these products which are very heavily concentrated on the likes of Samsung Electronics and SK Hynix, so you're concentrating that volatility impact on those stocks. And finally, you know, there's...

Analysis

South Korean regulators are implementing measures to curb leverage in the market, but concerns remain about their effectiveness as retail investors may continue to use these products. The concentration of flows into major stocks like Samsung Electronics and SK Hynix could exacerbate volatility rather than mitigate it.

16:07
PDT

AI investment returns are under scrutiny.

Japan Korea Taiwan SoftBank Tokyo Electron AI South Korea

– Semiconductor stocks in Japan and Taiwan face selling pressure.

– South Korea's market closure could amplify volatility.

– Broad-based unwinding in AI-related positions is evident.

– Niche suppliers are also experiencing declines.

AI investment scrutinysemiconductor market volatility

▸ Full transcript

Concerns around the return on investment from the AI investment boom have not always trickled down into negative returns and sharp concerns around some of these AI beneficiaries. That is certainly what we're seeing today, and it's a concern for Japan, Korea, and Taiwan, where these issues haven't typically affected those types of companies because they've simply been the beneficiaries of that capital expenditure. David, South Korea is away on holidays, but we do have Japan coming online with the yen still around that 162 level. What are some of the catalysts and moves that you'll be watching in the Asia session? Yeah, I think that's certainly the concern; with South Korea closed, semiconductor and semiconductor-related stocks in Japan and Taiwan will bear more of the selling pressure. Notably, in the last couple of months, we saw that the AI trade really broadened out beyond the likes of SoftBank and Tokyo Electron into some of these more niche suppliers and specialty chemical providers, and those stocks were also down. So it's been a very broad-based positioning unwind.

Analysis

Concerns are rising regarding the return on investment from the AI boom, particularly affecting semiconductor stocks in Japan and Taiwan. The recent broad-based sell-off indicates that the AI trade's benefits are not uniformly trickling down to all beneficiaries, raising alarms for investors in these markets.

The selling pressure is exacerbated by South Korea's market closure, which may lead to increased volatility in semiconductor-related stocks. Smart money should note that the unwinding of positions in niche suppliers and specialty chemical providers suggests a deeper reevaluation of the AI investment thesis across the region.

16:05
PDT

Tech stocks are facing heightened concerns over growth sustainability.

SpaceX South Korea IPO AI South Korean

– Investors are wary of the AI dependency in the current market.

– The South Korean market reflects similar investor sentiment.

– There is a notable rotation away from certain tech sectors.

– Profit expectations are not accelerating as previously anticipated.

AI dependencytech sector growth concerns

▸ Full transcript

To the IPO, which there was, the problem is there hasn't been any follow-through. And that therefore has ended up acting as a confirmation that this could well be the top. Investors need to find some reason to revive that mojo about relentless growth in profit expectations along with the AI trade. Otherwise, that concern that was growing when gains in tech stocks were turning parabolic, that this was too fast, too high, even for a generational innovation, those concerns keep on hitting shares. And the sort of thing that used to drive gains across the tech complex is now doing nothing but heightening concerns that we're well and truly over our skis. Right. What we're seeing in SpaceX is that investors are just fully appreciating the risks around being so dependent on the AI story and Dave, I want to send this question to you because that seems to be reflected in the South Korean market as well. It's been fairly broad-based and we're seeing, you know, I think two things to note. I think we're seeing one a similar rotation away from sort of the.

Analysis

Investors are increasingly concerned that the tech sector's growth may have peaked, as there is a lack of follow-through following the IPOs, suggesting a potential market top. The heavy reliance on AI narratives is causing apprehension, particularly in the South Korean market, where a broad-based rotation is evident.

16:02
PDT

Tech companies report strong earnings but growth is slowing.

Bloomberg Bank of America 23andMe Netflix Google TSMC Derek Huerta Ed Lullo David Savage Gaffrey Reynolds FIFA World Cup 2026 US

– Increased borrowing among hyperscalers raises concerns.

– Shift from free cash flow to borrowing indicates potential risks.

– Investors need to reassess valuations in light of changing cash flow dynamics.

– Market sentiment may shift as tech spending patterns evolve.

tech sector dynamicsborrowing trendscash flow analysismarket volatility

▸ Full transcript

Earlier this week, they announced earnings that were very strong. They showed that your profits and revenues are beating expectations in the here and now and even for the coming quarter or so. But the difficulty is that they're not accelerating as much as they have been, and there's been nothing to mitigate those concerns that hyperscalers are going to go on spending enormous amounts of money. They're also going to go on borrowing to fund that. This is a big pivot for investors who had been used to limitless, seemingly free cash flow, free cash flow that was so extreme that these big tech companies would do buybacks rather than invest. They could not find anywhere to invest it, but they thought it was worthwhile. Now they're investing so much that the free cash flow is declining for many of them, and they're needing to borrow. So that exposes the whole complex to concerns about the potential for things to turn down. You know quietly or sometimes not so quiet in the background, even with this week's better week for treasuries and other government bonds on those softer US CPI reports, yields are still much higher and they don't look like they will decrease.

Analysis

Earnings reports indicate strong profits and revenues for major tech companies, but concerns are rising as growth rates are not accelerating and borrowing is increasing. This shift marks a significant pivot for investors who previously enjoyed abundant free cash flow, now facing declining cash flow and increased borrowing needs among these firms.

The underlying issue is the potential for a downturn as hyperscalers continue to spend heavily while needing to borrow, which could expose the tech sector to greater risks. Investors should be cautious as the landscape shifts from one of seemingly limitless cash flow to a more constrained environment, raising questions about sustainability and future growth.

16:00
PDT

Asian markets likely to decline following U.S. chip sell-off.

Aval Hong Sherianne South Korea Netflix Google TSMC Gaffrey Reynolds David Savage KMA AI Max Evans Live Asia GOOGL CL=F

– Regulatory changes in South Korea may impact market leverage.

– Netflix and Google face scrutiny over earnings and AI delays.

– Bullish bond sentiment contrasts with elevated oil prices.

– Investor concerns focus on AI spending and tech valuations.

AI spending concernschip market volatilitybond market trends

▸ Full transcript

You're watching the Asia trade. I'm Aval Hong in Singapore with Sherianne in Tokyo, and this is the setup going into the session today following on from the chip sell-off in the U.S. We're seeing futures on KMA that close like this. It looks like it'll be another session for Asia with South Korea markets closed today, though we did get regulatory changes late in the day yesterday that could help curb leverage in the market. Those A.I. jitters are dragging the MAG7s overnight, of course, and we did see Google following a report of delays on its AI model. In terms of earnings, Netflix's sales forecast also missed. All this in the performance of Max Evans, the chip stocks; the selling came despite TSMC hiking sales and spending projections. Let's take a look at how we're looking macro. There seems to be a bit of a bullish tone that's creeping into bonds this week, given the benign U.S. inflation reports. This is how U.S. 10-year futures are pointing, but oil levels are still elevated as traders balance those disruptions to supply with profit-taking. Let's discuss because this renewed sell-off in chipmakers looks set to weigh on Asian markets as investors question massive AI spending and lofty valuations. Bringing in now, Gaffrey Reynolds, who leads our MLive Asia coverage, and he joins us from Sydney. David Savage is also with us from Hong Kong. So God bless that with you.

Analysis

Asian markets are poised for another session of declines following a sell-off in U.S. chip stocks, with regulatory changes in South Korea aimed at curbing market leverage. Concerns over AI spending and high valuations are weighing on investor sentiment, particularly after disappointing earnings forecasts from Netflix and delays reported by Google on its AI model.

The bullish tone in bonds, driven by benign U.S. inflation reports, contrasts with the elevated oil levels as traders navigate supply disruptions and profit-taking. This divergence suggests a complex market environment where traditional indicators may not fully capture the underlying risks associated with tech valuations and sector-specific pressures.

15:53
PDT

SpaceX is deploying operational V3 Starlink satellites.

SpaceX Starlink Falcon Starship Derek Werters Eclipse Space Microsoft TAM

– Skepticism exists around the scalability of Starship due to high costs.

– Total addressable market for connectivity is $1.6 trillion.

– SpaceX's iterative engineering approach has historically led to success.

– Investors should monitor the impact of Starship's performance on future growth.

satellite technologybroadband marketengineering innovation

▸ Full transcript

Already seeing the TAM for connectivity is outlined in the S1 as like $1.6 trillion or so. So the market is growing because of the technology and how advanced it is. And so that shouldn't be discounted in the future, I think. Can you talk to us about the sort of culture behind the engineering of the company? There's been some talk about how when it came to the Falcon there was, you know, testing and failures that helped to lead to its success. But when it comes to the Starship, because of how massive and how expensive it is, there is some skepticism that an approach like this would work as well. Yeah, that's a super interesting question. And I think just the fact that SpaceX's approach is all about building things quickly and getting that proof point and iterating and getting that feedback, I think it is the right approach. I think you're absolutely right that Starship is applying that to a massive scale. But I think SpaceX has the right technology and the right engineering approach in solving these problems that it makes sense that even on this larger scale where things are more expensive that you can compound that success and grow. Saw it on Starlink in the early days we were trying to mass produce, you know, the V.

Analysis

SpaceX's Starlink program is advancing with the deployment of operational V3 satellites, but skepticism remains regarding the Starship's ability to scale effectively. The company's iterative engineering approach has proven successful in the past, yet the high costs associated with Starship raise concerns about its future viability.

Investors should note that the total addressable market for connectivity is projected at $1.6 trillion, indicating significant growth potential. SpaceX's ability to rapidly iterate and innovate could be a key differentiator in capturing this market, despite the challenges posed by the Starship's scale and expense.

15:51
PDT

Starlink reached over $1 billion in revenue rapidly.

SpaceX Starlink Marsat Derek Werters DXY

– SpaceX's workforce for Starlink has grown from 150 to nearly 3000.

– Investor doubts persist regarding SpaceX's long-term valuation.

– Starlink's growth outpaces traditional satellite companies significantly.

– SpaceX's technology compounding could drive future innovations.

satellite broadband growthinvestor sentimenttechnology compounding

▸ Full transcript

Commercial success Starlink became so quickly? Yeah, absolutely. I mean, I think when I started at SpaceX, it wasn't called Starlink, it was called satellite development. And there were about 150 or so people; I think now there are close to 3000 people working on Starlink. So, dramatic growth, dramatic improvement. I think another fun fact is that it got to organically over a billion dollars in revenue faster than anyone else before. I think the first organically grown revenue stream was Marsat, and it took them about 30 years to get there. So, the fact that SpaceX did it with Starlink alone in just a handful of years is a huge testament to how real this market is and how far SpaceX is in this broadband market. Derek, that being said, you look at the way the stock is performing, as it has outlined, maybe this might be L goals exacerbating the moves as well. But investors are having doubts about whether there is conviction in this value of the company. Remind us of the long-term potential that you see in SpaceX. Absolutely. I mean, I think you see SpaceX moving in, I think maybe one way to frame it is just the way that SpaceX has historically compounded their technology to create.

Analysis

SpaceX's Starlink has achieved over a billion dollars in revenue in just a few years, showcasing its rapid growth compared to competitors. However, investor skepticism remains regarding the company's long-term value amidst stock performance fluctuations.

The swift revenue generation of Starlink highlights the significant demand for broadband services in space, indicating a robust market potential. Smart investors should note the historical context of SpaceX's technological advancements, which may suggest a compounding effect on future growth and innovation.

15:49
PDT

Starship test flight was scrubbed, indicating ongoing challenges.

SpaceX Derek Werters Eclipse Space CEO Bloomberg Talisman PRIVATE

– V3 satellites are specifically designed for Starship, not Falcon 9.

– Production readiness of V3 satellites is a significant milestone.

– SpaceX's future business relies heavily on Starship's success.

– Investors should monitor the implications of Starship delays.

space explorationsatellite technology

▸ Full transcript

Derek Werters is the co-founder and CEO of Eclipse Space. Derek, this isn't my first rodeo. Do you know how many of these Starship launch attempts I've done live on television that then get scrubbed? But what I was saying there about the Starlink test component, V3 on Starlink, the much bigger picture, is that the reason we pay such close attention to where the Starship can be rapidly reusable and operable is that that future business line at SpaceX, the one that's happening right now, needs Starship to work. Just give us that broader context. Yeah, so I think the key thing here is that all of these V3 spacecraft were specifically designed for Starship. You can't go back to launch one of these new satellites on a Falcon 9. And so yeah, you're absolutely right. Space is hard. And you really need Starship to unlock V3. That being said, the fact that they have a full stack of 20 V3 satellites that are real V3 satellites that are working is a huge step in the right direction. It actually implies a whole lot has already been done to build the factory and get ready for mass production of the spacecraft and kind of eye-cleaning the factory, so to speak. So the fact that they had real satellites is a big deal that I think people should not undervalue. Just to remind anyone that's tuning in to Bloomberg Talisman.

Analysis

SpaceX's Starship program faces challenges as a recent test flight was scrubbed, highlighting the difficulties in achieving rapid reusability. The successful development of V3 satellites is crucial for SpaceX's future business line, emphasizing the importance of Starship's operational success.

Investors should note that the production readiness of V3 satellites indicates significant progress in SpaceX's manufacturing capabilities, which could lead to accelerated deployment and revenue generation. The reliance on Starship for launching these satellites underscores the interconnectedness of SpaceX's projects and the potential risks involved if Starship continues to face delays.

15:47
PDT

SpaceX's Starship test flight was scrubbed.

SpaceX Starlink Bloomberg IPO Starship Rocket PRIVATE

– The aerospace sector faces inherent volatility and risks.

– After-hours trading showed a decline in SpaceX's stock.

– Investor confidence may be shaken by operational delays.

– Future revenue streams from satellite deployments are uncertain.

aerospace volatilityinvestor sentiment

▸ Full transcript

That's okay. We still got plenty to talk about, especially the significance of this second flight of the new V3 architecture. Right. Tell us a little bit about how this connects to the revenue stream and what SpaceX needs to show investors, especially after their immense IPO just in June. Yeah, I think any moment now, by the way, Sherry, we're going to get a headline on the Bloomberg terminal. I do your deal. You look out for the headline on the terminal and I'll answer the question. On this test flight, there are essentially operational versions of the latest generation Starlink satellite. The plan was that they were to be deployed in a demo. And within 20 minutes of deployment, having connected with the broader Starlink constellation, they would actually burn off, fall back down into Earth's gravitational pull and pull away. I'm seeing the Bloomberg headline, Sherry. Do you want to take it or do you want me to take it? No, I mean we're seeing that they actually scrubbed the test mission of the Starship Rocket, but tell us a little bit of why this is significant, especially given that we were hoping to see some major improvements after flight 12. It's significant because space is hard and this is exciting. We're showing the after-hours trade right; the stock is now actually accelerating in its decline. So again, why was this Starship 13th test flight significant? It was the first test flight.

Analysis

SpaceX's Starship test flight was scrubbed, which has implications for investor confidence following their recent IPO. The significance lies in the challenges of space exploration, highlighting the volatility and risks associated with the aerospace sector.

Smart money should note that despite the setback, the after-hours trading showed a decline in stock, indicating investor sensitivity to operational performance. The repeated delays in test flights could signal a cautious approach from investors regarding future revenue streams from SpaceX's satellite deployments.

15:42
PDT

VIA is producing superconducting cables with plans for grid integration.

VIA Microsoft MSFT

– The company has raised over $100 million, indicating strong investor interest.

– Challenges include high costs and conservative utility customer base.

– Superconducting cables could significantly enhance grid efficiency.

– Adoption may be slow due to utility risk aversion.

energy infrastructuresuperconducting technology

▸ Full transcript

Uh, the grid. Yeah. When we visited VIA in 2025, the company was starting to produce 10-meter long sections of its cables on this assembly line. Uh, is this thing on? We're going extremely slow. Typically, it takes about two weeks to make a cable. In normal cable manufacturing, you can't even see the real spinning. It's spinning so fast. A lot of the manual things we're doing right now are going to be automated. And yeah, it will be a much faster process. Do you think about a future of these cables stretching across America, stretching across the world? I hope so. I really hope so. VIA has raised a little over $100 million so far from investors, including Microsoft. And it says it aims to have its first cables on the grid within a couple of years. But none of this is easy or cheap. The system needs vacuum tubes and a continuous supply of liquid nitrogen, which could add a price premium over conventional cables. And there's another issue. VIA's potential customers, electric utilities, aren't known for their high-tech risk-taking. It just can't be denied that utilities are conservative businesses. When you're worried about providing power 100% of the time, you're going to be very cautious about trying something new. I don't know, we'll ever see superconductors be the...

Analysis

VIA is progressing in the production of superconducting cables, aiming to have its first cables on the grid within a couple of years after raising over $100 million from investors, including Microsoft. However, the company faces challenges due to the conservative nature of electric utilities, which may hinder the adoption of this innovative technology despite its potential benefits.

The significant investment in superconducting cable technology highlights a shift towards more efficient energy solutions, but the reliance on liquid nitrogen and vacuum tubes could create cost barriers. Smart money should consider the long-term implications of energy infrastructure modernization and the potential for VIA to disrupt traditional utility models if it can overcome these hurdles.

15:40
PDT

Superconducting cables can carry more power in a compact space.

VIA China GE EV

– Reduced infrastructure needs could lower costs for grid upgrades.

– Efficient power transmission is crucial for meeting rising electricity demands.

– VIA must solve cooling challenges to implement superconducting technology.

– The shift to advanced materials may reshape energy distribution.

energy infrastructuresuperconducting technologyelectricity demand

▸ Full transcript

We can build lines that have a lot more capacity than what you've been able to build in the past. So what is a superconducting cable? See, your typical power cable is made of a good conductor, a material that electric current can pass through without a lot of resistance. The more resistance, the more energy gets lost along the way. Plastic has a lot of resistance, making it a bad conductor. That's why it's used for insulation. Copper and aluminum have low resistance, making them pretty good conductors, so we use them for most power cables today. VIA's cables, on the other hand, are made of this stuff. So I'm holding here a sample of the superconducting material. It's a really special class of materials that in certain operating conditions no longer have resistance. So when you can operate a material that doesn't have resistance, we can carry a lot more power in a very, very compact space. Cables that can carry more power could be a big upgrade for the grid, helping move a lot of electricity to the data centers, homes, and EV chargers that need it. They could also mean we don't have to build as much new infrastructure since one superconducting cable could carry as much power as several conventional cables. But first, VIA needs to figure some things out, like how to keep its cables extremely cold.

Analysis

VIA is developing superconducting cables that can carry significantly more power than traditional cables, which could revolutionize grid infrastructure. This advancement could reduce the need for extensive new infrastructure while efficiently delivering electricity to high-demand areas like data centers and EV chargers.

The ability to transmit electricity without resistance presents a unique opportunity for energy efficiency and capacity expansion. Smart investors should note that as demand for electricity surges, especially from AI and EV sectors, technologies like superconducting cables could become critical in maintaining competitive energy grids.

15:38
PDT

China's grid expansion outpaces the US and Europe.

China US Europe AI EVs In China USDCNH

– Rapid economic growth in China supports energy demand.

– Countries failing to upgrade their grids risk losing competitiveness.

– New technologies may redefine future electricity distribution.

– Energy infrastructure is critical for emerging industries.

energy infrastructureChina's economic growthemerging technologies

▸ Full transcript

China does a lot of the manufacturing that Western countries mostly stopped doing, and the grid has had to keep up. In China, you still have pretty rapid economic growth. A bad year here is 5% growth, which is much higher than you normally see in developed economies like the US and Europe. And so, whereas the US has barely seen an uptick in power generation, in China, power generation has gone up seven times since 2000. I moved to China 29 years ago, and the difference between now and then is just palpable. You know, I used to drive on my way to school and we'd pass people living in huts and hovels. Now, in a city like Shanghai or Beijing, there are brightly lit skyscrapers. Energy is destiny. It decides whether your country has enough capability to do the things it wants. The countries that can't power new industries like AI and EVs just won't have as much of those new industries. And so if, as a country, you're not able to build out the grid, you lose out on being a competitive economy in the 21st century. For the rest of the world, keeping pace with China's fast-growing grid isn't going to be easy. But the grid of the future isn't necessarily going to look like the grid of the past. New technologies to move electricity could be the key to getting ahead, especially for China.

Analysis

China's power generation has surged sevenfold since 2000, driven by rapid economic growth, while Western countries struggle to keep pace. The ability to build out energy infrastructure is crucial for competitiveness in emerging industries like AI and EVs, highlighting a significant gap between China and developed economies.

15:33
PDT

Electricity consumption directly correlates with economic output.

GE Rich Miller ConEd US VP CL=F

– The grid's expansion has historically driven economic growth.

– Rising energy costs are prompting efficiency initiatives.

– The energy landscape is evolving, impacting investment strategies.

– New technologies may emerge to address energy management challenges.

energy consumptioneconomic growthenergy efficiencygrid infrastructure

▸ Full transcript

And all the parts of this massive system have to work together in perfect harmony. A sudden imbalance, say a large power plant switching off without warning, can easily throw the whole system out of whack, or even do I lose? Do I lose? Well, more on that later. But most of the time, the grid works just fine, powering our lives and helping our economies grow. So there is a direct relationship between how much energy an economy consumes and how much economic output results. The richer you are, the more electricity you consume, the bigger your grid, and the bigger your grid, the more electricity you consume, the richer you become. That feedback loop has been going strong since the early 20th century, when electricity started to become a major energy source. Suddenly, all you needed to bring energy into your home or business was a wire. In 1910, just 14% of US homes had electricity. By 1930, it was 70%. Companies like GE sold millions of fridges and TVs and the grid grew fast. But things started to change in the 1970s when, thanks to the oil crisis, energy started getting more expensive. So that's when the first big movements in energy efficiency began with major energy efficiency programs run by electric utilities. That's Rich Miller, a former VP of ConEd.

Analysis

The relationship between energy consumption and economic output remains strong, with richer economies consuming more electricity and thus expanding their grids. However, the energy landscape is shifting due to rising costs and efficiency initiatives that began in the 1970s, indicating a potential pivot in how energy is managed and consumed moving forward.

Smart money should note that the historical feedback loop between electricity consumption and economic growth may face disruptions as energy efficiency becomes a priority. This shift could lead to new investment opportunities in energy technologies and infrastructure that adapt to changing economic conditions and consumer demands.

15:31
PDT

Global electricity demand expected to double by 2050.

China AI EVs USA RPM OK In China USDCNH DXY

– China's power generation has increased sevenfold since 2000.

– Significant investment needed for grid infrastructure upgrades.

– Evolving grids present opportunities for new technologies.

– Competition for grid superiority will influence economic futures.

energy infrastructuregrid evolution

▸ Full transcript

This year, with industries like AI and EVs growing fast, the world is predicted to use twice as much electricity by 2050. That's roughly a whole new USA's worth of electricity every five years. To make all that power and get it to where it needs to go, the world's grids need to evolve. All that new infrastructure will cost billions of dollars, but so did broadband internet, and that's ended up creating trillions of dollars of value. Some countries' grids are evolving faster than others. In China, power generation has gone up seven times since 2000. The battle to build the best grid is a battle to win the future. And with more power comes more opportunities; new ideas and technologies are in the works to massively upgrade the world's grid. It's spinning round at 1500 RPM. Can it all happen fast enough to power the future? The answer is going to get a bit nerdy and technical. But we're all nerds here, right? OK, good. Right, the show's called Primer. So here's a quick primer on the grid. A typical grid structure looks like a large power plant somewhere, typically far away from where you are, that is generating power. It could be nuclear, gas, hydro, or solar.

Analysis

The global electricity demand is projected to double by 2050, driven by rapid growth in industries like AI and EVs, necessitating significant upgrades to power grids. Countries like China are leading the way in power generation, which has increased sevenfold since 2000, highlighting a competitive race for grid superiority that will shape future economic landscapes.

Investors should note that the evolution of power grids represents a massive infrastructure opportunity, akin to the broadband internet boom, which created trillions in value. The shift towards more efficient and advanced grid systems will not only meet rising energy demands but also unlock new technologies and business models in the energy sector.

15:29
PDT

EU regulators criticized for hindering tech growth.

EU Lisa of Romowitz Dave Scarlett Foo Bloomberg In Case You Missed PRIVATE

– Stakeholders feel unsupported in the competitive tech landscape.

– Potential for regulatory changes impacting investment strategies.

– Focus on companies adept at navigating regulatory challenges.

– Concerns about Europe's ability to foster global tech leaders.

regulatory challengestech investmentEuropean market dynamics

▸ Full transcript

Bringing you up to the minute news whenever and wherever it happens. I'm Lisa of Romowitz in Rio de Janeiro, and this is In Case You Missed It. I'm Dave, right here. We're talking with the EU regulator on this. Look, as I told you, I interact a lot with America's and Chinese players, and we see Trump fighting for their companies all the time. We see the Chinese fighting for their companies all the time here in Europe. I feel I'm fighting against the European regulators, not that they are fighting for us; they are fighting against us. It's a big mistake because we need to have really big global tech leaders in Europe. Make mistake, Europe. Live every weekday. Bringing you the latest business news wherever and whenever it happens. I'm Scarlett Foo reporting from America's biggest military shipyard. This is Bloomberg. The world's largest machine is so big it can be seen from space. In fact, it covers huge areas of the Earth's surface. Oh, wait, sorry, hold on. Give me the other side. There we go. Our lives depend on electricity. If you haven't noticed already, all of that electricity in almost all parts of the world is delivered to you by the grid. The world's biggest, most complicated machine ever built. And if you start to notice the grid, you'll see it every... every.

Analysis

The EU regulator faces criticism for not supporting European tech companies, with stakeholders feeling they are fighting against regulatory barriers rather than for growth. This sentiment highlights a growing concern that Europe may lag in fostering global tech leaders, which could impact its competitive edge in the tech sector.

Smart money should note the potential for regulatory changes that could either hinder or support tech innovation in Europe. The ongoing struggle between local regulators and global tech firms may create investment opportunities in companies that can navigate these challenges effectively.

15:27
PDT

Microsoft is interested in building new centers without consolidating debt.

Microsoft Roger Storback MSFT

– Sensible underwriting decisions are emphasized as crucial for credit management.

– There is a potential shift towards equity story-oriented investments.

– Good underwriters are distinguished from bad ones based on credit selection.

– The narrative-driven investment approach may increase market volatility.

credit managementinvestment strategy

▸ Full transcript

Microsoft, who are interested in seeing these centers built and are interested in not consolidating the debt on their balance sheet. To the extent they are prepared to lend their credit, one can lend against those types of things and make sensible underwriting decisions. There are those who are more equity story oriented, where it's maybe not as sensible to underwrite, and good underwriters pick good credits while bad underwriters pick everyone. My old mentor, Roger Storback, told me when I transitioned, 'Football will never leave you, but you need to leave it.' Wow! Everyone has a dream, and a lot of dreams are, you know, 'My dream is to play football and play professional football,' and you get the dream comes true. But it isn't going to end, and the day it ends is the day before it ends. You're one of the best in the world. Great! The next day you wake up, that's gone. What are you great at? And the truth is, nothing, right? I'm not.

Analysis

Microsoft is exploring the construction of new centers while avoiding debt consolidation on their balance sheet, indicating a strategic approach to credit management. The emphasis on sensible underwriting decisions highlights the importance of discerning good credits from bad, a critical skill in today's volatile market environment.

The mention of equity story orientation suggests a potential shift in investment strategies, where traditional underwriting may be overshadowed by narrative-driven investments. Smart money should recognize the risks associated with this trend, as it may lead to increased volatility and mispricing in the market.

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