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17:56
PDT

Japan raises concerns over China's military drills.

Japan China TSMC Hong Kong The China USDCNH PRIVATE

– U.S. semiconductor stocks see a rebound.

– Memory makers in Asia are performing well.

– TSMC is likely to be a focal point for investors.

– Geopolitical tensions may introduce market volatility.

geopolitical risksemiconductor market dynamics

▸ Full transcript

Japan has conveyed concerns to China over a live-fire drill. So geopolitics is in the mix as well on a day where you look at how we are faring on the setup for Chinese markets, following on from what we saw in the U.S. in terms of their bounce in chip stocks, at least the reprieve on selling in the semiconductor names. We are seeing, of course, in the Asia session so far, one hour in thereabouts, the memory makers are all in the green. Does this sort of set up a positive backdrop for what we're seeing in the greater China region? Taiyaks futures are pointing to that bit of upside. TSMC, no doubt, will be in focus. That's it from the Asia trade. Our markets coverage continues as we look ahead to the start of trade in Hong Kong, Shanghai, and Shenzhen. The China show is next. This is Bloomberg.

Analysis

Japan has expressed concerns to China regarding a live-fire drill, highlighting geopolitical tensions that could impact market sentiment. Meanwhile, semiconductor stocks are rebounding in the U.S., setting a positive tone for the greater China region, particularly for memory makers like TSMC.

Smart money should note the potential for a sustained rally in semiconductor stocks, driven by improved sentiment and demand in Asia. The geopolitical backdrop may create volatility, but the current market dynamics suggest a favorable environment for chip manufacturers in the near term.

17:54
PDT

Boeing plans to increase production rates for 737 and 787 aircraft.

Boeing Kelly Oudberg Guy Johnson New Delhi India cockroach Jan's party Narendra Modi Andy Burnham John Healy Rachel Reeves Shabana Mahmood Ed Miliband PRIVATE

– Strong backlog indicates sustained demand for Boeing's aircraft.

– Political protests in India reflect growing dissatisfaction with the government.

– UK Prime Minister Andy Burnham's cabinet reshuffle may influence economic policy.

– Market sentiment could be affected by geopolitical tensions.

aerospace demandpolitical instabilityUK economic policy

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You have to make orders for aircraft well in advance, and we think that the demand is set for our aircraft going forward. Boeing CEO Kelly Oudberg there speaking with Bloomberg's Guy Johnson. Now some global political headlines are tracking as well. Police in New Delhi used tear gas and batons on Monday to disperse thousands of students marching on parliament. The rally led by the so-called cockroach Jan's party was the largest in India's capital in recent years. Protesters were demanding the education minister's resignation over a series of exam paper leaks, but anger was also directed at Prime Minister Narendra Modi, reflecting broader frustration with his government. Now the newly-emitted UK Prime Minister, Andy Burnham, has made several appointments to his cabinet. John Healy, the former Defense Secretary, replaced Rachel Reeves as Chancellor of the Exchequer. His appointment was unexpected and comes weeks after he resigned in a row over funding with the Treasury. Shabana Mahmood remains Home Secretary, a role she has held since September and oversees immigration policy. Former Labour leader Ed Miliband takes over as foreign secretary and he replaces Yvette Kupa, who hasn't been appointed health secretary.

Analysis

Boeing's CEO Kelly Oudberg expressed confidence in the strong demand for aircraft, highlighting a robust backlog and plans to ramp up production rates. The company is focused on executing its backlog and improving overall performance, aided by support from the U.S. administration.

The ongoing political unrest in India, marked by student protests demanding government accountability, could signal broader discontent with Prime Minister Modi's administration. This unrest may impact investor sentiment and economic stability in the region, warranting close monitoring by market participants.

17:52
PDT

Boeing is increasing production rates for both 737 and 787 models.

Boeing White House President The President

– Strong backlog and market conditions are driving production ramp-up.

– Government support has played a significant role in Boeing's recent success.

– Focus on execution and stakeholder trust is critical for Boeing's future.

– Boeing's strategy includes investing in new capacity and facilities.

aerospace growthgovernment supportproduction ramp-up

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We've got more work to do, but I am pleased with the progress so far. We're ramping up production across many of our product lines. Markets are very strong, so our backlog is very, very strong. Our story is really focusing on executing that backlog. The administration of the White House has given you massive support over the last 18 months. The President certainly had your back. Do you think the company would be where it is now, that kind of progress that you've made, without that kind of support? Well, I think the execution focus is really on us to go improve our overall performance, build trust with our stakeholders, and restore trust with the regulator. I think that's more what Boeing has done for themselves. The President has been very helpful in sales campaigns. Balancing trade, the best way to do that is by a bunch of airplanes. So we've been a beneficiary that he's been very helpful to the whole aerospace industry. So you're in a good place right now? Yes. Well, we still have to ramp up higher. So we're at 47 a month now on the 737. We have aspirations to get to a 63 a month rate. We're at an 8 a month rate on the 787. We want to go to 10 later in the year and then higher next year. So we're investing in new capacity, new facilities, so that we can continue this rate ramp. The backlog is there. The market is strong. So it's all about delivering more airplanes. You say the backlog is there, the market is strong. Do you like the economy right now? I do, the consumer.

Analysis

Boeing is ramping up production across multiple product lines, with a strong backlog and market conditions supporting this growth. The company aims to increase its 737 production rate from 47 to 63 per month and the 787 rate from 8 to 10 per month later this year, indicating confidence in demand despite ongoing challenges.

The support from the White House has been pivotal for Boeing, particularly in sales campaigns, which highlights the importance of government relations in the aerospace sector. As Boeing invests in new capacity and facilities, the focus on execution and stakeholder trust will be crucial for sustaining this momentum in a competitive market.

17:49
PDT

DRAM prices are at all-time highs due to tight market conditions.

China Apple Nintendo Alphabet Anthony Stevens EU Alibaba Bruce Lee Fitch Australia AAPL PRIVATE

– Chinese companies are increasing DRAM capacity, impacting global supply.

– Alphabet is developing a new server chip to enhance AI performance.

– El Niño is expected to significantly affect utilities and agriculture sectors.

– Thermal coal producers may benefit from increased energy demand due to El Niño.

supply chain riskenergy demandEl Niño impact

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which delves into the biggest story shaping the country's role in global business. Find it on Apple's Spotify or Bloomberg.com. We have more head on the Asia trade. This is Bloomberg. 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. Don't mistake Europe, live every weekday.

Analysis

The Chinese are shifting memory usage from HBM to DRAM due to domestic supply advantages, leading to a continuous rally in DRAM prices. This shift is expected to impact major tech companies like Apple and Nintendo, while new DRAM capacity from China is anticipated to come online in 2027 and 2028, complicating the current market dynamics.

17:47
PDT

Thermal coal producers likely to benefit from El Niño conditions.

Australia Fitch thermal coal Linenia El Niño Indian Ocean dipole El Ni Indian Ocean

– Drier weather may reduce disruptions and increase supply volumes.

– Increased reliance on fossil fuels could challenge energy transition efforts.

– Regional impacts depend on the severity of El Niño and Indian Ocean dipole.

– Hotter weather across Asia may drive up energy demand.

energy demandclimate impactfossil fuel relianceenergy transition

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Sectors that could be benefiting in a way from the improved energy demand given these weather events. Talk to us about what you're seeing or expecting in terms of the outlook especially for energy producers. Correct. So I mean, thermal coal producers are expected to be one of the few clear beneficiaries of the El Niño because compared to Linenia-related floodings, drier conditions are typically more favorable as it sort of entails typically less weather-related disruptions and this could increase supply volumes. In terms of demand, hotter weather across Asia as well as a reduction in hydropower availability could lead to increased reliance back to traditional fossil fuel generation, but this in itself would definitely lead to some challenges in terms of the energy transition that Australia is currently undergoing. What about how the impact may vary by region? It depends on the severity. It's not really just El Niño that's a key driver; it also has to be dependent on the Indian Ocean dipole as well.

Analysis

Thermal coal producers are expected to benefit from the El Niño weather pattern, as drier conditions typically lead to fewer weather-related disruptions and increased reliance on fossil fuels. This shift could challenge Australia's energy transition efforts while boosting supply volumes amid rising demand across Asia.

The interplay between El Niño and the Indian Ocean dipole will significantly influence regional impacts, suggesting that investors should closely monitor these climatic factors to assess their effects on energy markets and production strategies. The potential for increased thermal coal demand highlights a divergence in energy strategies as traditional fossil fuels may see a resurgence amidst climate challenges.

17:45
PDT

Utilities and agriculture are most exposed to El Niño impacts.

Bruce Lee Fitch Australia utilities agriculture energy retailers To Australia La Ni El Ni

– Reduced water inflows may weaken utility revenues.

– Increased electricity demand could lead to higher spot prices.

– Energy retailers may experience short-term earnings volatility.

– Corporates are likely prepared for extreme weather events.

weather impactenergy demandagricultural risk

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To Australia. In terms of the impact on sectors, we believe that utilities and agriculture are most exposed. For utilities, if you look at water utilities, you find that there are big expectations of reduction in water inflows and storage, which could weaken revenue and increase those utilities' operating expenditure in the near term. For energy retailers, definitely, if this leads to an increase in electricity demand, it will put pressure on spot prices as well as grid stability. A combination of high spot prices and possibly unplanned outages could lead to short-term earnings volatility. Bruce, you raised a good point about how we've seen this episode in 2023-2024 before; how it pans out to the intensity of back then is a separate question. But talk to us about how corporates have been spending their time perhaps also preparing for a weather event like this. Correct. The key message is Australians are no strangers to extreme weather events. We've been exposed to them regularly and shuffled between La Niña and El Niño. So, I mean, the good thing that it brings, right, is that...

Analysis

Utilities and agriculture sectors in Australia are facing significant exposure to the impacts of a strong El Niño event, with expectations of reduced water inflows and increased electricity demand. This could lead to revenue declines for utilities and heightened earnings volatility for energy retailers due to rising spot prices and potential outages.

Smart money should note that Australian corporates are accustomed to extreme weather events and may have already implemented strategies to mitigate risks associated with El Niño. The interplay between increased demand for energy and reduced water supply could create investment opportunities in energy retailers while pressuring agricultural stocks.

17:43
PDT

El Niño could severely impact utilities and agriculture sectors.

Bruce Lee Fitch Ratings Australia El Niño US APEC El Ni

– Energy retailers may benefit from increased electricity demand.

– Food supply chains are at risk due to potential crop yield reductions.

– Sector-specific analysis is crucial in assessing market impacts.

– European equity markets are currently experiencing gains.

climate impactsector analysis

▸ Full transcript

Is it paradise ahead or Gadica? Maybe somewhere in the middle. What is going to be the consequence for US markets? We are seeing more gains across European equity markets. Take a look at how we're faring when it comes to Asia markets. Australia's weather bureau has warned that a very strong El Niño event this year could be the most severe in decades. Fitch Ratings says utilities and agriculture are most exposed to the developing weather pattern, with hotter, drier conditions set to strain water supplies, lift electricity demand, and heighten bushfire risk. El Niño historically cuts crop yields, adding stress to food supply chains and prices, but energy retailers may benefit from stronger demand. Joining us now is Bruce Lee, director for APEC Corporates at Fitch. Great to have you on the program, Bruce. So there are, I guess, some winners and losers when it comes to the impact from El Niño, but talk to us about the sectors that are most vulnerable here.

Analysis

European equity markets are gaining, while Australian weather forecasts indicate a severe El Niño event this year, raising concerns for utilities and agriculture sectors. Fitch Ratings warns that the developing weather pattern could strain water supplies and increase electricity demand, impacting food supply chains and prices, but may benefit energy retailers due to stronger demand.

Investors should note that while utilities and agriculture face vulnerabilities from El Niño, energy retailers could see upside from increased demand. This divergence highlights the importance of sector-specific analysis in navigating the potential impacts of climate events on market dynamics.

17:40
PDT

ASX200 down for four sessions, indicating bearish sentiment.

ASX200 Nikkei Samsung Hynix Mark Carney Derek DeCloet ZAI Anthony Stevens Apple Nintendo Alphabet Gemini AAPL USDCNH PRIVATE GOOGL

– Nikkei shows resilience with a rebound after a market holiday.

– Chinese chip makers are increasing DRAM capacity, affecting global memory prices.

– Alphabet's new server chip development signals competitive pressure in AI hardware.

– Trade tensions between Canada and the U.S. could influence market stability.

trade tensionsAI hardware competitionmemory market dynamicsChinese tech developments

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From a perspective, the Chinese are trying to move usage of memory from HBM to DRAM where they have more domestic supply. At the moment, the DRAM market is also very tight, so DRAM prices have just been on a constant rally and are at absolute highs. You see stocks like Apple and Nintendo struggle because they have to get more memory. So for now, the memory space is happy on both sides of HBM and DRAM. But the Chinese are coming up with new capacity in 2027 and 2028 in DRAM, which is why they want to condition their models to use more DRAM. This space is very technologically complex at the moment, and it's very hard to focus on when this supply is going to come online because building memory fabs is no joke. At the moment, China is doing an extremely good job of bringing on new DRAM capacity as quickly as possible, but none of these funds are really operational until next year. Bloomberg's reporter Anthony Stevens is there with the latest on the markets. Let's stay with tech because Alphabet shares now closed higher after the information reported the company is developing a new server chip designed to boost the performance of its Gemini AI models. The report says the chip known as Frozen V2 could be deployed as early as 2028. Almost every major AI developer is set to be developing their own chips to work more efficiently with their systems. The EU has fined Alibaba.

Analysis

The ASX200 continues its decline, marking a fourth consecutive session of losses, while the Nikkei rebounds from previous losses, gaining over a percent. The Chinese chip market is under scrutiny as local manufacturers ramp up DRAM production, potentially impacting global supply dynamics.

17:38
PDT

Chinese tech stocks show divergence in performance.

China QOXIA AI US NVIDIA Samsung Hynix Z.AI Mark Carney Derek DeCloet Anthony Stevens In China USDCNH

– Model developers face pressure while hardware ecosystems improve.

– Investment strategies are becoming more selective.

– Resource optimization is becoming a key focus in AI development.

– Increased competition among Chinese model makers.

AI market dynamicsChinese tech competitionresource optimization

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In China, where momentum sells off, value and dividend yield plays can start to do better. Anthony, to your point on this divergence that we're seeing in the Chinese tech space as well, the fact that you're seeing all of these model developers under pressure while the hardware ecosystem is actually gaining ground, is this sort of a reflection of what's just happening globally where the AI exuberance is no longer lifting all boats? Very much so. And it's being driven by technological developments which are kind of head-snapping at this level. You continue to see new models and their technical specifications drive these trades in a very big way. So it's no longer a correlation of one. You do see winners and losers really picking up and really seeing big, big divergence in the double-figure territory over short periods of time. So now we have to look at each model's release separately and how they stack up against each other. The Chinese model makers are competing with each other as viciously as the U.S. are. Similarly, we're moving away from using as much compute as you can get your hands on into a part where LLMs are looking at more resource optimization, and that raises the risks of getting too one-sided on AI capex trades. To us as well about what you're seeing in some of the memory trades. I mean today we're looking at QOXIA, it's up 6%.

Analysis

Chinese tech stocks are experiencing a divergence, with model developers under pressure while hardware ecosystems gain ground. This reflects a global trend where AI exuberance is no longer uniformly benefiting all players, indicating a shift towards more selective investment strategies based on individual model performance.

The competitive landscape among Chinese model makers is intensifying, mirroring the fierce competition in the U.S. market. As firms focus on resource optimization rather than sheer computational power, the risk of overexposure in AI capital expenditure trades increases, suggesting a need for careful evaluation of investment positions in this sector.

17:36
PDT

Chinese chip stocks may rise after US peers rebound.

ZAI China Anthony Stevens Bloomberg Chinese chip stocks US AI Bloomberg Executive Editor Derek Decluere USDCNH Z.AI PRIVATE

– ZAI has completed a major data center with local chips.

– Investors in Chinese chip makers are sitting on large gains.

– Profit-taking could occur as valuations rise.

– The demand for AI supply chain development remains strong.

AI supply chainlocal productionprofit-taking

▸ Full transcript

I think you could say for the most part, but these two goals are not necessarily perfectly compatible, you could say. Derek, thank you so much for talking us through what's at stake for Canada here. Bloomberg Executive Editor for Canada, Derek Decluere here. Let's also take a look at how Chinese chip stocks are in focus. They may get a lift today after their US-listed peers rebounded. Meanwhile, Bloomberg has been told that China's ZAI has completed construction of a giant data center that houses only locally-made chips. Let's get back to our markets reporter, Anthony Stevens. So, Anthony, what are you watching today? Yeah, we want to see whether the disruption from the moonshot kind of AI team continues in China today. So, we did see some very sharp falls in moonshots kind of competitors, many Macs and Z.AI. But whether that continues into today's session will be very interesting because we do have that announcement from Z.AI about the fact that their big data center is going to be filled with Chinese-made equipment. And that's been a big issue in demand here. So the Chinese chip makers have a lot more valuation air under them, and they need to continue to see China build out aggressively its AI supply chain. They are the leaders here to date in gains. Many of them have triple-digit gains. So investors are sitting on huge gains in these names and maybe it can tempted to get some profits out of them.

Analysis

Chinese chip stocks may see a boost today following a rebound in their US-listed counterparts, with ZAI completing a significant data center project utilizing only locally-made chips. The ongoing developments in China's AI supply chain and the performance of domestic chip makers are critical indicators for investors, especially given their substantial recent gains.

Smart money should note the potential for profit-taking among investors in Chinese chip stocks, as many have experienced triple-digit gains. The focus on local production and the aggressive build-out of AI infrastructure in China could create both opportunities and risks in the sector, particularly as market sentiment shifts.

17:34
PDT

Prime Minister Carney's approach to U.S. relations has shifted from aggressive to conciliatory.

Canada Donald Trump Mark Carney China And Canada USDCNH

– Canada is open to negotiating trade deals with the U.S.

– Ongoing tensions with China complicate Canada's trade strategy.

– Historical challenges in negotiating with Trump may impede progress.

– Canada's middle power status influences its foreign relations.

trade negotiationsU.S.-Canada relationsChina trade tensions

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He's taken a variety of positions in his time as prime minister. He ran an election campaign in April 2025 that was very much about, you know, we will be aggressive with the Americans and we will hit them where it hurts. And then after he won that election, I mean, that was a political strategy, he became more conciliatory and he went to Washington and talked about, you know, the great partnership and so on. And then he went to Davos earlier this year and gave that speech about middle powers and standing up to the superpowers that clearly annoyed Trump. So it has been sort of a variety of positions from Carney. Sometimes he's more conciliatory. Lately he has certainly made a number of entreaties to the U.S. that Canada's ready to make a deal. But I think there is some history here, and of course, Donald Trump is not an easy person to negotiate with, as many world leaders have found out. And Canada is in a difficult position as well, because they also have significant trade with China, right? And they had frictions with Beijing as well. How do the other relationships, you mentioned the middle power status of this country, how do other relationships also factor in and how Canada now deals with its neighbor?

Analysis

Canada's Prime Minister has shifted from an aggressive stance towards the U.S. to a more conciliatory approach, indicating readiness to negotiate trade deals. This change comes amid ongoing tensions with both the U.S. and China, complicating Canada's foreign relations strategy.

Smart money should note that while Canada seeks to engage with the U.S., the historical difficulties in negotiating with Trump could hinder progress. Additionally, Canada's balancing act between U.S. and Chinese trade interests may create volatility in its economic outlook.

17:31
PDT

ASX200 falls for the fourth session.

ASX200 Nikkei Samsung Hynix Mark Carney Trump administration Canada U.S.USMCA AI South Korea When Nikkei ASX200 PRIVATE

– Nikkei rebounds after a market holiday.

– AI sector in South Korea remains under pressure.

– Canada ready to negotiate with the U.S. on tariffs.

– New tariffs on Canadian goods set to take effect in 30 days.

trade tensionsAI sector performancemarket volatility

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A mixed picture across markets in Asia, we continue to see the downside on the ASX200 now falling for a fourth consecutive session. The cost beam remaining muted at the moment, and this of course, as we have already seen that AI trade pretty fragile in South Korea with some big names like Samsung and Hynix all under pressure. A little bit of dispersion through markets right now as the Nikkei now rebounds from losses that we saw in the previous session. When Nikkei was one market, we actually tumbled into a technical correction, closing more than 10 percent below its June peak. We are coming off the worst weekly loss since April 2025. But we're also coming back from a market holiday here in Japan, and we're now gaining more than a percent. We'll continue to watch global headlines. We do have trade frictions to watch out for. The Canadian Prime Minister, Mark Carney, is saying that his government is ready to engage in trade talks with Washington after the Trump administration slapped extra 50 percent tariffs on certain Canadian goods from next month. Bloomberg executive editor for Canada, Derek DeCloet, joins us now from Toronto. Derek, these tariffs will go into effect in 30 days. Is there still time to come up with a negotiation to try to deter these tariffs? Where does the USMCA also go from here? I think there probably is time and I guess I would note.

Analysis

Asian markets show a mixed performance, with the ASX200 declining for the fourth consecutive session while the Nikkei rebounds from previous losses. Trade tensions are escalating as Canada prepares to engage in negotiations with the U.S. following the announcement of new tariffs on Canadian goods.

Investors should note the fragility of the AI sector in South Korea, particularly with major players like Samsung and Hynix under pressure. The upcoming trade talks between Canada and the U.S. could significantly impact market sentiment, especially in sectors sensitive to tariff changes.

17:29
PDT

U.S. Supreme Court strikes down Trump's global tariffs.

U.S. Supreme Court Trump Bloomberg AI Tyler Kendall Supreme Court Ed Ludlow San Francisco PRIVATE

– Expect increased tariff-related headlines until midterms.

– Potential volatility in trade-sensitive sectors.

– Businesses may need to adjust pricing and supply chains.

– Political implications could affect future trade negotiations.

trade policymarket volatility

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News whenever and wherever it happens. I'm Tyler Kendall in Geneva, Switzerland, and this is Bloomberg. When news breaks, a redhead across the Bloomberg terminal, Bloomberg has you covered. Trump's global tariffs are struck down by the U.S. Supreme Court. For all the context and clarity you need, there's going to be now tons of tariff headlines until the midterm election. Here at first on Bloomberg. Technology is embedded in every aspect of our lives, and that revolution is playing out in real time. From finance to defense tech, AI to entertainment from the road to the stars. Bloomberg is bringing you the stories of companies and people that are pushing tech to new frontiers and the politics reshaping global tech markets. I'm Ed Ludlow live in San Francisco in this.

Analysis

The U.S. Supreme Court has struck down Trump's global tariffs, which is expected to generate a flurry of tariff-related headlines leading up to the midterm elections. This decision could significantly impact trade dynamics and market sentiment as businesses adjust to the new landscape.

Smart money should note that the ruling may lead to increased volatility in sectors heavily reliant on imports and exports, as companies reassess their pricing strategies and supply chains. Additionally, the political implications of this decision could influence fiscal policies and trade negotiations in the near future.

17:27
PDT

Houthis threaten to disrupt Saudi oil supply.

Houthis Saudi Arabia RISTER Energy Nicholas Lois Bloomberg Andy Burnham Donald Trump UK Iran LISTS North Sea And Burnham CL=F

– Potential supply impact estimated at 2.5 million barrels per day.

– Burnham's fiscal policies are under scrutiny by markets.

– Trump's influence on UK foreign policy could complicate matters.

– UK financial markets remain sensitive to political statements.

geopolitical riskUK fiscal policyoil supply disruption

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Positively positive phone calls so far. Donald Trump called it very good, but also interesting. He's got that carrot dangled in front of him that the UK might re-up some of the drilling for oil and gas in the North Sea. But also, is Donald Trump going to push Burnham to try and use UK bases in strikes against Iran, for example? That's something that could be very, very tricky for Burnham to work through, because the UK public wouldn't support it. So how that relationship is going to evolve will be very interesting. Burnham's strategy, he says, is to meet Trump where he is, to not pick fights, but he also needs to find a way to stand up to Trump if needed on some of these issues. So that relationship could prove very interesting to watch. Andy Burnham used to be a guy who has a knack for shaking things up in the guilt market. I mean, these comments, again, about flexibility and fiscal policy, you say, you know, we need to wait for details on policy, but what are the indications or what are markets kind of pricing in? Well, it's been quite tricky for the markets because there's this endless premium on U.K. financial markets because of the LISTS Trust era. So anything that any leader or official says about the fiscal side can have the markets moving. And Burnham's been a bit tricky on this. He's changed his mind several times when he was, you know, years ago he was talking about spending a lot more, which the markets would find quite worrying. Now he's saying he's going to adhere to the election manifesto, the promises around tax, the promises around the fiscal rules. But he's also—

Analysis

Oil prices are under pressure as the Houthis threaten to disrupt Saudi shipping channels, potentially impacting supply by around 2.5 million barrels a day. This geopolitical risk, combined with dwindling alternatives, could push oil prices back to $100 a barrel.

The UK faces a complex political landscape as Prime Minister Andy Burnham navigates relationships with foreign leaders, particularly Donald Trump, while trying to maintain fiscal discipline. Markets are wary of Burnham's shifting fiscal policies, which could lead to volatility in UK financial markets as investors react to any signs of increased spending or changes in tax commitments.

17:24
PDT

Burnham's administration is under financial strain.

Andy Burnham John Healy Gordon Brown Trump UK

– Increased defense spending is likely but funding sources are unclear.

– Lack of detailed policies on energy prices raises concerns.

– Healy's experience may not suffice to navigate fiscal challenges.

– Foreign policy engagement will be critical for market stability.

fiscal policydefense spendingenergy pricesforeign policy

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Really a budget that's already under severe strain, the need to find more money from somewhere, perhaps cutting from other places, limits around what they can do on the tax front. But real issues, as you say, from immigration, cost of living, structural economic challenges, foreign policy challenges as well for this new prime minister. So a lot on his slate. What we've heard is a lot of promises to do things differently, but not a lot of detail about how he's going to do it differently, particularly how he's going to do that financially. And we do have the news on the Chancellor, the ex-checker John Healy; he's a safe pair of hands, seen as a pragmatic individual. He was a junior Treasury official, obviously some decades ago under Gordon Brown, so he's got some experience. The question though is he's going to probably push for an increase in defense spending, because that's what he pushed for when he was in the defense chair. So how is he going to fund that? What we really need to hear is what specific policies Burnham is now going to bring in to lower energy prices, for example? And how is he going to pay for that? What's going to be the offset without busting the fiscal rules that the market gets so anxious about? So, he's got very little wiggle room. He's got a new bench. But what's he going to do with it? Yeah, this is all coming at a time where it's easy to forget Europe has a door at its—has a wall on its doorstep, right? What was it about when it comes to how he's been engaging with some of these foreign leaders, including Trump? What are the signals we've been hearing?

Analysis

UK Prime Minister Andy Burnham faces significant challenges, including a strained budget and the need for increased defense spending, which raises questions about funding sources. The lack of detailed financial policies to address energy prices and fiscal rules creates a precarious situation for his administration.

Smart money should note that Burnham's pragmatic Chancellor, John Healy, may struggle to balance defense spending demands with fiscal constraints, potentially leading to market volatility. The government's approach to foreign policy and engagement with leaders like Trump could also influence investor sentiment amid ongoing economic pressures.

17:20
PDT

Europe is experiencing a diesel supply shortage.

Europe Asia Nicholas Loa Bloomberg So Europe Alright Nicholas Bloomberg Oil PRIVATE CL=F

– Asia's fuel consumption remains high, potentially leading to future supply issues.

– Current market calm may quickly turn into volatility.

– Interconnected global fuel markets can amplify regional disruptions.

– Investors should monitor diesel supply trends closely.

supply chain riskenergy market volatility

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Supply, right? So Europe's also starving of diesel. Asia last week was in a relatively good situation. We had gotten some of the crude cargoes we needed, and so we were continuing to run high and export. But I think we're almost now close again that sort of honeymoon may not last. What markets are most vulnerable to these issues? I would say primarily Europe first, and then we are going to see that slowly peter into Asia just because Asia is the biggest fuel-consuming region in the world. Supply and demand here stand to move very quickly, and so when what looks like a relative calm could become a crisis again very, very soon. Alright Nicholas, thank you so much, our Bloomberg Oil reporter Nicholas Loa. We have more head on the Asia trade, this is Bloomberg.

Analysis

Europe is facing a diesel supply crunch, which could escalate into a crisis as Asia's fuel consumption remains high. The current calm in the market may quickly shift to volatility, particularly affecting Europe first before impacting Asia.

Smart money should note that while Asia appears stable now, any disruption in supply could lead to rapid price increases, especially given the region's significant fuel demand. The interconnectedness of global fuel markets means that issues in one region can have swift repercussions elsewhere.

17:17
PDT

Houthi threats could disrupt 2.5 million barrels of Saudi oil supply.

Houthis Saudi Arabia RISTER Energy Bloomberg Bloomberg Oil Nicholas Lois New Zealand CL=F PRIVATE

– Oil prices may rise towards $100 per barrel due to geopolitical risks.

– Diminishing alternative supply sources heighten market volatility.

– Inflation concerns may increase as oil prices rise.

– Central banks could be influenced by rising oil prices.

geopolitical riskoil pricesinflation

▸ Full transcript

Back above 100 bucks a barrel. For more, we're joined by Bloomberg Oil reporter Nicholas Lois. So the issue with the Houthis and how they're threatening to block off those Saudi channels, how much supply might that actually cut off? Is this a new aspect of the war that could prompt oil to 100 bucks a barrel? I think there's a threat that's always been there in the background because they've done it before, right? They've threatened to disrupt shipping and they have, and this round they've come out to say that they're going to do it. In terms of actual supply that stands to be impacted, RISTER Energy has estimates of around two and a half million barrels a day. Now that might sound like a small amount, but in the grand scheme of things, when flows through Hormuz have basically fallen off again, let's not forget that most of Saudi loadings once upon a time came through the Strait, and with the workarounds by which people snuck tankers through, perhaps potentially at risk, even this out, like once upon a time at Yanbu where the Houthis have a little more control, that could potentially push prices up higher, much, much higher. 100 bucks. That's a good question, everyone. I will say we've not crossed that 100 handle in a long time, but I will say at a time when all the other alternatives are disappearing, are at risk, this added risk stands to be amplified, I think. So, I wouldn't put that out of the window. Okay, talk to us as well about, you know, we've been discussing these second-order effects you're seeing. Maybe these bits on central banks being affected as well. New Zealand inflation is hotter than...

Analysis

The threat from the Houthis to disrupt Saudi oil supply could push prices back to $100 a barrel, with estimates suggesting a potential impact of around 2.5 million barrels a day. This risk is amplified as alternative supply sources diminish, making the situation more precarious for oil markets.

Smart money should note that while the immediate supply impact may seem small, the geopolitical tensions and historical precedents of disruption could lead to significant price volatility. Investors should be cautious of the broader implications for inflation and central bank policies as oil prices rise.

17:15
PDT

Escalation of conflict complicates diplomatic efforts.

Iran Qatar Pakistan President Trump The Iranians

– Lack of clarity on ceasefire or negotiation terms.

– Intermediaries are seeking backing off from both sides.

– Past behavior suggests difficulty in achieving lasting peace.

– Statements from leaders may not reflect actual developments.

geopolitical riskdiplomatic negotiations

▸ Full transcript

Right away, they ended up with that memorandum of understanding, which was to have created a 30-day ceasefire and a period for additional talks. Then all of that went out the window when the two sides started attacking each other again. There are just a lot of open questions and unanswered questions right now about what the circuit breaker or off-ramp will be, if there is one. The latest escalation makes it more difficult to find these diplomatic channels. We know how Qatar and the Pakistanis have been the main intermediaries, but they also want to see some backing off before some of these negotiations can take place. No doubt, some backing off or at least a willingness from both sides to talk is key to restarting negotiations at all. The Iranians referenced today getting some kind of an offer or something to look at from an intermediary, but they didn't give additional details about that. President Trump has also repeatedly said that Iran wants a deal, but that is almost something that just kind of comes out of his mouth sometimes without there necessarily having been a development to lead to that, at least not one that we've gotten a whole lot of details about. Right now, the two sides are fighting, and again, if past is prologue, that's...

Analysis

The ongoing conflict has escalated, complicating diplomatic negotiations as both sides resume hostilities. The lack of clarity regarding potential off-ramps or ceasefires raises concerns about future talks and stability in the region.

Smart money should note that while both sides express a desire for negotiations, the current fighting undermines any real progress. The involvement of intermediaries like Qatar and Pakistan may not be enough to facilitate a resolution without significant concessions from both parties.

17:11
PDT

Japanese yen trading around 162 against the US dollar.

Japanese yen Korean won Kevin Warsh SGMC Capital Bloomberg CIO SGMC PRIVATE DXY

– Central bank rhetoric is not enough; traders want action.

– Korean won faces similar pressures as the yen.

– Tech stocks, especially in AI, are experiencing significant volatility.

– Lower prices in tech may present buying opportunities.

currency volatilitycentral bank policyexport-driven economytech sector dynamics

▸ Full transcript

Well, I guess more on the Japanese yen. They probably do need a weaker currency just because it's a primarily export-driven economy. They've been talking tough at around the dollar-yen level of around 160, but beyond the point, once interest rate differentials ever since Kevin Warsh came through and he's not talking about significantly lower rates, he might not even cut rates, and you might not have been hiked. But the very fact that he says, you know, that the market figure it out, the market is figuring it out. And I guess the problem freed into the Korean won as well. It's really hard to stop these trades. And you know, there needs to be an underlying economic justification that the central bank works towards preserving rather than, you know, I shouldn't say cheap talk, but you just wishful talk, that they do not wish to see the currency weakened. It's a tougher job than that. Yeah, traders want to see the action. And thank you so much. Great to chat at Gomez at CIO at SGMC Capital. We have more hit on the Asia trade. This is Bloomberg.

Analysis

The Japanese yen is under pressure, with discussions around the need for a weaker currency to support the export-driven economy. Central bank actions and interest rate differentials are critical, as traders seek tangible measures rather than mere rhetoric from authorities.

Smart money should note the fragility in the Korean won and the challenges central banks face in stabilizing currencies without economic justification. The ongoing volatility in Asian markets, particularly in tech stocks and AI-related sectors, signals potential opportunities for patient investors amidst lower prices.

17:09
PDT

Intel's turnaround under new leadership is gaining investor interest.

Intel Lip Poo Tan Google Microsoft CEO AI GOOGL MSFT

– Efficiency in foundry operations remains a critical challenge for Intel.

– Google's AI research strength contrasts with its product development struggles.

– Overall earnings for major tech firms are expected to be positive.

– Market sentiment may shift based on upcoming earnings reports.

turnaround storiesAI researchearnings expectations

▸ Full transcript

Great news for everyone, I guess. Okay, talk to us also about what you want to see as an investor out of these Alphabet and Intel earnings that are coming up this week as well. Well, Intel is a bit of a turnaround story. It's caught everyone's imagination in a positive manner recently. But at the same time, you have, starting up a foundry; they already have a foundry, but making a foundry really efficient is something which is really, really hard to do. Now, Lip Poo Tan, who's joined as the CEO, he's taken over after some fairly troubled times for Intel, is showing the ability to do the right things. It's just hard engineering and tough management challenges, but it appears that he's the right person for the job. In terms of Google and Microsoft and all the other cloud service providers, Google has probably some of the best AI researchers within their ecosystem. They're a long champion, just working on pet projects, and the initial attention is all you need. The paper came out primarily from Google engineers, but their ability to make really cool products has been a little bit of a challenge. If we want to see how that stacks up, overall earnings should be fairly positive. I guess the people who need to worry are...

Analysis

Intel is being viewed positively as a turnaround story under new CEO Lip Poo Tan, who faces significant engineering and management challenges in making the foundry efficient. Meanwhile, Google is recognized for its strong AI research capabilities, but its product development has faced hurdles, which could impact overall earnings positively.

17:07
PDT

Alibaba could benefit from upcoming IPOs in the AI sector.

Alibaba China AI open source Chinese AI models IPO

– Chinese regulators remain unpredictable, warranting caution among investors.

– AI usage is projected to increase significantly due to cheaper access to models.

– The evolution of AI mirrors past tech booms, indicating potential for substantial returns.

– Demand for intelligent models is driven by a desire for enhanced decision-making capabilities.

AI adoptionChinese tech regulation

▸ Full transcript

A large part of the moonshot, and to the extent that you have an IPO coming up for moonshot, Alibaba would stand to benefit from that. So, you know, a lot of these get very compelling. At the same time, you know, to the extent that Chinese regulators in the past have been a little hard to read in terms of the kind of pronouncements that they make, investors need to be a bit cautious, but otherwise the value is clearly there. What about when it comes to the impact from the developments, the headway that's being made by these open source Chinese AI models? How does that also impact the picture on AI usage? Well, the usage is only going to explode. Just keep in mind that when you look at the mobile boom, you look at the internet boom, you look at the cloud boom, which happened roughly from the 1990s, starting with the internet all the way to 2022. That was information which was being more freely passed on and made available to users, which was a great thing, and we've seen that, and everyone's benefited from that. What you have with the machine learning models, which are now broadly called AI models, what's happening with that is intelligent; it's possible to now augment your own intelligence, so the corporate's intelligence, the government's intelligence, and there's obviously a massive hunger for that because everyone wants to be a little smarter rather than not. Right? So when you have cheaper access to models and to compute as well given what.

Analysis

Chinese AI models are gaining traction, with potential benefits for companies like Alibaba as they prepare for IPOs. Despite regulatory uncertainties, the demand for AI usage is expected to surge as access to intelligent models becomes cheaper.

Smart investors should note that the evolution of AI technology parallels past tech booms, suggesting a significant opportunity for those who can navigate the regulatory landscape. The increasing accessibility of AI models may lead to enhanced corporate and governmental intelligence, driving further adoption across sectors.

17:05
PDT

Leverage in trading accounts is a significant risk factor.

South Korea Taiwan Japan China AI US USDCNH

– New issuance of levered ETFs in South Korea has been halted.

– Lower prices may benefit patient investors.

– Demand for technology is expected to increase, driven by AI.

– China is rapidly advancing in tech capabilities.

leverage riskAI technology demand

▸ Full transcript

Sure, it's great to be here. When you talk about AI fragility, you know, what I'm more focused on when it comes to fragility is the leverage in trading accounts and investor accounts. We've seen and we've spoken about how the levered single stock levered ETFs are now being halted. New issuance is being halted by South Korea. And I guess that's probably a great thing. Leverage always comes back to bite. When you look at day traders in the internet boom, a lot of them got cleaned out. When you look at leverage across the banking system in 2006, 2007, and 2008, which effectively blew up because of housing problems, the leverage always comes back to bite. When you look at the underlying economics, you look at the underlying market dynamics, you look at the underlying technologies and what's being delivered by South Korea, Taiwan, Japan from a hardware perspective, by the US in terms of the fabulous designs, and also now by China, which is catching up really, really quickly, a lot of that will point to more usage rather than less. So we're very happy to see prices come off to the extent that you run sensible portfolios and sensible strategies. These kinds of lower prices are just a massive bone to patient investors. How compelling is the China tech trade at the moment? Because we are seeing, of course, these hardware companies getting a big boost from the latest AI model releases. But at the same time, we have seen China...

Analysis

Leverage in trading accounts is a growing concern, particularly with the halting of new issuance for levered single stock ETFs in South Korea. This situation echoes past market fragilities, suggesting that while lower prices may attract patient investors, the underlying leverage could pose significant risks.

The current dynamics in the tech sector, especially with hardware contributions from South Korea, Taiwan, and Japan, indicate a shift towards increased usage rather than a decline. Smart money should note that despite the challenges, the demand for technology driven by AI advancements remains robust, particularly in the context of China's rapid catch-up in the sector.

17:01
PDT

Japanese yen volatility remains high, trading around 162 against the USD.

Japan South Korea Finance Minister Katayama Nikkei 225 Kospi Tokyo Electronics Stock Kyoksia Stock AI US JGB South Korean DXY

– Finance Minister Katayama warns of potential decisive action regarding currency stability.

– South Korea's Kospi index volatility is nearly double that of Japan's Nikkei 225.

– South Korea's chip exports surged 52.3% in the first 20 days of the month.

– The AI trade remains fragile, impacting tech stocks significantly.

currency volatilityAI trade dynamicsexport growth

▸ Full transcript

Open after this holiday. We had that weekend holiday, so we'll see what happens when it comes to the markets. We could be seeing a little bit of a catch-up in some parts, but at the same time, you said it, the tech stocks have been selling off, especially in the decade with the Tokyo Electronics Stock and the Kyoksia Stock all plunging last week. So we continue to watch that very fragile AI trade while we're also watching very closely all of the volatility related to the Japanese yen, trading at that mid-162 level against the US dollar, despite the fact that we continue to get warnings from authorities. The latest finance minister, Katayama, is now talking about decisive action if necessary. We're watching the JGB space as well because we have seen that sell-off paring back a little bit, perhaps, given the comments from the finance minister, but still the 10-year yield at that 273 level. Talking about volatility, we continue to watch the South Korean market. Of course, we have seen volatility in the Kospi topping 60%. That's almost double the Nikkei 225, all to do, of course, with what was happening in the AI trade. And to give us an indication of where that's headed, take a look at the trade numbers. The first 20 days of this month, the surplus for this economy was $12.21 billion, with export numbers in the first 20 days of this month growing, surging 52.3%. But the important number that caught my eye is really the chip's exports number.

Analysis

The Japanese yen is experiencing significant volatility, trading at the mid-162 level against the US dollar, prompting Finance Minister Katayama to warn of potential decisive action. Meanwhile, South Korea's market is seeing heightened volatility, with the Kospi index's fluctuations nearly double that of Japan's Nikkei 225, largely driven by the fragile AI trade.

Smart money should note the substantial growth in South Korea's exports, particularly in chips, which surged 52.3% in the first 20 days of the month, indicating a potential shift in market dynamics. This could signal resilience in the semiconductor sector amidst broader market uncertainties, making it a focal point for investors looking for opportunities in a volatile environment.

16:59
PDT

Airbus supports Europe's defense self-sufficiency.

Airbus Guillaume Forri Bloomberg Mark Carney President Trump USMCA Australia RBA ASX200 Danny Berger Wall Street Jennifer Zabasaja PRIVATE DXY

– Canada is ready to negotiate U.S. tariffs under USMCA.

– Australian stocks are seen as defensive amid market volatility.

– Rising oil prices and inflation pose challenges for Australia.

– Upcoming earnings season will be pivotal for Australian corporates.

defense industrytrade negotiationsAustralian equitiesinflation pressures

▸ Full transcript

on hype. It runs on innovation. Watch season two on all these lovely channels. World's most powerful investors don't ring a bell. They quietly reshape entire industries. This is the money shaping the world. The dealmaker playbook where power and billions of dollars change hands every day. From private equity and credit to venture capital and M&A, we bring you the inside scoop on the biggest deals and debates, plus exclusive conversations with finances ultimate insiders. I'm Danny Berger and this is Bloomberg deals every Wednesday at noon Eastern only on Bloomberg television. Good morning. Good morning. This is Bloomberg surveillance. Welcome back to the opening trade. It's Bloomberg money. This is your trade. This is Wall Street. We welcome to balance of power. You're watching Bloomberg deals. Welcome to Bloomberg this weekend. This is Bloomberg television. Bringing you up to the minute geopolitical news whenever and wherever it happens. I'm Jennifer Zabasaja in the Lesotho Highland and this is Bloomberg.

Analysis

Airbus is playing a crucial role in Europe's defense efforts as the continent seeks to enhance its self-sufficiency. Meanwhile, Canadian Prime Minister Mark Carney is prepared to engage with the U.S. regarding tariffs that he claims violate the USMCA trade deal, as President Trump announces a 50% tariff on certain Canadian goods.

Investors should note the defensive appeal of Australian stocks amid AI-driven volatility in Asia, although challenges remain due to rising oil prices and persistent inflation above the RBA's target. The upcoming Australian earnings season will be critical in assessing the impact of these economic pressures on consumer-facing sectors.

16:57
PDT

Airbus remains involved in F-CAS while evaluating GCAP participation.

Airbus F-CAS GCAP European Union UK Mark Carney USMCA Donald Trump Australia RBA Middle East Bloomberg Equity Indices PRIVATE GC=F

– Open rotor technology is under consideration for better fuel efficiency.

– Australian stocks are seen as defensive amid market volatility.

– Inflation in Australia remains above the RBA's target range.

– Rising oil prices are adding pressure to Australia's economic outlook.

defense technologymarket volatilityinflation pressures

▸ Full transcript

Bloomberg Equity Indices, built using transparent, rules-based methodologies that are more responsive to changes in the markets, powered by 450 billion daily data points, and backed by research from hundreds of global experts, delivering benchmarks driven by the markets, not opinions. Bloomberg Equity Indices, get evolved benchmarks for today's equity markets. Hello there. Just wanted to say, Prima is back. We've been scouring the frontiers of science and technology to help explain the difference between the next gold rush and whatever this thing is. And in season two we're up in the stakes. More danger. Now that is some high-grade Iranian mineralization. We used to have a stable climate on this earth. Right now we do not. More science. We're pushing the envelope of technology in multiple.

Analysis

Airbus is navigating complex decisions regarding its involvement in next-generation jet fighter programs, particularly the GCAP initiative, while still being part of the broader F-CAS program. The company is also assessing the risks associated with adopting open rotor technology for improved fuel efficiency in its aircraft.

The Australian stock market is currently appealing to investors due to its defensive characteristics amidst AI-driven volatility in Asia. However, rising oil prices and persistent inflation pose challenges to the domestic economy, potentially impacting profits in consumer-facing sectors.

16:55
PDT

Australia's inflation remains above the RBA's target range.

Australia RBA Fitch El Nino AI CPI Middle East New Zealand Kameli Agana ASX200 CL=F

– Rising oil prices are exacerbating inflationary pressures.

– Consumer-facing sectors may see profit challenges.

– Upcoming earnings season could reveal more about corporate health.

– Short-term market outperformance may not be sustainable.

inflation riskoil price impactearnings outlook

▸ Full transcript

The outperformance might continue. What are you hearing among traders? I would expect it to continue in the short term, whilst we're seeing a lot of that sort of caution around the AI trade in Asia. But on the longer-term outlook for this, I think that's a little bit more in question. If you look at the domestic outlook that's affecting Australia's market and Australia's economy now at the moment, it's still quite challenging. Of course, we have the resurgence, jump in oil prices as a result of renewed hostilities in the Middle East. That's not helping the inflation problem in Australia at all. If you look at the most recent CPI reading in June in Australia, inflation still remains above the 2% to 3% target band that the RBA has set and the labor market is still tight. So all of that is adding pressures to the economic backdrop and that could in turn eat into the profits for a lot of those bigger consumer-facing sectors that I mentioned, the banks, the consumer staples. So it's quite challenging at the moment. And we'll watch in a few weeks when the Australian earnings season begins as well. Kameli, thank you so much. Great to have you. Australia and New Zealand equities reporter Kameli Agana. More on the outlook for Australian corporates in the next hour. Fitch joins us to unpack the risks facing Australia's industries as El Nino looms. Sherri? Watching of course you're straight in the market opens as we've seen the ASX200 now drop for it.

Analysis

Australia's market is facing challenges due to rising oil prices and persistent inflation, which remains above the RBA's target range. This economic backdrop is likely to pressure profits in consumer-facing sectors, raising concerns ahead of the upcoming earnings season.

Despite the current defensive appeal of Australian stocks, the longer-term outlook is uncertain as domestic economic conditions remain tough. Traders should be cautious as the tight labor market and inflationary pressures could dampen growth prospects for major sectors.

16:52
PDT

Australian stocks are seen as a defensive haven amid volatility.

Australia Kamele Agana Bloomberg AI Bloomberg Surveillance Boomba Equities So Kamele PRIVATE

– Investors are prioritizing risk management over growth.

– The defensive dynamic has been in play since March.

– Market participants may be shifting strategies towards stability.

– AI-driven volatility is impacting broader Asian markets.

defensive investingmarket volatility

▸ Full transcript

At that, maintaining that very unique essence of our work should be very relevant in the medium to long term, of course. Don't miss the pulse, live every weekday. Making money isn't about drowning in emotions. It's about understanding what's actually happening. Markets are the best way to glean signal from noise, and that is what we try to do every morning. This is Bloomberg Surveillance. Stocks have emerged as an unlikely haven from the AI-driven volatility that has hit other Asian markets. Boomba Equities reporter Kamele Agana joins us now from Sydney. So Kamele, we've seen Australia's market that was a laggard compared to the rest of Asia for most of the year. What's the appeal for investors at a time like this? Morning, Aval. I think the appeal for Australian stocks at this time is that defensive dynamic coming back into play. Now we've seen this defensive dynamic come in March.

Analysis

Australian stocks are gaining traction as a defensive investment amid AI-driven volatility affecting other Asian markets. This shift indicates a renewed interest in stability over growth, suggesting that investors are prioritizing risk management in their portfolios.

The defensive dynamic observed in Australian equities since March highlights a potential trend where investors may favor markets perceived as less volatile. This could signal a broader shift in investment strategies, as market participants seek refuge in traditionally stable sectors during uncertain times.

16:50
PDT

Airbus is contributing to Europe's defense self-reliance.

Airbus Guillaume Forri Canada Mark Carney U.S.President Trump USMCA NATO UK CEO Andy Burnham Guy Johnson PRIVATE

– Canada is prepared to negotiate U.S. tariffs under the USMCA.

– Trump's tariffs could impact Canadian goods significantly.

– The defense industry may see increased investment.

– Trade tensions could create volatility in affected sectors.

defense spendingtrade negotiations

▸ Full transcript

NATO and when it comes to the industry, we're supporting that effort. So I think Europe is not saying that they will in the future do everything themselves in defense, but they want to be able to do more by themselves, and a company like Airbus is contributing to this effort. The UK's got a new prime minister today. What do you think the message should be from the defense industry to that new Andy Burnham, the new UK prime minister? We wait and see, and we'll be discussing with the prime minister when the prime minister is appointed. Airbus CEO Guillaume Forri speaking with Bloomberg's Guy Johnson at the Farnborough International Air Show. We have an alert on Bloomberg. We are getting the response from the Canadian Prime Minister Mark Carney on the U.S. tariffs announced by President Trump. Canada is ready to engage intensively to address issues with the U.S., according to the Prime Minister, that says we're ready to talk with the U.S. about modernizing the USMCA deal that the U.S. has imposed tariffs that violate the USMCA Canada trade deal. Now President Trump, of course, has announced that he will impose a 50 percent tariff on some Canadian goods. Those take effect in 30 days. And the U.S. is now citing alleged discrimination against U.S. alcohol, autos, and dairy products. We have more ahead on the Asia trade. This is Bloomberg.

Analysis

Airbus CEO Guillaume Forri emphasized the company's role in supporting Europe's defense capabilities, indicating a shift towards greater self-reliance in defense production. Meanwhile, Canadian Prime Minister Mark Carney expressed readiness to negotiate with the U.S. regarding tariffs that violate the USMCA trade deal, as President Trump announced a 50% tariff on certain Canadian goods.

The defense sector is poised for increased investment as Europe seeks to bolster its military capabilities, potentially benefiting companies like Airbus. Additionally, the U.S.-Canada trade tensions could lead to market volatility, particularly in sectors affected by tariffs, such as agriculture and automotive.

16:48
PDT

Airbus is assessing open fan rotor technology for fuel efficiency.

Airbus F-CAS GCAP French president German Chancellor CAS At Airbus

– The decision on engine technology will be made in the next couple of years.

– Airbus remains part of the F-CAS program despite complexities.

– European nations are collaborating on next-generation fighter jets.

– The development of a combat cloud is crucial for future air and space operations.

aviation technologydefense collaborationfuel efficiency

▸ Full transcript

We have to decide on a number of technologies. We are not at the point of deciding. It will be the next couple of years. An important choice is whether we maintain the traditional geared turbofan or if we go for an open rotor, which has better fuel efficiency but comes with other types of risks. So we are assessing those risks at the moment. We see. Okay. We have to be fact-based. Let's talk about jet fighters. Europe wants to produce a new generation of jet fighters. We have the F-CAS program, which you were part of, and we've got the GCAP program. The F-CAS program you're no longer part of. When are you joining the GCAP program? When are you going to make that decision? It's slightly more complex, actually. We're still part of the future combat air system that is more than a 6th generation plane. But indeed, the 6th generation plane, as it was structured at the beginning, is no longer there. So we have to find a way forward to the next 6th generation fighter for Europe. At Airbus, we want to continue to be part of it. Therefore, your question, but again, F-CAS is a broader thing, and the French president and the German Chancellor have decided last week to continue to work together, for instance, on the network, on the so-called combat cloud that is so important for connecting the different things that will be flying in the air and in space. So F-CAS is more than a plane; it's also a plane, and we have to find a way forward. Governments are working on it. So you're still part of F-CAS? Of course, we're still part of F-CAS. So you will stay there?

Analysis

Airbus is evaluating whether to adopt open fan rotor technology for its next-generation narrow-body aircraft, which promises better fuel efficiency but comes with risks. The company remains involved in the F-CAS program while navigating complexities in the development of Europe's next-generation fighter jets, indicating ongoing collaboration among European nations in defense technology.

Smart money should note that Airbus's decision on engine technology could significantly impact operational costs and environmental compliance in the aviation sector. Additionally, the continued commitment to F-CAS highlights the strategic importance of defense collaboration in Europe amid rising geopolitical tensions.

16:46
PDT

Alibaba fined by the European Commission for inadequate policing of illegal products.

Alibaba European Commission Alphabet Gemini ZAI Nvidia Guiyang Fori Airbus AI CEO Averil Airbus GOOGL PRIVATE NVDA

– Alibaba plans to appeal the fine, indicating potential legal battles ahead.

– Alphabet's shares rose on news of a new AI chip development.

– Frozen V2 chip expected to enhance performance of Gemini AI models by 2028.

– ZAI has completed a large data center powered by Chinese-made chips.

regulatory riskAI technology developmentsupply chain independence

▸ Full transcript

Failing to adequately police illegal, unsafe, and counterfeit products on the platform, the European Commission says AliExpress did not do enough to remove repeat offenders or enforce its own penalties. Alibaba says it's surprised by what it calls a disproportionate fine and is planning to appeal. Alphabet shares closed higher after the information reported that the company is developing a new server chip designed to boost the performance of its Gemini AI models. The report says the chip, known as Frozen V2, could be deployed as early as 2028. Almost every major AI developer is said to be developing their own chips to work more efficiently with their systems. Bloomberg's been told that ZAI has completed construction of a massive data center powered entirely by Chinese-made chips. A source says the 1GW facility could rank among the largest AI computing hubs built by a Chinese AI company. Beijing has been pushing its tech companies to reduce reliance on Nvidia and other foreign suppliers. Sherry. Right, Averil Airbus says its next-generation narrow-body aircraft should be in service within 10 years, although it's yet to make a decision about which engine technology it will use. Speaking to Bloomberg at the FarmBrow air show, CEO Guiyang Fori told us more about progress on the project. We want to be going to the...

Analysis

Alibaba faces a significant challenge as the European Commission has imposed a fine for failing to adequately police illegal and counterfeit products on its platform, prompting the company to plan an appeal. Meanwhile, Alphabet's shares rose following reports of its development of a new server chip, Frozen V2, aimed at enhancing the performance of its Gemini AI models, with deployment expected by 2028.

The fine against Alibaba highlights ongoing regulatory scrutiny in the tech sector, which could impact its operational costs and market position. Conversely, Alphabet's advancements in AI chip technology signal a competitive edge in the rapidly evolving AI landscape, potentially attracting further investment and interest in its capabilities.

16:43
PDT

Andy Burnham introduces a 10-year economic plan.

Andy Burnham Keir Starmer Britain Bloomberg UK Joanna Bersetchi Saudi Arabia Prime Minister Andy Burnham Lizzie Burton Downing Street Prime Minister PRIVATE

– Focus on addressing the cost of living crisis.

– Burnham promises significant changes in UK governance.

– Seventh Prime Minister in a decade indicates political instability.

– Potential for new investment opportunities in response to policy shifts.

UK economic policypolitical stabilitycost of living

▸ Full transcript

Look at how we're faring when it comes to Asia markets. Bringing you up to the minute global news whenever and wherever it happens. I'm Joanna Bersetchi in Alhala, Saudi Arabia, and this is Bloomberg. Later this year, I will bring forward a new plan for Britain, a 10-year plan, laying out a path from where we are now to where I believe we all want Britain to be, wherever we're coming from, whatever party we support. New UK Prime Minister Andy Burnham outlining his agenda after taking office on Monday. Burnham says his first action as leader would be to address the cost of living issue and pledge the new economic model. Bloomberg's Lizzie Burton has more from Downing Street. Andy Burnham is now Britain's seventh Prime Minister in a decade. Keir Starmer flanked by his supporters wished his successor well. And as he passed into the shadows, adamant that he wouldn't be a backseat driver to Burnham, in came the self-styled King of the North. No lectern, no notes, promising a new economic and political model. We will make this moment a circuit breaker for Britain, bringing forward the biggest changes in the last 40 years.

Analysis

UK Prime Minister Andy Burnham has outlined a new 10-year plan aimed at addressing the cost of living crisis and establishing a new economic model for Britain. This marks a significant shift as Burnham becomes the seventh Prime Minister in a decade, promising the biggest changes in 40 years.

Smart money should note that Burnham's approach signals a potential pivot in UK economic policy, which could influence market sentiment and investor confidence. The emphasis on a new economic model may attract attention from sectors poised to benefit from government initiatives aimed at economic revitalization.

16:39
PDT

Iran conflict escalating, impacting energy supply chains.

Iran Southeast Asia China U.S.Marco Rubio Pete Hegceth ASEAN South China Sea Myanmar Cambodia Thailand ICBM USDCNH

– China's missile tests contradict its peace narrative.

– Southeast Asian countries are increasingly concerned about regional stability.

– U.S. foreign policy signals are mixed, complicating assessments.

– Long-term challenges for supply chain resilience are emerging.

geopolitical riskenergy supply chainU.S.-China relations

▸ Full transcript

For the transit of crucial supplies, particularly in energy, to not just Southeast Asia, but Asia more generally. So I think this is going to be a significant topic of conversation, and I would expect that regional countries are concerned by the fact that the conflict in Iran seems to be escalating rather than de-escalating. And this presents long-term challenges for supply chains and resilience in the region. This is also all coming at the time where countries in the Indo-Pacific have been a bit rattled by China's firing of an ICBM nuclear-enabled or capable weapon. How do you think that shifts or destabilizes things? Yeah, I mean, that is another example of where you have China talking in one way, talking about Asia as a region of peace, but then doing things that counteract what they're talking about by testing ballistic missiles. These are flying over the South China Sea into the Pacific and raising real concerns, just for Southeast Asian countries but for countries in the Pacific as well. I mean, it's hard not, I think for analysts and for poll...

Analysis

The escalating conflict in Iran is raising concerns about energy supply chains in Southeast Asia, with regional countries worried about the long-term implications of this instability. Additionally, China's recent missile tests are undermining its narrative of promoting peace in the region, further complicating geopolitical dynamics.

16:37
PDT

U.S.-China relations are critical for regional stability.

Marco Rubio Pete Hegceth Iran ASEAN China Philippines Saudi Arabia Houthi militants U.S.Southeast Asia United States USDCNH

– Mixed signals from U.S. officials complicate foreign policy analysis.

– Iran conflict impacts energy security discussions.

– ASEAN meetings will address regional tensions and global issues.

– Investors should monitor oil market volatility.

geopolitical riskU.S.-China relationsenergy security

▸ Full transcript

You know the stability and relations between the U.S. and China and how important that is for this region? Yeah, I mean I think it's incredibly important not just for this region but globally trying to understand what the temperature of the relationship between the United States and China is at the moment. I think part of the problem is actually just with analyzing U.S. approach to foreign and defense policy is quite difficult. You have Marco Rubio who will be attending the meetings this week in Manila. I think talking very much more consistently on things like having an Indo-Pacific strategy and alliances and partners in the region being really important to that. But then at the same time you have the Secretary of War, Pete Hegceth talking in terms of not of the Indo-Pacific but in terms of the Pacific at the Shangri-La dialogue not so long ago. And PAYCOM is now back renamed. It's not Indo paycom anymore, it's paycom. So there's all of these sorts of different signals that are being sent out of Washington that makes it really difficult, I think, to assess the trajectory of the U.S.-China relationship. Talk to us as well about the specter of the impact from the Iran war and how that will figure into conversations you think here. Yeah, I think this is significant.

Analysis

The U.S.-China relationship remains a focal point for global stability, with varying signals from Washington complicating assessments of its trajectory. The ongoing Iran conflict is expected to significantly influence discussions at the ASEAN meetings, highlighting the interconnectedness of regional and global security issues.

Smart money should note the mixed messaging from U.S. officials regarding Indo-Pacific strategy, which may create uncertainty for investors. Additionally, the implications of the Iran conflict on energy security in Southeast Asia could lead to volatility in oil markets, impacting broader economic conditions.

16:34
PDT

U.S.-Iran tensions are escalating, impacting energy security.

U.S.Iran Southeast Asia China Philippines Myanmar Cambodia Thailand Strait of Hormuz The South China Sea South China Sea Arbitral Southeast Asian USDCNH

– China's narrative of stability may be undermined by regional conflicts.

– The South China Sea disputes are a significant concern for Southeast Asia.

– Energy prices may experience increased volatility due to geopolitical tensions.

– Investors should reassess strategies in light of shifting geopolitical alliances.

geopolitical riskenergy securityregional stability

▸ Full transcript

Front of mind for the week in Manila will be, of course, the regional issues. The South China Sea tensions that were just reported on earlier will be top of mind. Of course, it was only last week that the Philippines celebrated the 10th anniversary of the South China Sea Arbitral Tribunal ruling, which largely found in its favor. There's also ongoing regional tensions as the crisis in Myanmar, and tensions between Cambodia and Thailand. But then there are also these global issues that have significant impacts on Southeast Asia. In particular, the conflict in Iran and its spillover effects in the Strait of Hormuz have had serious implications for energy security for Southeast Asian countries. You raised the issue of the tensions between China and the Philippines, where we are increasingly seeing these clashes between either side in the South China Sea. To what extent do you think this perhaps undercuts the role that China wants to play in the region, perhaps as an anchor for stability? Yeah, I think that's a really important question. You see China using sort of strategic narratives about it being a responsible party in the region and, you know, talking about peace and stability, but at the same time.

Analysis

Tensions between the U.S. and Iran are escalating, impacting energy security in Southeast Asia, particularly through the Strait of Hormuz. The ongoing geopolitical conflicts, including the South China Sea disputes, are influencing China's narrative of stability in the region, which may be undermined by these tensions.

Smart money should note that the spillover effects from the Iran conflict could lead to increased volatility in energy prices, affecting not just Southeast Asia but global markets. Additionally, the ongoing regional tensions may shift investment strategies as countries reassess their energy security and geopolitical alliances.

16:32
PDT

U.S. military actions against Iran are escalating.

Iran U.S.President Trump Houthi militants Saudi Arabia ASEAN Wang Yi Sergei Lavrov Mark Rubio La Trobe Center for Global Security Red Sea Southeast Asia CL=F

– Houthi militants have initiated a blockade affecting Saudi oil shipments.

– Inflationary pressures are rising globally, impacting bond and currency markets.

– ASEAN meeting may address geopolitical tensions and oil supply issues.

– Market volatility is expected as these events unfold.

geopolitical riskinflation dynamicsoil supply chain

▸ Full transcript

We have actually seen the Iran headlines helping with those inflationary pressures and higher U.S. yields, right? I mean, not to mention, of course, we have the Treasury, the U.K. fiscal risk as well coming from their own government politics and spending. But it's really been about the inflation picture around the world that's really taken the bond markets and also, of course, the currency markets by surprise. Right now, we're seeing that the escalation continues. U.S. forces are striking Iranian targets. President Trump vowing Tehran will pay for killing three U.S. soldiers. And also, we have another threat, a second shipping front, the Houthi militants announcing an immediate maritime blockade of Saudi Arabia, putting millions of barrels of crude moving through the Red Sea at risk. And remember, Avril, this was supposed to be a workaround for Saudi Arabia to get their oil out to the market. Those conversations will be part of the agenda as these top diplomats from across Southeast Asia gather in Manila for the ASEAN Foreign Minister's meeting. We know how the Chinese Foreign Minister Wang Yi, Russia's Sergei Lavrov, and the U.S. Secretary of State Mark Rubio are also expected to attend. Let's look at what's on the agenda with our next guest. Beck Strotting is director at the La Trobe Center for Global Security. Beck, good to have you. We see the ASEAN meeting as a sort of...

Analysis

Escalating tensions in the Middle East are impacting inflationary pressures and bond markets, with U.S. forces striking Iranian targets and President Trump vowing retaliation. The Houthi militants have announced a maritime blockade of Saudi Arabia, jeopardizing crude oil shipments through the Red Sea, which could further strain global oil supply chains.

Smart money should note that the geopolitical risks are not just limited to immediate military actions but also involve broader implications for global oil supply and inflation dynamics. The upcoming ASEAN Foreign Minister's meeting may provide insights into diplomatic efforts that could influence market stability amidst these tensions.

16:30
PDT

US strikes on Iran continue to impact oil prices.

US Iran Bloomberg Katie Greithel Romain Bostic Annemarie Hordern Sherry NVIDIA The Close PRIVATE CL=F

– Volatility in oil has decreased from recent highs.

– Chip stocks are under pressure, signaling potential sector weakness.

– Investors are becoming more selective in their market responses.

– Oil price resilience suggests a shift in risk pricing.

geopolitical riskoil market dynamicstech sector performance

▸ Full transcript

I'm Katie Greithel. And I'm Romain Bostic. And this is The Close. Every weekday from 3 to 5 Eastern. Only on Bloomberg. Context changes everything. Bringing you up to the minute geopolitical news whenever and wherever it happens. I'm Annemarie Hordern in Ankara, Turkey. This is Bloomberg. Well, let's take a look at the market action. Of course, Sherry, when it comes to the geopolitics, we've been seeing yet more strikes by the US on Iran and oil prices remain elevated, although volatility has pulled off the highs that we've seen during the height of the conflict. We are seeing some parts of the market in terms of stocks coming under pressure overnight in the US. Futures are pointing to a bit of upside and we indeed saw in terms of chip stocks, the selling there did stem a little.

Analysis

US strikes on Iran have kept oil prices elevated, while volatility has decreased from recent highs. Chip stocks are experiencing selling pressure, indicating potential weakness in the tech sector amidst geopolitical tensions.

The market's reaction to geopolitical events suggests that investors are becoming more discerning, focusing on specific sectors like technology that may be more sensitive to these developments. The resilience of oil prices despite conflict indicates a potential shift in how markets are pricing geopolitical risks.

16:28
PDT

Oil prices are steady despite U.S.-Iran tensions.

RBNZ U.S.Iran President Trump Bloomberg QE Federal Reserve CL=F GC=F FEDFUNDS PRIVATE DXY

– RBNZ raised cash rate to 2.5% due to inflation.

– Annual inflation is at its fastest pace in over two years.

– Gold prices remain stable amidst geopolitical risks.

– The Federal Reserve's decisions are crucial for market direction.

geopolitical riskinflation trendscentral bank policy

▸ Full transcript

Oil has headed back towards a 1,500 level as you're seeing actual strength in the QE dollar. This comes as we have just received annual inflation data accelerating to the fastest pace in more than two years in the second quarter, driven by soaring fuel prices. The RBNZ raised the official cash rate by a quarter point to 2.5 percent earlier this month. However, despite the rising fuel prices, oil is trading steadily amid continued escalation between the U.S. and Iran, with U.S. forces striking Iranian targets and President Trump vowing that Tehran will pay for killing three U.S. soldiers. Gold is also relatively steady. The path of the Federal Reserve here is key.

Analysis

Oil prices remain steady despite escalating tensions between the U.S. and Iran, with the Federal Reserve's path being a critical factor for market movements. The RBNZ has raised the official cash rate to 2.5%, influenced by rising fuel prices contributing to the fastest annual inflation in over two years.

Smart money should note that while geopolitical tensions typically drive volatility, the current oil market shows resilience, indicating a potential shift in how these factors influence investor sentiment. Additionally, the steady gold prices suggest a cautious approach among investors amid these developments.

16:25
PDT

New U.S. tariffs on select Canadian goods announced.

Canada U.S.Donald Trump USMCA Derek De PRIVATE CL=F

– Oil and potash not affected by the new tariffs.

– Negotiations expected within the next 30 days.

– Tensions may impact broader trade relations under USMCA.

– Market sentiment could be influenced by negotiation outcomes.

trade tensionstariff implicationsUSMCA dynamics

▸ Full transcript

Of oil from Canada that's not subject to the new tariff, a potash fertilizer, things like that. None of that is affected by today. So a lot of the things that are on the new list of U.S. tariffs, certain types of consumer products, a Canadian-made beer and alcohol, they're not necessarily really large categories of business between the two countries. But even so, this is definitely an escalation of the tension. It's definitely not a great sign for USMCA. There's still 30 days until these levies are set to take effect. I mean, as we've seen with the U.S. president, sometimes there's room for negotiation. Are we getting any sense of that this time around? I mean, this is all pretty fresh. It's only come out in the last couple of hours. Certainly, I would expect that Canada will be attempting to try to sit down and figure out what can be done to head this off over the next 30 days. And as you say, we have seen before where Donald Trump has made specific threats about Canada and then backed off or found an exit ramp, not just in the Canada situation, but with other countries too, to try to prevent an escalation. So there's definitely pressure being applied here, but an expectation, I think, within Canada that there will be some kind of talks. Derek, thank you so much for walking us through this Bloomberg executive editor for Canada, Derek DeCluayet, for us.

Analysis

Tensions between the U.S. and Canada have escalated with the announcement of new tariffs on certain Canadian goods, including beer and alcohol, while essential commodities like oil and potash remain unaffected. This situation may lead to negotiations within the next 30 days, as Canada seeks to mitigate the impact of these tariffs on trade relations under the USMCA.

Smart money should note that while the tariffs target smaller consumer categories, the underlying tensions could signal broader implications for trade dynamics and market sentiment. The potential for negotiation suggests that volatility may be contained, but the situation remains fluid and warrants close monitoring.

16:23
PDT

U.S. imposes tariffs on Canada over trade practices.

Canada U.S.Trump administration U.S.-Mexico-Canada agreement U.S. wine U.S. alcohol dairy imports automotive industry For Canada Derek De

– Canada retaliated by restricting U.S. alcohol sales.

– Tensions may escalate further affecting trade flows.

– Automotive industry protections are a key concern.

– Potential reevaluation of supply chains in North America.

trade tensionsautomotive sectorsupply chain risk

▸ Full transcript

For Canada, Derek DeCluet joins us now from Toronto. Derek, so what do we know about the timing behind such a move and what's included or excluded as part of these tariffs? Yeah, there has been tension building, and the Trump administration has been arguing for some months that Canada is treating the U.S. unfairly. Now, the chronology of events here is that Trump took office last year. He imposed quite quickly a series of tariffs on Canada and Mexico, despite the presence of the U.S.-Mexico-Canada agreement, and Canada retaliated in certain ways. One of those ways is that it took U.S. wine and alcohol off the shelves of stores in some provinces because the provincial governments here have control of alcohol distribution, and the U.S. has been upset about that. So they're citing that and restrictions that exist on dairy imports from the U.S., as well as measures that Canada has taken to try to protect its automotive industry in the face of the U.S. tariffs against foreign autos. So that's what the reasons are behind this action today by the U.S. government. How significantly are the trade flows between Canada and the U.S., and what does it mean for the future of the U.S.

Analysis

The U.S. government is imposing tariffs on Canada, citing unfair treatment regarding trade practices, particularly in the alcohol and dairy sectors. This move follows a series of retaliatory actions from Canada, including removing U.S. wine from store shelves in certain provinces, which could escalate tensions between the two countries.

Smart money should note that these tariffs could disrupt trade flows significantly, particularly in the automotive sector, as Canada has been protective of its industry in response to U.S. tariffs. The ongoing trade tensions may lead to a reevaluation of supply chains and trade dependencies, impacting market sentiment and investment strategies in North America.

16:19
PDT

Japan's dependency on Middle Eastern oil and products is affecting its manufacturing sector.

Japan Middle East AI autos manufacturers retail sector US NAPTA North Asian CL=F

– AI remains the dominant trend in Asian markets, with less tolerance for mistakes in this sector.

– Geopolitical risks are influencing market sentiment, particularly in the automotive sector.

– Earnings reports will provide insights into how companies are navigating these challenges.

– Oil's muted volatility contrasts with the heightened geopolitical tensions.

geopolitical riskAI sector performanceoil dependencyinflation impact

▸ Full transcript

As tensions escalate every day, how will that be factored into these North Asian markets that have performed so differently during the peak of the Iran war? Oil volatility is actually significantly lower than it was at the peak of the war, which is a much more restrained element this time around. You also see that US inflation came in quite muted, so it will take some doing in terms of oil to turn that narrative around. For now, AI technological disruption is the key driver of Asian equity markets, not oil, although oil continues to put pressure at the macro margins of this trade. There is less room to make mistakes as far as the AI trade is concerned right now. Especially since we are seeing Japan so dependent on the release of oil, it will be interesting to see how we could trade the geopolitical risk premium. Earnings will provide a good three-month chunk of how companies have been dealing with this. Autos were among the worst hit at the beginning of the war, but as Anthony said, AI is really the bigger trend now. Japan is so dependent on the Middle East for not just oil but also oil-derived products like NAPTA, which has been hitting manufacturers and the retail sector earlier in the war.

Analysis

Tensions in North Asia are rising, but oil volatility remains lower than during previous conflicts, impacting earnings and equity decisions. The AI technological disruption is currently the primary driver of Asian equity markets, overshadowing oil's influence, which is exerting pressure at the macro margins.

16:16
PDT

Nikkei shows high expectations and rotation around AI-related sectors.

Mark Cranfield New Zealand Japan Tokyo Electron Adventists MLCC Nikkei S&P Chinese assets US AI

– Weaker yen supports exports but raises pricing concerns.

– Dispersion in the Nikkei resembles US market trends.

– Performance of electricals versus cyclicals is under scrutiny.

– Earnings reports could significantly impact market sentiment.

AI sector rotationJapanese export dynamicsmarket volatilityearnings expectations

▸ Full transcript

So I think the sense is that expectations are really high. There's a lot of nerves going around. And so people really have to kind of really smash it out of the park to actually get a bump after earnings. Anthony, let's bring you in here. What are you expecting for the Nikkei rotation or volatility? I think the Nikkei is starting to resemble the US a little bit, where you see dispersion as a bigger aspect of the market than volatility. You're going to see this rotation around the AI chips, the picks and shovels trade versus the chip trade, you know, Tokyo Electron and Adventists look reasonable versus the pure cyclicals on the MLCC side substrates and kind of printed circuit boards. So we saw that in Taiwan yesterday, and it stands to reason that it will kind of follow through into Japan early going. The topics, electricals have really outperformed the topics overall. That ratio has come crashing back down into kind of the normal range. And whether it stays there or kind of the semi-trade continue to outperform will be the big debate in Japan. This against the backdrop of a weaker yen as kind of Cranfield and Alas have kind of alluded to that kind of puts a macro kind of draws the line under the earnings of Japan. The fact that you have a weaker yen helping these exports but how much of that is priced into what were formerly cyclicals that now trade like structural trades. This is also coming at a time where the Chinese assets are you know we're getting.

Analysis

Expectations for the Nikkei are high, with a notable rotation around AI chips and related sectors. The weaker yen is providing a macro backdrop that supports Japanese exports, but the market is questioning how much of this is already priced in.

Investors should note the dispersion in the Nikkei, which resembles trends seen in the US market, indicating a shift in focus towards specific sectors rather than overall volatility. The performance of electricals versus cyclicals will be crucial, especially as earnings reports loom and market sentiment remains jittery.

16:14
PDT

Nikkei futures show little movement as Japan's CPI numbers approach.

Japan Nikkei Kyokushia S&P AI CPI Japan Equity Alice French Anthony Stevens And Alice The Nikkei PRIVATE S&P

– Investors are pulling back from AI-related stocks amid volatility.

– Kyokushia's value halved in a month but is still up over 400% this year.

– Nikkei outperforms S&P, up over 25% since early 2026.

– Short-term jitters may not derail long-term AI growth potential.

AI trade volatilityJapanese equity performance

▸ Full transcript

That sell-off will be watching the cost be open as well and market that's very dependent on the AI trade as we're also setting up for that Japan's CPI numbers later in the week. But with Japan coming back on holiday, take a look at the Nikkei futures. Not doing much, but this after being back falling into technical correction territory, investors pulling back from AI related stocks. We continue to see these growing concerns that the rally could have gone too far. Bloomberg's Japan Equity reporter Alice French and Market's reporter Anthony Stevens joined us now for more on this. And Alice, let me start with you because of course we have seen that incredible pressure on the tech sector recently. Could we see that again in Japan or perhaps even expect a rebound? I think it's getting increasingly difficult to kind of predict what's going to happen day to day with this tech volatility. Like you say, it does look like we're poised for a little bit of a rebound this morning after that sell-off that we saw of course on Friday. As you mentioned, the AI trade is really just pretty much the only thing that people care about. Of course, Kyokushia, that memory maker, we've seen it halving value in the space of about a month, which is crazy. But to put it in context, it's still up over 400% on the year. The Nikkei is still outperforming the S&P, still up over 25% since the beginning of 2026. So we're still seeing some pretty big gains there. And I think most people are, you know, the sense is this is perhaps a little bit of short-term jitters, but we can still see that AI growth over the mid to long term.

Analysis

Japan's tech sector faces volatility as investors pull back from AI-related stocks, with the Nikkei futures showing little movement ahead of CPI numbers. Despite recent sell-offs, the Nikkei remains up over 25% since the beginning of 2026, indicating potential for a rebound amid ongoing AI growth.

Smart money should note that while short-term jitters are evident, the long-term outlook for AI stocks remains strong, with significant gains still recorded year-to-date. The pressure on tech stocks, particularly memory makers like Kyokushia, highlights the fragility of the current rally, suggesting a careful approach to investment in this sector.

16:12
PDT

U.S. military actions against Iran are ongoing, raising geopolitical tensions.

U.S.Iran Houthi militants Saudi Arabia Trump Pakistan New Zealand Japan GPIF Bloomberg EU Dave Rake PRIVATE

– Oil prices remain stable despite conflict, but other commodities are under scrutiny.

– Inflation concerns are rising globally, particularly in agricultural sectors.

– Japanese authorities face pressure to implement fiscal reforms to strengthen the yen.

– Political risks related to the U.S. midterm elections could influence market sentiment.

geopolitical riskcommodity volatilityinflation concernsJapanese fiscal policy

▸ Full transcript

In case you missed it, I'm Dave Rake, Europe. We're talking with the EU regulator on this, though. I have been interested in the U.S. and the Chinese, and we see Trump for their component and the Chinese and their component. Here in Europe, I feel against the European regulators. Not that they are fighting for us and against us. It is a big mistake because we really have great global tech leaders in Europe. Not a mistake that Europe lives every day. Asia is at the forefront of the world's biggest story. And wait here, where the action begins in Sydney and in Tokyo, even further, as the global trading day begins. Asia Trade, Weekdays, only on Bloomberg.

Analysis

The escalating conflict between the U.S. and Iran continues to impact global markets, with potential implications for oil prices and economic sentiment ahead of the midterm elections. Traders are shifting focus from oil to agricultural products and other energy sectors, indicating a broader concern about inflation driven by commodity prices.

Smart money should note that while oil prices have not surged as expected, the underlying volatility in other commodities could signal a shift in market dynamics. Additionally, the lack of concrete action from Japanese authorities regarding fiscal policy may further weaken the yen and impact Japanese assets.

16:10
PDT

Japanese authorities urged to repatriate funds to strengthen yen.

Japan GPIF Bank of Japan Canada Trump administration The Japanese The Bank Mark Cranfield PRIVATE

– Investors demand concrete action from the GPIF and Bank of Japan.

– Weakness in Japanese bonds and currencies noted as a concern.

– Potential trade war with Canada could impact market sentiment.

– Frustration among investors over lack of decisive fiscal measures.

currency weaknessfiscal policy uncertaintytrade tensions

▸ Full transcript

The Japanese authorities are talking a lot about moving funds back to Japan. The Japanese pension fund, the great big GPIF, they're saying, "Oh, it would be a nice idea if they move money back to Japan." Just get on with it. Investors have heard enough talk about what could be done. They want to see clear, concrete action. They want to see more investors at home in Japan being allowed to buy JGPs through their savings plans. They want to see pension funds moving money back to Japan. They've heard it many times, but it's not yet happening. That's why the currency is so weak. The Bank of Japan is taking too long to raise interest rates to a neutral level. All of these things feed back into negativity for Japanese assets. The stock market is a slightly different story. That can get away with it. In fact, it's enjoying the weekend anyway, and yields which are not moving up high enough. But in terms of bonds and currencies, they are the weak link if the Japanese authorities do not come up with a clear fiscal plan. Okay, Mark, thank you so much. Bloomberg M-Life strategist Mark Cranfield. Now, still to come on the program, a new trade war looms as the Trump administration threatens extra tariffs on Canada, alleging unfair treatment of U.S. cars, dairy, and alcohol. We'll have the details. This is Bloomberg.

Analysis

The Japanese authorities are under pressure to repatriate funds as the GPIF calls for action to strengthen the yen, which remains weak due to delayed interest rate hikes. Investors are frustrated with the lack of concrete measures to support Japanese assets, particularly bonds and currencies, which are seen as the weak link in the market.

Smart money should note that the ongoing discussions around fiscal policy and interest rates in Japan could lead to significant volatility in the yen and Japanese bonds if no decisive action is taken. The potential for a new trade war with Canada adds another layer of uncertainty, which could impact investor sentiment and market dynamics in the region.

16:07
PDT

Geopolitical tensions are influencing oil price expectations.

Mark Cranfield New Zealand U.S.Iran Brent futures WTI futures UK fertilizer food agricultural products jet fuels diesel CL=F PRIVATE

– Traders are diversifying focus to agricultural and energy sectors.

– New Zealand's inflation exceeds 4%, driven by food and fertilizer costs.

– Central banks may need to raise interest rates to combat inflation.

– Low volatility in commodities may mask underlying inflation risks.

geopolitical riskinflation pressurescommodity volatilitycentral bank policy

▸ Full transcript

Let's look at the market impact in the setup for Asia's trading today. Bring in Bloomberg and LifeStriker Mark Cranfield. So Mark, we've just been talking about how there's a potential for further escalation that could creep up in oil prices. But volatility on commodities has been low on the commodity, I should say. What is the impact you're seeing across treasuries as well at the time where fiscal spending in the UK is a concern? I think traders are looking way beyond the oil now. They're looking at agricultural products, they're looking at the other energy aspects, things like jet fuels, they're looking at diesel. Other things which are more difficult to clamp down on. So the Brent futures, WTI futures, they can be traded a little bit differently. You're going to get constant supply in there where people are taking long-term hedges. It's much more difficult to control the spreads in other parts of the energy sector and indeed feeding into food prices because of all the things that go into the natural products which happen there. So those are becoming more important. You've just seen New Zealand just produce their inflation numbers. It's been pushed up partly by fertilizer costs, by food costs. They're above 4% on their inflation numbers and they need to hike interest rates further to address that as well. And that is going to be an issue around the world, which feeds back into higher for longer yields.

Analysis

Oil prices are poised for potential escalation due to ongoing geopolitical tensions, particularly with U.S. military actions against Iran. Traders are shifting focus beyond oil to agricultural products and other energy sectors, indicating a broader market concern about inflationary pressures.

The low volatility in commodities suggests that while oil remains a key concern, the impact of rising costs in agricultural inputs and energy products could have a more significant and lasting effect on inflation. New Zealand's inflation data highlights the urgency for central banks to address these pressures, which could lead to sustained higher interest rates globally.

16:05
PDT

U.S. military engagement in Iran may be prolonged.

President Trump Iran U.S.Vietnam Afghanistan Oval Office United States CL=F

– Oil prices remain stable despite escalating tensions.

– Political implications could affect midterm elections.

– Public sentiment is sensitive to economic impacts of war.

– Market resilience observed in oil pricing.

geopolitical riskoil market dynamicspolitical sentiment

▸ Full transcript

After the two sides started attacking each other again, I asked President Trump in the Oval Office last week how long this might last. He used a familiar answer, comparing the length of this war to other wars that the United States has engaged in, including Vietnam and Afghanistan, which were years-long wars. This indicates that he's not in a huge hurry. However, there are political reasons to not let this drag on, including the midterm elections coming up in November and the economic impact this war is having, which we are already seeing with fuel prices in the states. The mood among the American public is interesting, given that despite the escalation and tensions around Iran, oil prices are not necessarily as high as they were during the peak of previous conflicts. We know that oil became very expensive during the war and has the potential to edge up again if this conflict continues to escalate, which is something we will have to watch in the coming days. Americans and people around the world often vote based on their pocketbooks.

Analysis

The ongoing conflict between the U.S. and Iran is escalating, with President Trump indicating a prolonged military engagement similar to past wars. Despite rising tensions, oil prices have not surged as expected, suggesting a disconnect between geopolitical events and market reactions.

Smart money should note the potential political ramifications of sustained military action, particularly with midterm elections approaching, which could influence public sentiment and economic conditions. The current stability in oil prices may indicate market resilience or a lag in response to geopolitical risks, warranting close monitoring of fuel price movements in the coming days.

16:03
PDT

U.S. military actions against Iran are ongoing.

U.S.Iran Houthi militants Saudi Arabia President Trump Pakistan Red Sea White House Jeff Mason

– Iran-backed Houthi militants threaten Saudi shipping.

– No current diplomatic talks identified from Washington.

– Potential for further escalation in the Middle East.

– Market sentiment may be affected by rising geopolitical tensions.

geopolitical tensionsmilitary escalationoil market volatility

▸ Full transcript

They'll share you. Yeah, let's actually delve into that top story that you just mentioned. U.S. forces striking Iranian targets for a tenth day after President Trump said Tehran would pay for killing three U.S. soldiers. Iran-backed Houthi militants in Yemen are also now threatening to blockade Saudi shipping in the Red Sea. Let's bring in our Washington and White House correspondent Jeff Mason. Jeff, from the outside, it just looks that this crisis is escalating. We know at this point if there are any conversations going on, any mediation happening. Well, I think the view from the outside is pretty accurate based on what we're seeing from here as well. And in terms of whether talks are going on at all, nothing from the Washington side, at least nothing that the White House has identified, although the Iranians did reference receiving some proposals from mediators without giving a great deal of detail about that in Pakistan, which has served as a mediator in these discussions between the two sides for multiple months. But beyond that, very little detail at this point, and certainly mostly just rhetoric and threats from both sides, but from this side, from Washington's side and from President Trump's side wanting to respond to the deaths of U.S. service members at the hands of Iranian attacks. Jeff, talk to us about how much further escalation we could potentially see and what do we know about the military.

Analysis

U.S. forces continue to strike Iranian targets for the tenth consecutive day following President Trump's vow to retaliate for the deaths of three American soldiers. The situation escalates as Iran-backed Houthi militants threaten to blockade Saudi shipping in the Red Sea, indicating rising tensions in the region.

Smart money should note the lack of ongoing diplomatic conversations, with only rhetoric and threats dominating the narrative. The absence of mediation from Washington suggests a potential for further military escalation, which could impact global markets and oil prices significantly.

16:01
PDT

U.S. military actions against Iran are ongoing, impacting oil prices.

U.S.Iran Houthi militants Saudi Arabia Canada Japan President Trump Bloomberg AI Tyler Kendall Asia Traders In Tokyo PRIVATE CL=F

– President Trump has vowed revenge for the killing of American soldiers.

– Iran-backed Houthi militants threaten to blockade Saudi shipping.

– The U.S. plans to impose 50% tariffs on some Canadian goods.

– Japanese currency is nearing intervention levels.

geopolitical risktrade tensionsenergy markettech earnings

▸ Full transcript

To the minute, geopolitical news whenever and wherever it happens, I'm Tyler Kendall in Geneva, Switzerland. And this is Bloomberg. This is the Asia Traders' show. In Tokyo, the top story is this hour. Oil is moving as the U.S. launches a tenth day of attacks on Iran. President Trump vowed revenge for the killing of three American soldiers. Iran-backed Houthi militants also threatened to blockade Saudi shipping in the Red Sea. The Middle East tensions are set to weigh on the Asia Open, with investors also waiting for the start of mega-cap tech earnings for signs of strength in the AI trade. Trade tensions are resurfacing as the U.S. plans to impose an extra 50% tariff on some Canadian goods. I'm Averil Hong in Singapore. Here's the setup for trading across Asia with Japan returning from a long weekend. Take a look at what the setup is looking like across Asia with futures for Korea pointing to a bit of reprieve from yesterday's selling. We, of course, saw in the U.S. session that stocks were mostly down. There was a bit of stemming of the losses in the chip stocks, though, so that was a bit encouraging. We are also watching the Japanese currency as the yen inches back to those levels that drew intervention.

Analysis

Oil prices are reacting to escalating tensions in the Middle East as the U.S. continues its military actions against Iran, with President Trump promising retaliation for the deaths of American soldiers. Additionally, trade tensions are resurfacing as the U.S. plans to impose a 50% tariff on certain Canadian goods, which could further strain economic relations.

Investors should note that the geopolitical landscape is increasingly volatile, which may lead to heightened market sensitivity, particularly in energy and tech sectors. The upcoming mega-cap tech earnings could provide insights into the resilience of the AI trade amidst these tensions, making it crucial for market participants to assess the potential impacts on stock performance.

15:56
PDT

Nadal retired due to physical limitations and personal choice.

Rafael Nadal Maria Sharapova Bloomberg Rafa Nadal DXY

– He feels at peace with his decision to retire.

– Nadal is exploring new business opportunities.

– He emphasizes the importance of having goals in life.

– Nadal acknowledges the responsibility of supporting many families through his business.

athlete transitionbusiness growthpersonal development

▸ Full transcript

I made that decision that was the end for me. I was not able to keep going the way that I needed to keep going, you know, when they had plenty of issues. So I brought my body over the limit, I think. So I am at peace with myself and enjoying this new chapter of my life. Rapid fire questions. Are you ready? I hope. What's the best piece of advice you've ever received and how do you deal with life off tour? Copy what you like from others. As a child, you played both tennis and football. Do you think you would have been as successful at football as you have been at tennis? I mean, the chances are very little. Why do you say that? Because in tennis, I am probably one of the best players in history. So if I decided all the way things that I would be one of the best players in the history of football, let's say it's difficult that you have both possibilities. Rafa Nadal, thank you so much for joining us. Thanks a lot.

Analysis

Rafael Nadal reflects on his retirement decision, emphasizing the importance of personal choice and the peace he feels with his decision. He acknowledges the challenges of pushing his body to its limits and expresses a desire to explore new business ventures post-tennis.

Smart money should note Nadal's transition from sports to business, highlighting the potential for growth in his new endeavors. His focus on maintaining goals and responsibilities suggests a disciplined approach that could translate into successful business strategies.

15:54
PDT

Nadal prioritizes having goals and staying active post-retirement.

Rafael Nadal Maria Sharapova Bloomberg Majorca PRIVATE

– He emphasizes the responsibility of leadership in business.

– Nadal's academy employs 650 workers, indicating significant operational scale.

– He contrasts decision-making in sports with the longer-term strategies in business.

– Nadal seeks to learn about sustainable growth in his business ventures.

sustainable growthathlete-led business

▸ Full transcript

Yeah, I want to explore, and it's great to share all these experiences with leaders in each sector, people that are successful. So for me, it's a great experience, and I am enjoying that. I mean, you talk a lot about growth; you could be sitting on a beach. I am not the kind of person that likes to wake up every morning and not know what to do. That's as simple as that. I need to have goals in my life. Even if I am very lucky and could decide to do other stuff, just stay at home without planning. But I don't understand life that way. I am enjoying this process. And yeah, it's intense but interesting. Last year, Maria Sharapova told Bloomberg that there's no match point in business, so she misses those deciding kind of break point moments. Of course, a different approach. I mean, in sports, you need to make decisions in a fraction of a second; in business, it's different stuff. You know, for example, the academy, as I said before, I think we are only in Majorca, we have 650 workers. You know, it's a big responsibility knowing that a lot of families depend on whether you are doing well or not. And I am very interested in learning more about how a company can keep growing and have the ambition to grow, but a healthy ambition, doing it the proper way.

Analysis

Rafael Nadal expresses a strong desire to remain active and engaged in business after retirement, emphasizing the importance of having goals and responsibilities. He highlights the significant role of his academy in Majorca, which employs 650 workers, indicating a commitment to sustainable growth and leadership in his post-tennis career.

Nadal's perspective on business contrasts with the immediacy of sports, where decisions are made quickly. His focus on healthy ambition and responsibility towards his employees suggests a strategic approach that could resonate with investors looking for sustainable business practices.

15:52
PDT

Nadal retired on his own terms, emphasizing personal decision-making.

Rafael Nadal Bostad

– External opinions on retirement were dismissed as uninformed.

– Nadal's confidence in his decision reflects a trend in athlete mental health.

– He is exploring business interests post-retirement.

– The transition may open opportunities in sports and hospitality.

athlete retirementmental healthentrepreneurship

▸ Full transcript

Did you feel that you retired on your own terms, that it was really your decision? Yeah, I probably didn't want to talk a lot about that, and I don't want it to be influenced by the media and by the people from outside. Now it's something personal. You need to be sure when you make that kind of decision because when you say it's over, it's over. And you need to be 100% sure that it is the right moment. And if it's not your personal decision, maybe I would be today doing this interview, thinking that maybe I should be playing tennis. And I'm 100% sure that I made the right decision at the right moment. So when people said, look, maybe it's time to retire and you didn't agree, did you not listen? It never bothered me, but I tried not to pay much attention because they don't know the real stuff. They don't know how I feel; they don't know exactly how I am every single day; they don't know what the doctors told me and what the process has been. So I need to make my own decisions with the people that I trust the most. I mean, it feels like the new chapter is just as busy, so when you're in a new hotel, you have a number of hotels and business interests. What do you think comes next in terms of business? I want to explore.

Analysis

Rafael Nadal confirmed his retirement decision was personal and made on his own terms, emphasizing the importance of being 100% sure before concluding a career. He expressed confidence in his choice, dismissing external opinions as uninformed about his true condition and feelings.

Smart money should note Nadal's focus on personal agency in decision-making, which reflects a broader trend of athletes prioritizing mental and physical well-being over public expectations. His transition into business interests suggests potential opportunities in the sports and hospitality sectors as he shifts from competitive tennis to entrepreneurship.

15:50
PDT

Nadal's retirement was influenced by long-term injury issues.

Rafael Nadal Bostad Michael Mc Mount Everest In October PRIVATE

– He took a year post-surgery to assess his physical readiness.

– The announcement may impact sports-related endorsements.

– Investors should watch for shifts in brand partnerships.

– Nadal's legacy could affect market sentiment in sports sectors.

sports endorsementsathlete retirement

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What is going to be the consequence for U.S. markets? We all see money skanked across Europe in equity markets. Take a look at how we're faring when it comes to Asian markets. Bringing you the world's business and financial news whenever and wherever it happens. I'm Michael McKee at Mount Everest. And this is Bloomberg. In October 2024, Rafael Nadal announced he was retiring. He said it wasn't a decision he came to lightly. Injury following Nadal, his whole career, are looming over him and even threatening to take away his dream before it fully began. But I wanted to know how this elite athlete confronted the question we all face at one point. How do you know when it is the right time to go? In 2024, you announced that you were retiring. Do you remember the moment that you decided that it was the right time? Yeah. I decided to retire in Bostad, 2024. I give myself around a year after my hip surgery to see if my body will come back.

Analysis

Rafael Nadal announced his retirement in October 2024, a decision influenced by ongoing injuries that have plagued his career. He reflected on the moment he decided to retire, indicating a careful consideration of his physical condition post-surgery.

Smart money should note that Nadal's retirement signals a potential shift in the sports market, particularly in endorsements and sponsorships tied to his brand. The timing of his announcement may also influence investor sentiment in companies associated with tennis and sports apparel as they adjust to the absence of a major figure in the sport.

15:48
PDT

Routines are essential for maintaining focus in high-pressure situations.

Rafa Nadal Daniel Medvedev

– Athletes may prefer to avoid rituals but often find them necessary.

– Mental challenges are prevalent even among top performers.

– The need for routines can reflect deeper psychological pressures.

– Understanding these dynamics can inform investment strategies.

mental resilienceathlete performance

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I needed them to stay 100% focused on what I was doing, as simple as that. It was more that than superstitious because I have zero rituals outside of the tennis court. You know, I’m not a very superstitious guy, to be honest, but on the tennis court, unfortunately, I needed those routines. Why unfortunately? Because I would like to have the same kind of concentration without those routines. I don’t like to see myself doing those routines, but I need them. I try to avoid them, but I needed them to know that I was just focused on what I needed to be. But it’s just something that’s familiar, right? It’s a way of doing. Yeah, but if you ask me if you want to have that or don’t, I’d say I prefer not to, but I needed them. And I was humble enough to do it.

Analysis

The speaker emphasizes the necessity of routines for maintaining focus during matches, despite a desire to be free from such rituals. This highlights the mental challenges athletes face, revealing that even top performers rely on familiar practices to enhance concentration.

The insight here is that reliance on routines can indicate underlying psychological pressures in high-stakes environments. For investors, this suggests that even successful individuals may struggle with mental barriers, which could impact performance and decision-making in competitive markets.

15:46
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Nadal believes in maintaining faith and finding solutions during challenging match dynamics.

Rafael Nadal Daniel Medvedev Djokovic Roger Federer

– Mental resilience is crucial for success in tennis and can be applied to other competitive fields.

– Fan support plays a significant role in motivating athletes during tough times.

– Self-correction and adaptability are essential skills for overcoming adversity.

– The mental battle in sports reflects broader themes of competition and survival.

mental resiliencecompetitive dynamics

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When a momentum shifts in a match, do you play differently? Do you feel different? No, but of course, step by step, you start believing more and more. First of all, don't lose the faith when things are going wrong, find a solution to change that dynamic, and when things start to go well, find a way to keep going the same way. It's about point after point for five hours. That's the only way from my point of view. It's like resilience on steroids, right? Then it's one against the other. When I was playing, we were not able to have a conversation with the coach during the match. So you are alone there and you need to survive by yourself. You need to correct yourself and you need to find solutions by yourself. So it's a mental battle about the opponent and sometimes about yourself. It must be also difficult because there are fans that are quite close to you. How did you handle the crowds? I think the fans always give me this extra motivation to keep practicing when I was injured, to keep fighting even a little bit more when the match was against me. I was a very intense player.

Analysis

Nadal emphasizes the importance of mental resilience and self-correction during matches, especially when momentum shifts. He highlights that the support from fans serves as a crucial motivator, pushing him to perform better even in challenging situations.

The insight here is that mental fortitude and the ability to adapt under pressure are key attributes for success in high-stakes environments. This suggests that psychological factors can significantly influence performance outcomes, which may be relevant for investors considering the impact of mental resilience in competitive industries.

15:43
PDT

Nadal's mindset focuses on resilience and fighting for opportunities.

Rafael Nadal Daniel Medvedev

– He acknowledges the role of luck but emphasizes the need for proactive effort.

– Mental fortitude is crucial in high-pressure situations.

– Adversity can enhance appreciation for success.

– Rivalries can drive performance improvement.

resiliencemental fortitude

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But on the other hand, I was very unlucky all my life, so maybe this day will be the opposite. So I was just trying to give myself a chance all the time. You make it sound very easy. It's not, right? If you're losing in such a big, important game, you must have a way of turning it around, of saying, actually, I'm not giving up. It can't only be luck. No, it's not luck. Of course, not luck. You need to have some luck in every... Sure, with everything? In a particular moment, yes. But you need to look for that moment, you know, and to fight for that moment, no. So it's about giving yourself chances all the time. And that's what I tried to do all my tennis career. And that day was not an exception. I was losing, but in my mind, don't think that after I lose the first two sets, don't think that I will, in my mind was, Okay, I'm gonna come back for sure. No, in my mind was, I am almost dead, you know? But I don't want to increase the problem of myself. I want the other to beat me. I don't want to help him to beat me. So let's keep going. Let's try to do things, to bother him a little bit and the dynamic of the match changed. And in the third, after saving that dramatic moment, the match...

Analysis

Rafael Nadal emphasizes the importance of resilience and mental fortitude in overcoming adversity during critical moments in his career. He highlights that success is not merely about luck but about consistently giving oneself a chance to succeed, even when facing significant challenges.

Smart money should note that Nadal's approach to pressure and setbacks can be applied beyond sports, suggesting that resilience and a proactive mindset are crucial in high-stakes environments. This mentality can influence investment strategies, particularly in volatile markets where adaptability is key.

15:41
PDT

Nadal's comeback exemplifies crisis management in sports.

Rafael Nadal Daniil Medvedev Australian Open Australian Open Final Rafa Nadal Daniel Medvedev

– Mental resilience is key to overcoming adversity.

– Shifts in perception can change the outcome of competitive situations.

– Rivalries can enhance performance and motivation.

– Nadal's career reflects the importance of adapting to challenges.

mental resiliencecrisis management

▸ Full transcript

Cast your mind back to January 2022. We're in Melbourne. It's the Australian Open Final. Rafa Nadal vs. Daniel Medvedev. It's off to a bad start for Nadal. He loses the first set and the second set. He has to win the third to stay in the game. In a key moment, Nadal falls behind on his own serve. It's not looking good, but he saves three breakpoints. The tide turns. The momentum changes and after five hours and 24 minutes, Nadal clinches victory. The comeback is a masterclass in crisis management, reminded of what Nadal told me about how in tennis, you can come back from the brink unlike any other sport. I want to tap into the mind of the champion and understand how he engineered the victory. So there's some exceptional matches that you've done. One of them was the Australia final in 2022 against Medvedev. Talk to me about that final. So you're losing by two sets. And something happens between the second and the third set. What were you thinking? Nothing happened because the change was in the second set. Even if I lost that second set, the match already changed because the first set was very clear for him. He was way better than me. But then in the second set, the feeling was different. I had a big chance to win that second set, but I lost that second set. Of course, that was a heartbreak.

Analysis

Rafael Nadal's comeback victory in the 2022 Australian Open Final against Daniil Medvedev highlights his exceptional crisis management skills, as he turned the match around after losing the first two sets. This resilience underscores the mental fortitude required in high-stakes sports, where the ability to adapt and refocus can lead to success against overwhelming odds.

Nadal's insight into the importance of mindset reveals that even in defeat, a shift in perception can be pivotal. His experience suggests that psychological resilience is as crucial as physical ability, a lesson that extends beyond tennis and into broader competitive environments.

15:39
PDT

Nadal views pressure as a normal part of elite sports, distinguishing between healthy and unhealthy pressure.

Rafael Nadal Novak Djokovic Roger Federer Masters Thousand Grand Slam Grand Slams

– His perspective on luck and achievement highlights the psychological aspects of professional sports.

– The importance of resilience and adaptability in overcoming injuries is underscored.

– Nadal's career longevity is notable, especially given his early injury challenges.

– Rivalries in tennis are seen as a motivating factor for performance improvement.

athlete resiliencemental health in sports

▸ Full transcript

As a player, it must be very difficult to be at the top of your game with the pressure that not many other people understand. I mean, we have pressure, yes, because we have some attention, because tennis is a difficult sport, the way that the score is going. You will never be relaxed, because you can lose in any situation. And you can come back from every situation. We are very lucky people that we achieve what we wanted to achieve; in my case, much more than what I ever dreamed. So I can't complain a lot. We had pressure, yes, but everybody has pressure. For us, our pressure was healthy pressure. Some people have unhealthy pressure, dramatic pressure. You say you know you've achieved much more than you thought you would; was there a moment that crystallized that for you where you thought actually I'm exactly where I wanted to be? I always felt myself a very lucky person. I was able to win a Masters Thousand, then a Grand Slam, then the Olympics, then more Grand Slams. I had a professional tennis career of 20 or 21 years, having an injury that almost retired me when I was 19.

Analysis

Rafael Nadal reflects on the pressures of being at the top of professional tennis, emphasizing that while he experienced significant pressure, he considers it healthy compared to the dramatic pressures faced by others. He acknowledges his achievements, including multiple Grand Slam titles and an extensive career, attributing his success to a combination of luck and determination despite facing career-threatening injuries.

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