August 11, 2025 • 16 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) Nvidia and Advanced Micro Devices agreed to pay 15% of their revenues from Chinese AI chip sales to the US government in a deal to secure export licenses, an unusual arrangement that may unnerve both US companies and Beijing.
(2) European nations are seeking to talk to Donald Trump ahead of the US president’s planned meeting in Alaska with Russian leader Vladimir Putin, according to people familiar with the matter.
(3) Israeli Prime Minister Benjamin Netanyahu defended his plan for a military sweep against the final Hamas strongholds in Gaza, calling it the best available option for recovering hostages while safeguarding his country’s long-term security — an argument that’s met vocal opposition at home and abroad.
(4) It was a “trailblazing” project - and for the two small pension funds that helped finance it, a chance to prop up the retirement savings of dentists and pharmacists in rural northern Germany. We look at Germany's biggest property crash since the financial crisis.
(5) The UK jobs market weakened across the board in July as employers cut their payroll budgets in response to Chancellor of the Exchequer Rachel Reeves’ £26 billion ($34.9 billion) tax increase, according to a survey closely monitored by the Bank of England.
(6) European Central Bank officials will wait until December to deliver their next interest-rate cut in what is likely to be the final move in the cycle, a Bloomberg survey showed.
Podcast Conversation: Teach Your Kids Poker the Easy Way
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Daybreak Europe podcast. Good morning, It's Monday, the eleventh of August.
I'm Stephen Caroll in London. Coming up today, in Vidia
and AMD agree to pay the United States fifteen percent
(00:23):
of their China AI chip revenue to secure export licenses
to the country. The head of NATO says Ukrainian land
will have to be on the table in any peace
deal with Russia. Plus crumbling Dreams Germany's property collapse exposes
pension funds to risky private credit losses. Let's start with
a roundup of our top stories. Bloomberg understands that Nvidia
(00:46):
and AMD have agreed to pay fifteen percent of their
revenues from Chinese AI chip sales to the US government
in a deal to secure export licenses to the country.
The highly unusual arrangement reflects President Trump's effort to engineer
or financial payout for America in return for concessions on
trade or China. Correspondent mid Minlo has more, this is something.
Speaker 2 (01:08):
Quite unprecedented because no US company has done this before.
It does give us a new precedent for the type
of compliance costs that companies could face as they.
Speaker 3 (01:18):
Do business with China.
Speaker 2 (01:19):
It also raises the question as to whether or not
the US is willing to trade off some of these
security concerns by rolling back even more of these export
controls in exchange for a cut of the revenue from
US companies.
Speaker 1 (01:32):
Mid Menlo speaking there with less than twenty four hours
to go until the US China trade truce expires. The
Trump administration has previously signaled that the agreement is likely
to be extended. In its truth Social post. Overnight, the
US President called on Beijing to quadruple its soybean orders
to reduce China's trade deficit with America. NATO's Secretary General
(01:54):
Marcrota says this Friday is somewhat between Donald Trump and
Vladimir Putin, may open the doors negotiations over Ukrainian territory.
President Zelenski has continued to reject the idea of seeding
land currently occupied by Russia. Speaking to ABC's this Week,
Russa says Kiev may have to accept that it has
lost control of some of its territory without formally relinquishing sovereignty.
Speaker 4 (02:16):
These two big issues have to be on the table.
One is territory, and we have to acknowledge at this
moment that Russia is controlling some of Ukrainian territory, and
the question will be how to go forward past a ceasefire,
including what it means in terms of security guarantees for Ukraine.
Speaker 1 (02:35):
Native Chief Mark Ruta spoke to ABC's this week, as
Bloomberg learned that European leaders have been seeking to talk
to Trump ahead of his meeting with Putin. Ukraine and
its European allies have been pushing for a ceasefire that
freezes the current front line as a first step towards
negotiations on a more lasting settlement. Israel's Prime minister has
defended his widely condemned plans for a military sweep against
(02:57):
Hamas strongholds in Gaza. Bennaminettanie, who described the proposal as
the best available option for recovering the country's hostages and
safeguarding its security.
Speaker 3 (03:08):
Given Hamas's refusal to lay down its arms, Israel has
no choice but to finish the job and complete the
defeat of Hamas. Contrary to false claims, this is the
best way to end the war and the best way
to end it speedily.
Speaker 1 (03:23):
Benyminettane, whose plans have been criticized at home and by
foreign leaders, dozens of whom have spoken out against the
humanitarian crisis in Gaza after Israel cut off aid between
March and May. Australia has become the latest country to
announce it will recognize a Palestinian state at the United
Nations General Assembly meeting in September. The news comes as
London's Metropolitan Police say five hundred and thirty two people
(03:46):
were arrested during a demonstration on Saturday for supporting band
group Palestine Action. Al Jazeira says five of its journalists
were killed when an Israeli airstrike hit a tent in
Gaza on Sunday.
Speaker 5 (03:58):
The news organization reports the deaths of.
Speaker 1 (04:00):
Two correspondents and cameramen close to Gaza's Al Shifa Hospital
in what it called a targeted assassination. The Israeli military
confirmed it had targeted Al Jazeera correspondent an Us al Sharif,
claiming on telegram that he had served as the head
of a terrorist cell and hamas. The Committee to Protect
Journalists told the BBC that Israel has so far failed
(04:21):
to provide evidence to back up the allegation that the
journalists they killed were terrorists. The UK's jobs market is
weakening as employers hold back due to fears around taxes
and an uncertain future. A poll by KPMG in the
Recruitment's and Employment Confederation showed starting salaries rising at the
slowest pace in over four years.
Speaker 5 (04:41):
Bloomberg Exchange Wilcock has more.
Speaker 6 (04:43):
Working people are seeing fewer pay rises. The KPMG RIC
survey is stark. It shows a sharp slowdown in hiring,
low wages and pessimism about the future, and with tomorrow's
official UK job stated being scene is less reliable. The
RC release has become a closely watched indicator for the
(05:05):
Bank of England. Companies blame a wall of global uncertainty
for the pullback, but they point their finger at the
labor government too, singling out higher payroll taxes, coming tough
employment laws and the fear of more taxes potentially headed
their way this autumn as key reasons for holding back.
In London.
Speaker 5 (05:25):
James Wilcock Bloomberg.
Speaker 1 (05:26):
Radio economists expect the European Center Bank to hold interest
rates steady until December. A Bloomberg survey says Center Bank
watchers are pushing back expectations for more rate cuts while
they wait to see the impact of the Global Trade
tariffs bill. Appears also show signs of taking a while
to determine their next move, with the Federal Reserve having
(05:47):
stayed on hold so far this year. At the Bank
of England, governor last week acknowledging genuine uncertainty. And those
are your top stories on the markets. The MSCI ASA
Pacific Index outside of Japan is up by four tens
of one percent this morning. Japanese markets are closed for
a holiday. Your Stocks fifty futures are up by two tens.
SMP Miani's on Wall Street are up by a tenth.
Oil prices are lower by six tens of one percent.
(06:10):
With Friday's meeting between Vladimir Prutin and Donald Trump and
focus the Brank cruise training at sixty six dollars twenty one,
Soybean futures have risen on that social media post from
Donald Trump calling on China to buy more. They're up
about two point three percent, and bitcoin close to a
record high one hundred and twenty two thousand dollars just
over per digital token at the moment. In a moment
(06:33):
we'll bring you more on that deal between chipmakers and
the US government to get export licenses to China. Plus
we'll have a story about how small pension funds in
Germany are filling the pain from the property market crash.
Speaker 5 (06:44):
There.
Speaker 1 (06:45):
But another story they've been reading this week and on
teaching your children to play poker. Apparently it's easy, or
so says Matt Levine. Anyway, if we're looking for something
to do in your family holiday this summer, perhaps you
can try it out. His essay is about teaching his
eight year old daughter and four year old twins to
play poker. Now, his strategy is you start with one card,
(07:07):
which induced the whole concept of betting and bluffing, and
that it doesn't matter essentially what cards your dealt, it's
what you do with them.
Speaker 5 (07:13):
And he says that so much easier.
Speaker 1 (07:14):
Concept to get across than trying to get someone to
learn off you know, whether a flush is better than
a straight flush, or so on and so forth. So
his strategy says that once your kids have mastered this,
you can then make things more complicated, make it a
two card game than a five card and so on.
He writes about it very well and I think it's
a lovely piece also about getting his children on board
(07:37):
with something that he's interested in too. Do wonder if
it depends on the temperament of your children though definitely
step off in monopoly games that I was playing with
my family as a child. Anyway, But it's a great
READI You'll find it on Blueberg dot com. We'll put
a link to it in our podcast show notes as well.
Let's turn though, back to our top story in video
and AMD agreeing to pay fifteen percent of their revenues
from Chinese AI chip sales to the US government secure
(08:00):
export licenses. Are Tech editor of latsavav is with me
now for more. What can you tell us then about
this agreement that I Nvidia ANDAMD were told of signed
up to.
Speaker 7 (08:10):
Right well, I think first of all, it's worth taking
a step back to understand what band they were trying
to get over because as of April this year, these
chips that we're talking about, in Nvidia's case, the H
twenty chips that it was it had initially designed specifically
for China and we're shipping and selling over there. That's
(08:30):
when a Trumpe administration decided that they will be caught
up in its limits on shipments to China. So this
limitation on Nvidia and AMD shipments through the country didn't
exist until April. That's when the Trump administration imposed them.
And from our reporting, what we understand is it was
a straightforward as saying the Trumpet administration is saying to
(08:52):
Nvidia and AMD, if you give us fifteen percent of
the proceeds, you will be allowed to ship those again.
Speaker 1 (08:58):
Okay, So I mean, how value while are these chips
sales to these companies that they be willing to do this.
Speaker 7 (09:04):
Well, if you listen to Invidia CEO Jensen Huang, he's
made this case very strongly and very consistently that if
Nvidia is not present in China, that costs US interest.
Obviously it costs in Video's own interest, but his case
is more nuanced. He's saying that he can both serve
China's interests by providing them AI accelerators, which his company
(09:25):
is the leader in manufacturing those, but he can also
serve US interest by getting China attached to the US,
as he calls it, technology stack right, So what in
VideA sells isn't just the GPU or the hardware, The accelerator.
It also sells the connective tissue. It sells the infrastructure
that goes into all these data centers and video even
(09:47):
likes to talk about so called AI factories, which really
are just data centers full of the video hardware. And
Jensen and Kwang's premise is if you get all of China,
when you're talking about the Buydance Tens and Ali Baba's
of the world, building their data centers around a video hardware,
that is geopolitically, strategically advantageous for the US because it
(10:08):
means that the US has more negotiating leverage in future negotiations.
It means the US still has some sort of influence
over China. And you know, the idea is that if
there is no US tech allowed in there, China will
not just say we're not interested in AI anymore because
they don't have access. They'll build their own.
Speaker 1 (10:27):
So what does this mean that for the tech industry
more broadly, that companies as big as Nvidian AMD would
sign up to something like this.
Speaker 7 (10:35):
Well, again, you kind of have to rewind a little
bit when you look back to the end of January
when the TikTok ban in the US was just about
to happen, and then Donald Trump started a series of
extensions to that deadline. One of the things that he
made really clear is that everything is on the negotiating
table with his administration. Up until that point, it was
(10:57):
all built on national security grounds. It was ticked US
operations cannot operate here because they have access to young
Americans postal information, which Donald Trump literally shrugged off in
the White House. He said, Eh, what's the big deal,
It's just kids information.
Speaker 5 (11:13):
So he was making the point.
Speaker 7 (11:15):
Then that TikTok could be as big as a one
trillion dollar business and the US should have a slice
of that. And really, what we're seeing now with this
deal with Nvidia ANDAMD is the actual manifestation of what
the envisions. It's we're going to strike a deal, you
will literally give us a cut of the sales, and
then you go ahead and proceed.
Speaker 1 (11:35):
Okay, flat, Thanks very much for joining us with the
latest on that story.
Speaker 5 (11:39):
That's our tech editor of Vlad Tsavov. There.
Speaker 1 (11:41):
Well to Germany now, with a commercial property bubble that
burst under higher interest rates, it's continuing to cause pain
small pension funds that have helped to finance major projects
when rates were near zero are now proving to be
some of the biggest losers are distressed at Reporter Lebby
Cherry joins us now from Frankfurst for more on this
story that she's been reporting on Libby Good Morning. First
(12:02):
of all, why did these occupational pension funds invest in property?
Speaker 8 (12:07):
So in the lead up to exactly this bubble bursting,
we were in a very ultra low interest rate period
and a lot of these occupational pension funds have required
annual returns, so they need to make for the pensioners
that pay into them. And suddenly, in this ultra low
interest rate period, buying the very safe government bonds, mortgage
(12:29):
debt and so on was no longer providing the returns
that they required. So it needs to look for slightly
more arcane, higher risk products that would enable.
Speaker 5 (12:41):
Them to meet those annual returns.
Speaker 8 (12:43):
And if you think about how this financing was structured,
it was designed for them. People were syndicating this debt
out so that even very small occupational pension funds were
able to invest.
Speaker 5 (12:56):
So remind us then what happened when that property bubble burst,
So the kind.
Speaker 8 (13:02):
Of immediate repercussions was a lot of these developments, for example,
building office buildings in major cities. You know, residential developments
ground to a halt. The uncertainty was just so much,
and also the transaction market ground to a halt as
buyers and sellers suddenly couldn't agree on valuations anymore. And
(13:23):
all of the stem from the very rapid increase in
interest rates from the European Central Bank, which put immediate
pressure on valuations and also increased financing costs. And at
the same time you also had Russia's invasion of Ukraine
and the consequent increase in raw materials and so.
Speaker 5 (13:42):
On, all of which led to a lot of these.
Speaker 8 (13:44):
Developments running out of money and basically idling, with people
unwilling to invest more into these projects.
Speaker 1 (13:52):
So how much pain then, have these pension funds suffered
as a result of this? And do we know the
full extent of it? Are there further losses still expectors?
Speaker 8 (14:02):
So a lot of these cases are very idiosyncratic. But
where we have been able to understand what's happened in
these frastructurings. If there are pension funds invested in this
so called mezzanine or subordinated financing, a lot of them
are facing the risk of losing potentially their entire investment.
A lot of the valuations of the developments were based
(14:23):
on very optimistic views of where they'd be able to
sell the property at the end of you know, when
they finished developing it, and suddenly that value is just
completely lost. And in terms of, you know, where we
might go from here, people in the market say that
there are definitely more losses to come. A lot of
these developments are still being restructured, still being negotiated, are
(14:46):
in very long drawn out insolvency processes, and we might
not see the kind of final extent of the losses,
you know, maybe for another year or so.
Speaker 1 (14:55):
In the restructurings that have already happened, though, what's been
the outcome for these pension funds.
Speaker 8 (15:02):
So one case that we look at in particular is
the first project, which is a very large development in Berlin.
They actually came to London to restructure their debt and
what happened was the valuation of the property was so
much lower that it had been initially envisaged when they
started building, that the entirety of the debt that was
(15:25):
sort of more junior to the most sort of the
more junior debt that subordinated the mezzanine financing was completely
wiped out to save for a small compensation payment, and
that would have been very painful for those funds. We've
also seen in a development in Frankfurt where there are
two pension funds that are invested in the mezzanine financing
(15:46):
and they two were facing sort of total write downs
on their investment. But as I say, you know, a
lot of these negotiations are private, a lot of the
solutions are very unique to the property, so it's hard
to sort of generalize.
Speaker 4 (16:01):
I would say.
Speaker 1 (16:04):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 9 (16:10):
Look for us on your podcast feed every morning, on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 1 (16:16):
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Speaker 5 (16:30):
I'm Caroline Hipka and I'm Stephen Carroll.
Speaker 1 (16:32):
Join us again tomorrow morning for all the news you
need to start your day right here on Bloomberg Daybreak
Europe
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Daybreak Europe podcast. Good morning, It's Monday, the eleventh of August.
I'm Stephen Caroll in London. Coming up today, in Vidia
and AMD agree to pay the United States fifteen percent
(00:23):
of their China AI chip revenue to secure export licenses
to the country. The head of NATO says Ukrainian land
will have to be on the table in any peace
deal with Russia. Plus crumbling Dreams Germany's property collapse exposes
pension funds to risky private credit losses. Let's start with
a roundup of our top stories. Bloomberg understands that Nvidia
(00:46):
and AMD have agreed to pay fifteen percent of their
revenues from Chinese AI chip sales to the US government
in a deal to secure export licenses to the country.
The highly unusual arrangement reflects President Trump's effort to engineer
or financial payout for America in return for concessions on
trade or China. Correspondent mid Minlo has more, this is something.
Speaker 2 (01:08):
Quite unprecedented because no US company has done this before.
It does give us a new precedent for the type
of compliance costs that companies could face as they.
Speaker 3 (01:18):
Do business with China.
Speaker 2 (01:19):
It also raises the question as to whether or not
the US is willing to trade off some of these
security concerns by rolling back even more of these export
controls in exchange for a cut of the revenue from
US companies.
Speaker 1 (01:32):
Mid Menlo speaking there with less than twenty four hours
to go until the US China trade truce expires. The
Trump administration has previously signaled that the agreement is likely
to be extended. In its truth Social post. Overnight, the
US President called on Beijing to quadruple its soybean orders
to reduce China's trade deficit with America. NATO's Secretary General
(01:54):
Marcrota says this Friday is somewhat between Donald Trump and
Vladimir Putin, may open the doors negotiations over Ukrainian territory.
President Zelenski has continued to reject the idea of seeding
land currently occupied by Russia. Speaking to ABC's this Week,
Russa says Kiev may have to accept that it has
lost control of some of its territory without formally relinquishing sovereignty.
Speaker 4 (02:16):
These two big issues have to be on the table.
One is territory, and we have to acknowledge at this
moment that Russia is controlling some of Ukrainian territory, and
the question will be how to go forward past a ceasefire,
including what it means in terms of security guarantees for Ukraine.
Speaker 1 (02:35):
Native Chief Mark Ruta spoke to ABC's this week, as
Bloomberg learned that European leaders have been seeking to talk
to Trump ahead of his meeting with Putin. Ukraine and
its European allies have been pushing for a ceasefire that
freezes the current front line as a first step towards
negotiations on a more lasting settlement. Israel's Prime minister has
defended his widely condemned plans for a military sweep against
(02:57):
Hamas strongholds in Gaza. Bennaminettanie, who described the proposal as
the best available option for recovering the country's hostages and
safeguarding its security.
Speaker 3 (03:08):
Given Hamas's refusal to lay down its arms, Israel has
no choice but to finish the job and complete the
defeat of Hamas. Contrary to false claims, this is the
best way to end the war and the best way
to end it speedily.
Speaker 1 (03:23):
Benyminettane, whose plans have been criticized at home and by
foreign leaders, dozens of whom have spoken out against the
humanitarian crisis in Gaza after Israel cut off aid between
March and May. Australia has become the latest country to
announce it will recognize a Palestinian state at the United
Nations General Assembly meeting in September. The news comes as
London's Metropolitan Police say five hundred and thirty two people
(03:46):
were arrested during a demonstration on Saturday for supporting band
group Palestine Action. Al Jazeira says five of its journalists
were killed when an Israeli airstrike hit a tent in
Gaza on Sunday.
Speaker 5 (03:58):
The news organization reports the deaths of.
Speaker 1 (04:00):
Two correspondents and cameramen close to Gaza's Al Shifa Hospital
in what it called a targeted assassination. The Israeli military
confirmed it had targeted Al Jazeera correspondent an Us al Sharif,
claiming on telegram that he had served as the head
of a terrorist cell and hamas. The Committee to Protect
Journalists told the BBC that Israel has so far failed
(04:21):
to provide evidence to back up the allegation that the
journalists they killed were terrorists. The UK's jobs market is
weakening as employers hold back due to fears around taxes
and an uncertain future. A poll by KPMG in the
Recruitment's and Employment Confederation showed starting salaries rising at the
slowest pace in over four years.
Speaker 5 (04:41):
Bloomberg Exchange Wilcock has more.
Speaker 6 (04:43):
Working people are seeing fewer pay rises. The KPMG RIC
survey is stark. It shows a sharp slowdown in hiring,
low wages and pessimism about the future, and with tomorrow's
official UK job stated being scene is less reliable. The
RC release has become a closely watched indicator for the
(05:05):
Bank of England. Companies blame a wall of global uncertainty
for the pullback, but they point their finger at the
labor government too, singling out higher payroll taxes, coming tough
employment laws and the fear of more taxes potentially headed
their way this autumn as key reasons for holding back.
In London.
Speaker 5 (05:25):
James Wilcock Bloomberg.
Speaker 1 (05:26):
Radio economists expect the European Center Bank to hold interest
rates steady until December. A Bloomberg survey says Center Bank
watchers are pushing back expectations for more rate cuts while
they wait to see the impact of the Global Trade
tariffs bill. Appears also show signs of taking a while
to determine their next move, with the Federal Reserve having
(05:47):
stayed on hold so far this year. At the Bank
of England, governor last week acknowledging genuine uncertainty. And those
are your top stories on the markets. The MSCI ASA
Pacific Index outside of Japan is up by four tens
of one percent this morning. Japanese markets are closed for
a holiday. Your Stocks fifty futures are up by two tens.
SMP Miani's on Wall Street are up by a tenth.
Oil prices are lower by six tens of one percent.
(06:10):
With Friday's meeting between Vladimir Prutin and Donald Trump and
focus the Brank cruise training at sixty six dollars twenty one,
Soybean futures have risen on that social media post from
Donald Trump calling on China to buy more. They're up
about two point three percent, and bitcoin close to a
record high one hundred and twenty two thousand dollars just
over per digital token at the moment. In a moment
(06:33):
we'll bring you more on that deal between chipmakers and
the US government to get export licenses to China. Plus
we'll have a story about how small pension funds in
Germany are filling the pain from the property market crash.
Speaker 5 (06:44):
There.
Speaker 1 (06:45):
But another story they've been reading this week and on
teaching your children to play poker. Apparently it's easy, or
so says Matt Levine. Anyway, if we're looking for something
to do in your family holiday this summer, perhaps you
can try it out. His essay is about teaching his
eight year old daughter and four year old twins to
play poker. Now, his strategy is you start with one card,
(07:07):
which induced the whole concept of betting and bluffing, and
that it doesn't matter essentially what cards your dealt, it's
what you do with them.
Speaker 5 (07:13):
And he says that so much easier.
Speaker 1 (07:14):
Concept to get across than trying to get someone to
learn off you know, whether a flush is better than
a straight flush, or so on and so forth. So
his strategy says that once your kids have mastered this,
you can then make things more complicated, make it a
two card game than a five card and so on.
He writes about it very well and I think it's
a lovely piece also about getting his children on board
(07:37):
with something that he's interested in too. Do wonder if
it depends on the temperament of your children though definitely
step off in monopoly games that I was playing with
my family as a child. Anyway, But it's a great
READI You'll find it on Blueberg dot com. We'll put
a link to it in our podcast show notes as well.
Let's turn though, back to our top story in video
and AMD agreeing to pay fifteen percent of their revenues
from Chinese AI chip sales to the US government secure
(08:00):
export licenses. Are Tech editor of latsavav is with me
now for more. What can you tell us then about
this agreement that I Nvidia ANDAMD were told of signed
up to.
Speaker 7 (08:10):
Right well, I think first of all, it's worth taking
a step back to understand what band they were trying
to get over because as of April this year, these
chips that we're talking about, in Nvidia's case, the H
twenty chips that it was it had initially designed specifically
for China and we're shipping and selling over there. That's
(08:30):
when a Trumpe administration decided that they will be caught
up in its limits on shipments to China. So this
limitation on Nvidia and AMD shipments through the country didn't
exist until April. That's when the Trump administration imposed them.
And from our reporting, what we understand is it was
a straightforward as saying the Trumpet administration is saying to
(08:52):
Nvidia and AMD, if you give us fifteen percent of
the proceeds, you will be allowed to ship those again.
Speaker 1 (08:58):
Okay, So I mean, how value while are these chips
sales to these companies that they be willing to do this.
Speaker 7 (09:04):
Well, if you listen to Invidia CEO Jensen Huang, he's
made this case very strongly and very consistently that if
Nvidia is not present in China, that costs US interest.
Obviously it costs in Video's own interest, but his case
is more nuanced. He's saying that he can both serve
China's interests by providing them AI accelerators, which his company
(09:25):
is the leader in manufacturing those, but he can also
serve US interest by getting China attached to the US,
as he calls it, technology stack right, So what in
VideA sells isn't just the GPU or the hardware, The accelerator.
It also sells the connective tissue. It sells the infrastructure
that goes into all these data centers and video even
(09:47):
likes to talk about so called AI factories, which really
are just data centers full of the video hardware. And
Jensen and Kwang's premise is if you get all of China,
when you're talking about the Buydance Tens and Ali Baba's
of the world, building their data centers around a video hardware,
that is geopolitically, strategically advantageous for the US because it
(10:08):
means that the US has more negotiating leverage in future negotiations.
It means the US still has some sort of influence
over China. And you know, the idea is that if
there is no US tech allowed in there, China will
not just say we're not interested in AI anymore because
they don't have access. They'll build their own.
Speaker 1 (10:27):
So what does this mean that for the tech industry
more broadly, that companies as big as Nvidian AMD would
sign up to something like this.
Speaker 7 (10:35):
Well, again, you kind of have to rewind a little
bit when you look back to the end of January
when the TikTok ban in the US was just about
to happen, and then Donald Trump started a series of
extensions to that deadline. One of the things that he
made really clear is that everything is on the negotiating
table with his administration. Up until that point, it was
(10:57):
all built on national security grounds. It was ticked US
operations cannot operate here because they have access to young
Americans postal information, which Donald Trump literally shrugged off in
the White House. He said, Eh, what's the big deal,
It's just kids information.
Speaker 5 (11:13):
So he was making the point.
Speaker 7 (11:15):
Then that TikTok could be as big as a one
trillion dollar business and the US should have a slice
of that. And really, what we're seeing now with this
deal with Nvidia ANDAMD is the actual manifestation of what
the envisions. It's we're going to strike a deal, you
will literally give us a cut of the sales, and
then you go ahead and proceed.
Speaker 1 (11:35):
Okay, flat, Thanks very much for joining us with the
latest on that story.
Speaker 5 (11:39):
That's our tech editor of Vlad Tsavov. There.
Speaker 1 (11:41):
Well to Germany now, with a commercial property bubble that
burst under higher interest rates, it's continuing to cause pain
small pension funds that have helped to finance major projects
when rates were near zero are now proving to be
some of the biggest losers are distressed at Reporter Lebby
Cherry joins us now from Frankfurst for more on this
story that she's been reporting on Libby Good Morning. First
(12:02):
of all, why did these occupational pension funds invest in property?
Speaker 8 (12:07):
So in the lead up to exactly this bubble bursting,
we were in a very ultra low interest rate period
and a lot of these occupational pension funds have required
annual returns, so they need to make for the pensioners
that pay into them. And suddenly, in this ultra low
interest rate period, buying the very safe government bonds, mortgage
(12:29):
debt and so on was no longer providing the returns
that they required. So it needs to look for slightly
more arcane, higher risk products that would enable.
Speaker 5 (12:41):
Them to meet those annual returns.
Speaker 8 (12:43):
And if you think about how this financing was structured,
it was designed for them. People were syndicating this debt
out so that even very small occupational pension funds were
able to invest.
Speaker 5 (12:56):
So remind us then what happened when that property bubble burst,
So the kind.
Speaker 8 (13:02):
Of immediate repercussions was a lot of these developments, for example,
building office buildings in major cities. You know, residential developments
ground to a halt. The uncertainty was just so much,
and also the transaction market ground to a halt as
buyers and sellers suddenly couldn't agree on valuations anymore. And
(13:23):
all of the stem from the very rapid increase in
interest rates from the European Central Bank, which put immediate
pressure on valuations and also increased financing costs. And at
the same time you also had Russia's invasion of Ukraine
and the consequent increase in raw materials and so.
Speaker 5 (13:42):
On, all of which led to a lot of these.
Speaker 8 (13:44):
Developments running out of money and basically idling, with people
unwilling to invest more into these projects.
Speaker 1 (13:52):
So how much pain then, have these pension funds suffered
as a result of this? And do we know the
full extent of it? Are there further losses still expectors?
Speaker 8 (14:02):
So a lot of these cases are very idiosyncratic. But
where we have been able to understand what's happened in
these frastructurings. If there are pension funds invested in this
so called mezzanine or subordinated financing, a lot of them
are facing the risk of losing potentially their entire investment.
A lot of the valuations of the developments were based
(14:23):
on very optimistic views of where they'd be able to
sell the property at the end of you know, when
they finished developing it, and suddenly that value is just
completely lost. And in terms of, you know, where we
might go from here, people in the market say that
there are definitely more losses to come. A lot of
these developments are still being restructured, still being negotiated, are
(14:46):
in very long drawn out insolvency processes, and we might
not see the kind of final extent of the losses,
you know, maybe for another year or so.
Speaker 1 (14:55):
In the restructurings that have already happened, though, what's been
the outcome for these pension funds.
Speaker 8 (15:02):
So one case that we look at in particular is
the first project, which is a very large development in Berlin.
They actually came to London to restructure their debt and
what happened was the valuation of the property was so
much lower that it had been initially envisaged when they
started building, that the entirety of the debt that was
(15:25):
sort of more junior to the most sort of the
more junior debt that subordinated the mezzanine financing was completely
wiped out to save for a small compensation payment, and
that would have been very painful for those funds. We've
also seen in a development in Frankfurt where there are
two pension funds that are invested in the mezzanine financing
(15:46):
and they two were facing sort of total write downs
on their investment. But as I say, you know, a
lot of these negotiations are private, a lot of the
solutions are very unique to the property, so it's hard
to sort of generalize.
Speaker 4 (16:01):
I would say.
Speaker 1 (16:04):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 9 (16:10):
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Speaker 1 (16:16):
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Speaker 5 (16:30):
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Europe
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