August 28, 2025 • 21 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) Nvidia, the world’s most valuable company, gave a tepid revenue forecast for the current period, signaling that growth is decelerating after a staggering two-year boom in artificial intelligence spending.
(2) Francois Bayrou said he will negotiate directly with lawmakers next week and warned against new elections as he battles to stop France’s parliament from forcing him to resign.
(3) NATO members are on track to spend more than $1.5 trillion on defense in 2025, according to the alliance’s latest estimates, as they build up their militaries amid geopolitical tensions and pressure from the US.
(4) The Mexican government plans to increase tariffs on China as part of its 2026 budget proposal next month, protecting the nation’s businesses from cheap imports and satisfying a longstanding demand of US President Donald Trump.
(5) Two children were killed and 17 people injured after a gunman dressed in black fired dozens of rounds through the windows of a Minneapolis Catholic church holding a Mass for elementary school students.
(6) Europe’s new-car market rose the most in 15 months in July, as consumers shrugged off concerns over the global economy to splash out on fully electric and hybrid models.
Podcast Conversation: Netflix Missed a Moment With ‘KPop Demon Hunters’
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
This is the Blue Big Day, Bake you at podcast.
Good morning, It's Thursday, the twenty eighth of August. I'm
Caroline Hepca in London.
Speaker 3 (00:16):
And I'm Stephen Carroll. Coming up today.
Speaker 4 (00:18):
After a staggering two year AI boom, the world's most
valuable company, in Vidia forecasts a slowdown in growth.
Speaker 2 (00:25):
Defense spending by NATO members is on track to hit
one and a half trillion dollars this year. Is the
Alliance confront growing geopolitical.
Speaker 4 (00:35):
Risks, plus charging ahead. European car sales surge as motor
stop for more electric vehicles. Welcome news for an industry
that's been battered by US tariffs.
Speaker 2 (00:45):
Let's start with a roundup of our top stories.
Speaker 4 (00:47):
The AI boom made in Video the world's most valuable company,
but some investors are now worrying that boom could be
slowing down. In its latest results, in Video says it
expects sales to be roughly fifty four billion dollars in
the three to the end of October, so that was
in line with the average Wall Street estimate. Some analysts
had projected more than sixty billion dollars. The tepped outlook
(01:08):
ads to concern that the pace of investment in AI
systems is unsustainable. Mandeep Singh is the global head of
Technology sector Research at Bloomberg Intelligence.
Speaker 3 (01:18):
I mean just a guy.
Speaker 1 (01:19):
The three Q expectations were fifty four to fifty five billion,
and to my mind, this print is not something to
be excited about.
Speaker 4 (01:29):
And markets seem to share man Deep Singh's view. Shares
in Nvidia slipped three point one percent in post market trading.
Speaker 2 (01:36):
Now, if those losses hold when markets reopen, it would
wipe roughly one hundred and forty billion dollars of in
Nvidia's market capitalization. That is the equivalent of the entire
value of Pfizer, highlighting the company's outsized role in driving
stock gains this year. During a conference call with Analysis
Or Wednesday, the company's leadership, though rejected the notion that
(01:59):
interest in deploying AI infrastructure is flagging, and Vidia CEO
Jensen Wong suggested that the quote opportunity ahead is still
immense and that the company is still pushing to bring
their most advanced AI chips to the Chinese market.
Speaker 5 (02:14):
So I think the opportunity for us to bring Blackwell
to the China market is a real possibility, and so
we just have to keep advocating the sensibility of and
the importance of American tech companies to be able to
lead and win the AI race.
Speaker 2 (02:34):
And Vidia CEO Jensen Roe, speaking there as the company
also revealed that the Trump administration's plan to charge a
fifteen percent commission company for the company's AI chip sales
to China hasn't progressed beyond the early stages and could
pose legal risks. The company said that it excluded as
much as five billion dollars in possible China sales from
(02:56):
its projection because it can't be sure whether GPS political
tensions between the US and China will allow Nvidio to
fill orders.
Speaker 4 (03:04):
Francis Prime Minister says he will negotiate directly with lawmakers
next week and an effort to win support for a
planned confidence votes on the eighth of September. Frant Barberiu
warned against another snap election, saying he doesn't think it
will provide any stability given the demands of the far
right and the far left. Speaking to French broadcaster TEA,
fan Beau called for cooperation to address what he described
(03:26):
as a crushing debt burden.
Speaker 1 (03:29):
Lest sample. The question is simple. My conviction is that
it is impossible to continue to carry out the country's
recovery policy if there is not at minimum agreement on
the importance of this choice, because we cannot force our
way through, and besides, I don't want to force our
(03:50):
way through.
Speaker 4 (03:53):
Francis Prime Minister from Saberiu, was speaking as investors are
already positioning for higher risks selling French assets following the
inn intment of the confidence vote on Monday. France's benchmark
bondyield premium over Germany reached eighty two basis points yesterday,
its highest since January.
Speaker 2 (04:10):
Bloomberg understands that Mexico is set to raise tariffs on
imports from China after US pressure. The move aligns with
President Trump's pushed to shield North America from cheaper imports,
and approval is likely in Mexico given President at Claudia
Shinbaum's coalition majority also say that the hikes will target cars, textiles,
(04:31):
and plastics, among other products. Mexico has become the top
global destination for Chinese vehicles, overtaking Russia earlier this year.
Speaker 4 (04:40):
Two children have been killed and seventeen other people hurt
in Minneapolis after a gunman opened fire through the windows
of a Catholic church holding a mass for elementary school pupils.
FBI Director Cash Pattel identified the suspect as twenty three
year old Robin Westman, who police say died at the
scene from a self inflicted gunshot. World and Minneapolis Police
(05:01):
Chief Brian O'Hara says it's an unthinkable tragedy.
Speaker 3 (05:05):
This was a.
Speaker 6 (05:06):
Deliberate act of violence against innocent children and other people worshiping.
The sheer cruelty and cowardice firing into a church full
of children is absolutely incomprehensible.
Speaker 4 (05:24):
Ohara says police are still looking for a motive, but
the Trump appointed FBI chief Cash Hotail says the attack
is being investigated as an anti Catholic hate crime.
Speaker 2 (05:35):
NATO says it's on track to spend more than one
and a half trillion dollars on defense this year. The
alliance faces an unprecedented range of challenges, including the ongoing
war in Ukraine and questions over America's role in European security.
Blomberg's freddie Fulston reports.
Speaker 7 (05:52):
US President Donald Trump has been pushing for Europe to
invest more in its own defense, and the latest figures
show NATO has listened. All thirty two members of the
Alliance are on track to meet their old defense spending
target of two percent of GDP, and in a meeting
at the Hague in June, they agreed a new goal
(06:13):
of five percent of GDP by twenty thirty five. The
spending push is being led by Germany, whose annual defense
budget is expected to double to as much as one
hundred and eighty eight billion dollars within the next four years.
In London, I'm Freddie Folston.
Speaker 4 (06:32):
Bloomberg Radio UK's Chancellor rter Reeves produced her upcoming budget
to build a larger fiscal buffer. That's the view of
Bloomberg Economics, which says the government should boost its fiscal
room for maneuver from ten billion pounds to twenty five billion.
Speaker 3 (06:45):
Boombrook James Wilcock has more all yeh.
Speaker 8 (06:48):
The Chancellor has faced questions about what tax is she's
going to raise. That's because both economists and journalists can
see changes to growth forecasts and spending plans that road
to ten billion pounds. The government sets aside in case emergencies,
so Bloomberg Economics are one of many bodies now suggesting
Rachel Reeve should set the bar higher, but doing so
(07:12):
would mean she has to find even more money to
fill the coffers in London.
Speaker 3 (07:16):
James Willcock, Bloomberg Radio.
Speaker 2 (07:19):
And those are our top stories for you this morning.
Looking at the markets this hour, so the all country
World index is higher, brushing off perhaps the slightly negative
outlook from in Video whose shares fell after market. In
US trading, Chinese chip shares have actually surged. You've got
the CSI three hundred index up overall by seven tenths
(07:40):
of one percent, and you had the S and p
f i' found a closed at a record high on Wednesday,
even if stop futures this morning are actually down about
a tenth of one percent. Eurosource Switeist features are higher,
and we do continue to follow the most important story
in bond markets, where you've seen significant moves in terms
of long dated bonds in the US, in France and
the UK, maybe for some slightly different reasons, but still
(08:02):
hugely significant thirty year US els this morning they were
actually easing off down by two basis points of four
point nine percent. Those are the markets in.
Speaker 4 (08:10):
A moment we'll discuss in videos forecast which has failed
to impress investors, and why European car sales have jumped.
Another story that we've been reading this morning, Karl and
I didn't do my homework after yesterday's program and I
did not go home and watch K pop Demon Hunter.
Speaker 2 (08:24):
Oh no, I wanted you to harm all the songs? Yeah, anyway,
are you thinking that I can be off book in
a day?
Speaker 9 (08:30):
Though?
Speaker 2 (08:32):
I love it? That is a deep musical records, doesn't it?
Love it? Netflix is big weekend box office hit, well
of course being Biggs. Jason Bailey's got a great story
out about this, wrapping the knuckles of Netflix's CEO Ted
Sarandos for leaving money on the table as he sees it,
because he says that Netflix seems to be trying to
(08:53):
cut off its nose to spite its face by refusing
to give fans what they seem to want, which is
actually to see movies in theater. Is in cinemas. This
is after the success of this animated movie that was
weeks and weeks available actually download on Netflix, and then
finally was so popular they put it into these sing
(09:13):
along in theater performances. But Jason sort of makes the
thread that that's actually a bigger issue that cinemas and
people still do want to go and sit together and watch.
Speaker 4 (09:25):
The communal experience is now the premium part of this.
I mean, you know, think about the secret cinema trend
that's been so popular for many years, This idea of
actually it being an event that you want to go
and spend money on and want to go and attend.
That's part of how the consumer psyche has shifted away.
Perhaps at a post COVID thing as well, people are
happy to be out of the house and enjoying entertainment
(09:46):
in person as well. So this is a very interesting
argument from Jason Barry that really Netflix is missing a
trick here and they should be leaning into the fact
that they can draw audiences into a cinema as well
as into their subscriber services. It's not one or the other,
but you can actually do both. A great piece you'll
find at bloomberg dot Com Void Lash Opinion Our Los
a link to the article in our podcast show notes.
Speaker 2 (10:06):
Now to our top story on Nvidia. Shares fell and
extended New York trading after the chipmaker gave a forecast
for the current quarter that wasn't as bullish as some
analysts had anticipated. Joining us out, it's been a big
intelligence is senior analyst Robert Lee. Robert, good morning. So
just tell us a bit about the results for the
second quarter and looking backwards in other words, and also
(10:28):
why the forecast going forwards has slightly disappointed investors.
Speaker 10 (10:33):
Maybe just to take a very brief step back and
go back to textbooks, because I think what we saw
in terms of the stock price reaction was really it
was a classic setup going into the results, textbook stuff,
because there was a very high level of expectation, you know,
ahead of the results. We've seen this many times with Nvidia.
The stock was trading close to an all time hide,
(10:54):
evaluations pretty punchy, sort of a very high level of expectations,
and if you look at the results themselves, I think
were pretty solid. But what we didn't see was any
significant outperformance either in terms of the reported numbers or
more importantly, the guidance. And so as a consequence, it's
unsurprising really that you're going to get profit taking, But
(11:14):
in terms of the fundamentals, I think the outlook for
the company remains pretty solid. I mean, in Crewe terms,
the only only game in town still from a Western perspective.
But as you appreciate, there are some question marks. One
of them is on the level of returns that are
being generated within the AI industry in general.
Speaker 3 (11:33):
And if you remember, I think it.
Speaker 10 (11:35):
Was a week ago, there was a very important report
that came out of MIT in America based on a
survey of various corporations that were employing AI internally. I
think it was only around five percent of those were
making a meaningful return. In other words, ninety five percent
were making next to no return.
Speaker 3 (11:55):
Or were still loss making.
Speaker 10 (11:56):
So that raises big fundamental questions about the monetization outlook
within the users of AI, in other words, the software
companies that are utilizing these models to help develop new apps.
And then the other issue is obviously the ongoing saga
with the H twenty, and I think the most interesting
new development on that front is that it appears now
(12:19):
that debate is moving on. Jensen Wang and the CFO
both mentioned the fact that they are effectively lobbying the
US administration to try and persuade them to allow in
Video to sell the high performance Blackwell chip.
Speaker 3 (12:35):
So not the Age twenty.
Speaker 10 (12:36):
This is a far more powerful chip, but trying to
get some permission to sell that into China, I think,
you know, Age twenty is probably dead in the water
at the moment from a Chinese perspective.
Speaker 4 (12:49):
That's a really interesting point that was made during those
comments as well. I mean, how should we understand this
forecast in the count of the boom that Nvidia has
seen over the past two years. You know, sure, it's
slightly more tepid than some analysts had expected, but I
(13:10):
mean in the grander context of things, this is a
company that has massively benefited from investment in AI.
Speaker 10 (13:16):
Yeah, I think near terms, again, there were numbers themselves.
I mean, technically the guidance was marginally above what was expected.
But again, cast your mind back in certainly sort of
eighteen months or so ago. This company, you know, as
our Americans colleagues would refer to, they were beaten race.
They were substantially beaten numbers and then raising guidance significantly.
Speaker 3 (13:36):
So we've not seen that.
Speaker 10 (13:37):
So again, the rate of incremental beaten rays the cadence
of that. The momentum behind that has eased significantly. Part
of that's a base effect because the company is obviously
significantly bigger than it was. I don't think it has
any near term fundamental consequence, but you know, that explains
the Cheff price reaction. And again you know, in terms
(13:58):
of supply from a way perspective, they've got the market
to themselves.
Speaker 3 (14:02):
They've got an order book to die for.
Speaker 10 (14:04):
But the end of the day, if the users of
these chips, if the company's purchasing these chips, are not
monetizing fast enough, or they don't have the prospect to
generate a meaningful return and investment from the very very
high levels of investment they're spending at the moment, then
that raises a fundamental question about the whole whole AI
(14:26):
cycle that we're seeing at the moment, because clearly AI
is a great productivity tool, but again it comes at
a huge cost. Again, Microsoft from Memory is going to
spend around eighty five billion in CAPEX this year, but
the level of monetization that even the leading player like
Microsoft seeing at the moment is significantly lower than that.
(14:47):
And whilst the rate of monetization is increasing, I would argue,
or continue to argue, that the ramping monetization is nowhere
fast enough to justify such humongous levels of kapex being spent.
So some might argue, as I've said, there are parallels
with the dot com boom and the capex bubble that
(15:08):
we saw at that point.
Speaker 2 (15:10):
Yeah. Absolutely, let's see what people can actually deliver it
from all of their AI technology spend. Look, just very briefly,
in terms of the complexity of the sales to China,
the JOm administration wants to charge fifteen percent commission on
Nvidia's AI chip sales to China, which is a really
unusual plan. The CFO did also talk about that. Just
(15:33):
explain what he said. I mean essentially that it's there
needs to be a legal process for that to be possible. Right,
how do you see that?
Speaker 10 (15:42):
Yeah, on the I guess it's yeah, there are legal
complexities there. But I think no sort of discussion is
academic to some extent because at the end of the day,
if your potential and customer Chinese AI companies, which you know,
based on recent Bloomberg report though it appears that the
government is encouraging strongly encouraging Chinese AI companies to buy locally,
(16:07):
then you know effectively that there may well be no
market there. And also as a major geopolitical rival and
economic rival to the US. Again, why is China going
to buy US products? You know in the full knowledge
that fifteen percent of that is going to their main rival.
So I think the direction of travel from a Chinese
perspective is to double down on its efforts to become
(16:30):
self sufficient in tech. Those efforts are accelerating and the
country's making good progress. You've got the likes of Cambracon,
which is an a share listed Chinese company. If you
look at a stop price that's gone ballistic, is you
know recently the local suppliers are clearly benefiting from this.
Huawei as well, And I think on balance, you know,
(16:51):
the local AI companies like Alibaba, Tencent by do have
sufficient supply of chips on hand and are benefiting from
an increasing supply of domestic chips from the likes of
as I said, Huawei, cambricn SO net Net. With all
these geopolitical complications, on balance, I think it's highly unlikely
that Nvidia is likely to be selling meaningful level of
(17:14):
H twenty chips, or in fact probably none at all
from where we see it at the moment, with a
big question mark about their ability to sell Blackqell. So
you know it would be nice, but again it's all
tied up with a lot of geopolitical noise and complexity
at the moment.
Speaker 4 (17:31):
Okay, Robert Lee, Bloomberg Intelligence Senior analyst, thank you very
much for joining us.
Speaker 3 (17:37):
Stay with us.
Speaker 4 (17:38):
More from Bloomberg Daybreak Europe coming up after this.
Speaker 2 (17:42):
European car sales rose the most in fifteen months in July,
in a boost to the industry which has been battered
by President Trum's auto tariffs. Joining us this morning is
Bloomberg's transport or, reported Danny Lee. Danny, good to have
you on the program. So a big jump in sales.
What are Europeans buying then, by all.
Speaker 9 (17:59):
The being consumer concerns about spending in the past, the
money is flowing into new cars again and particularly into
the plug in hybrids and the fully electric models. Noticeably
saw German consumers continue to pile into these fully electric
vehicles in the various hybrids, so they led the way
in that front in terms of unis sales. At the
same time, continue to see petrol and DZE sales are full.
Speaker 3 (18:22):
But when you just look at.
Speaker 9 (18:23):
The cart brands as we set up this July sales number.
Biggest beneficiaries continue to be the VW Group, Renault and
BMW or seeing strong jumping sales high high single digital
or low double digits. So it's a really encouraging picture
given the strugs we've seen over recent months, particularly you know,
the kind of months we've seen over this year. It's
(18:45):
been a whip saw as we've seen new car registrations
in July up five point nine percent, whilst previous month
in July and June was down five point one percent,
So it has been quite a ratic over the recent months,
but at least there has been a real or flow
on in terms of car spending.
Speaker 4 (19:03):
How much is are subsidies playing into this bump in
in electric vehicle sales?
Speaker 9 (19:09):
Well, Ultimately, carbons are continued to position towards EV's and
you know, especially as these the threat of a ban
on combustion engines still looms into the next decade, so
you do see the European countries continue to think about
reviving subsidies and to try and jump stop the EV demand.
And we've definitely seen the benefits for the likes of
UK reintroducing grants for as much as three thousands some
(19:32):
three thousand, seven hundred and fifty pounds to stimulate EV purchases.
So they have seen in July a nice bump up
in sales and it is a kind of balancing out
for some countries who are still seeing a strain on budgets, frankly,
particularly the legs of France. So yeah, it's that subsidies
which are helping drive up sales for sure.
Speaker 2 (19:53):
Okay, well, how fragile there are European car manufacturers. I mean,
surely they'll they'll take this as good news. But the
upheave all of US tariffs has been enormous.
Speaker 3 (20:02):
Yeah.
Speaker 9 (20:02):
No, the Europe's co makers are really facing a delicate
balancing actor of the tariffs, and especially when you think
about their sales in a major market like the US
where they continue to still import from Europe and also
produce in America. It's the delicate balancing act. And you know,
as a reminder, you know, Europe's auto majors had downgraded
(20:23):
downgraded their four year earnings outlook not too long ago
because of the back of the higher tariffs. But the
Block is trying to lower tariffs on import for Russels,
is seeking to fast take legislation to remove all tariffs
on US and dust orgods and maybe that could help
EU car duties, which for now have a twenty seven
tariff level.
Speaker 4 (20:45):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Streets and beyond.
Speaker 2 (20:51):
Look for us on your podcast feed every morning, on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 4 (20:58):
You can also listen live each morning on London and
Dab Radio, the Bloomberg Business app, and Bloomberg dot Com.
Speaker 2 (21:03):
Our flagship New York station, is also available on your
Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.
I'm Caroline Hepka and.
Speaker 4 (21:12):
I'm Stephen Carol. 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.
Speaker 2 (00:10):
This is the Blue Big Day, Bake you at podcast.
Good morning, It's Thursday, the twenty eighth of August. I'm
Caroline Hepca in London.
Speaker 3 (00:16):
And I'm Stephen Carroll. Coming up today.
Speaker 4 (00:18):
After a staggering two year AI boom, the world's most
valuable company, in Vidia forecasts a slowdown in growth.
Speaker 2 (00:25):
Defense spending by NATO members is on track to hit
one and a half trillion dollars this year. Is the
Alliance confront growing geopolitical.
Speaker 4 (00:35):
Risks, plus charging ahead. European car sales surge as motor
stop for more electric vehicles. Welcome news for an industry
that's been battered by US tariffs.
Speaker 2 (00:45):
Let's start with a roundup of our top stories.
Speaker 4 (00:47):
The AI boom made in Video the world's most valuable company,
but some investors are now worrying that boom could be
slowing down. In its latest results, in Video says it
expects sales to be roughly fifty four billion dollars in
the three to the end of October, so that was
in line with the average Wall Street estimate. Some analysts
had projected more than sixty billion dollars. The tepped outlook
(01:08):
ads to concern that the pace of investment in AI
systems is unsustainable. Mandeep Singh is the global head of
Technology sector Research at Bloomberg Intelligence.
Speaker 3 (01:18):
I mean just a guy.
Speaker 1 (01:19):
The three Q expectations were fifty four to fifty five billion,
and to my mind, this print is not something to
be excited about.
Speaker 4 (01:29):
And markets seem to share man Deep Singh's view. Shares
in Nvidia slipped three point one percent in post market trading.
Speaker 2 (01:36):
Now, if those losses hold when markets reopen, it would
wipe roughly one hundred and forty billion dollars of in
Nvidia's market capitalization. That is the equivalent of the entire
value of Pfizer, highlighting the company's outsized role in driving
stock gains this year. During a conference call with Analysis
Or Wednesday, the company's leadership, though rejected the notion that
(01:59):
interest in deploying AI infrastructure is flagging, and Vidia CEO
Jensen Wong suggested that the quote opportunity ahead is still
immense and that the company is still pushing to bring
their most advanced AI chips to the Chinese market.
Speaker 5 (02:14):
So I think the opportunity for us to bring Blackwell
to the China market is a real possibility, and so
we just have to keep advocating the sensibility of and
the importance of American tech companies to be able to
lead and win the AI race.
Speaker 2 (02:34):
And Vidia CEO Jensen Roe, speaking there as the company
also revealed that the Trump administration's plan to charge a
fifteen percent commission company for the company's AI chip sales
to China hasn't progressed beyond the early stages and could
pose legal risks. The company said that it excluded as
much as five billion dollars in possible China sales from
(02:56):
its projection because it can't be sure whether GPS political
tensions between the US and China will allow Nvidio to
fill orders.
Speaker 4 (03:04):
Francis Prime Minister says he will negotiate directly with lawmakers
next week and an effort to win support for a
planned confidence votes on the eighth of September. Frant Barberiu
warned against another snap election, saying he doesn't think it
will provide any stability given the demands of the far
right and the far left. Speaking to French broadcaster TEA,
fan Beau called for cooperation to address what he described
(03:26):
as a crushing debt burden.
Speaker 1 (03:29):
Lest sample. The question is simple. My conviction is that
it is impossible to continue to carry out the country's
recovery policy if there is not at minimum agreement on
the importance of this choice, because we cannot force our
way through, and besides, I don't want to force our
(03:50):
way through.
Speaker 4 (03:53):
Francis Prime Minister from Saberiu, was speaking as investors are
already positioning for higher risks selling French assets following the
inn intment of the confidence vote on Monday. France's benchmark
bondyield premium over Germany reached eighty two basis points yesterday,
its highest since January.
Speaker 2 (04:10):
Bloomberg understands that Mexico is set to raise tariffs on
imports from China after US pressure. The move aligns with
President Trump's pushed to shield North America from cheaper imports,
and approval is likely in Mexico given President at Claudia
Shinbaum's coalition majority also say that the hikes will target cars, textiles,
(04:31):
and plastics, among other products. Mexico has become the top
global destination for Chinese vehicles, overtaking Russia earlier this year.
Speaker 4 (04:40):
Two children have been killed and seventeen other people hurt
in Minneapolis after a gunman opened fire through the windows
of a Catholic church holding a mass for elementary school pupils.
FBI Director Cash Pattel identified the suspect as twenty three
year old Robin Westman, who police say died at the
scene from a self inflicted gunshot. World and Minneapolis Police
(05:01):
Chief Brian O'Hara says it's an unthinkable tragedy.
Speaker 3 (05:05):
This was a.
Speaker 6 (05:06):
Deliberate act of violence against innocent children and other people worshiping.
The sheer cruelty and cowardice firing into a church full
of children is absolutely incomprehensible.
Speaker 4 (05:24):
Ohara says police are still looking for a motive, but
the Trump appointed FBI chief Cash Hotail says the attack
is being investigated as an anti Catholic hate crime.
Speaker 2 (05:35):
NATO says it's on track to spend more than one
and a half trillion dollars on defense this year. The
alliance faces an unprecedented range of challenges, including the ongoing
war in Ukraine and questions over America's role in European security.
Blomberg's freddie Fulston reports.
Speaker 7 (05:52):
US President Donald Trump has been pushing for Europe to
invest more in its own defense, and the latest figures
show NATO has listened. All thirty two members of the
Alliance are on track to meet their old defense spending
target of two percent of GDP, and in a meeting
at the Hague in June, they agreed a new goal
(06:13):
of five percent of GDP by twenty thirty five. The
spending push is being led by Germany, whose annual defense
budget is expected to double to as much as one
hundred and eighty eight billion dollars within the next four years.
In London, I'm Freddie Folston.
Speaker 4 (06:32):
Bloomberg Radio UK's Chancellor rter Reeves produced her upcoming budget
to build a larger fiscal buffer. That's the view of
Bloomberg Economics, which says the government should boost its fiscal
room for maneuver from ten billion pounds to twenty five billion.
Speaker 3 (06:45):
Boombrook James Wilcock has more all yeh.
Speaker 8 (06:48):
The Chancellor has faced questions about what tax is she's
going to raise. That's because both economists and journalists can
see changes to growth forecasts and spending plans that road
to ten billion pounds. The government sets aside in case emergencies,
so Bloomberg Economics are one of many bodies now suggesting
Rachel Reeve should set the bar higher, but doing so
(07:12):
would mean she has to find even more money to
fill the coffers in London.
Speaker 3 (07:16):
James Willcock, Bloomberg Radio.
Speaker 2 (07:19):
And those are our top stories for you this morning.
Looking at the markets this hour, so the all country
World index is higher, brushing off perhaps the slightly negative
outlook from in Video whose shares fell after market. In
US trading, Chinese chip shares have actually surged. You've got
the CSI three hundred index up overall by seven tenths
(07:40):
of one percent, and you had the S and p
f i' found a closed at a record high on Wednesday,
even if stop futures this morning are actually down about
a tenth of one percent. Eurosource Switeist features are higher,
and we do continue to follow the most important story
in bond markets, where you've seen significant moves in terms
of long dated bonds in the US, in France and
the UK, maybe for some slightly different reasons, but still
(08:02):
hugely significant thirty year US els this morning they were
actually easing off down by two basis points of four
point nine percent. Those are the markets in.
Speaker 4 (08:10):
A moment we'll discuss in videos forecast which has failed
to impress investors, and why European car sales have jumped.
Another story that we've been reading this morning, Karl and
I didn't do my homework after yesterday's program and I
did not go home and watch K pop Demon Hunter.
Speaker 2 (08:24):
Oh no, I wanted you to harm all the songs? Yeah, anyway,
are you thinking that I can be off book in
a day?
Speaker 9 (08:30):
Though?
Speaker 2 (08:32):
I love it? That is a deep musical records, doesn't it?
Love it? Netflix is big weekend box office hit, well
of course being Biggs. Jason Bailey's got a great story
out about this, wrapping the knuckles of Netflix's CEO Ted
Sarandos for leaving money on the table as he sees it,
because he says that Netflix seems to be trying to
(08:53):
cut off its nose to spite its face by refusing
to give fans what they seem to want, which is
actually to see movies in theater. Is in cinemas. This
is after the success of this animated movie that was
weeks and weeks available actually download on Netflix, and then
finally was so popular they put it into these sing
(09:13):
along in theater performances. But Jason sort of makes the
thread that that's actually a bigger issue that cinemas and
people still do want to go and sit together and watch.
Speaker 4 (09:25):
The communal experience is now the premium part of this.
I mean, you know, think about the secret cinema trend
that's been so popular for many years, This idea of
actually it being an event that you want to go
and spend money on and want to go and attend.
That's part of how the consumer psyche has shifted away.
Perhaps at a post COVID thing as well, people are
happy to be out of the house and enjoying entertainment
(09:46):
in person as well. So this is a very interesting
argument from Jason Barry that really Netflix is missing a
trick here and they should be leaning into the fact
that they can draw audiences into a cinema as well
as into their subscriber services. It's not one or the other,
but you can actually do both. A great piece you'll
find at bloomberg dot Com Void Lash Opinion Our Los
a link to the article in our podcast show notes.
Speaker 2 (10:06):
Now to our top story on Nvidia. Shares fell and
extended New York trading after the chipmaker gave a forecast
for the current quarter that wasn't as bullish as some
analysts had anticipated. Joining us out, it's been a big
intelligence is senior analyst Robert Lee. Robert, good morning. So
just tell us a bit about the results for the
second quarter and looking backwards in other words, and also
(10:28):
why the forecast going forwards has slightly disappointed investors.
Speaker 10 (10:33):
Maybe just to take a very brief step back and
go back to textbooks, because I think what we saw
in terms of the stock price reaction was really it
was a classic setup going into the results, textbook stuff,
because there was a very high level of expectation, you know,
ahead of the results. We've seen this many times with Nvidia.
The stock was trading close to an all time hide,
(10:54):
evaluations pretty punchy, sort of a very high level of expectations,
and if you look at the results themselves, I think
were pretty solid. But what we didn't see was any
significant outperformance either in terms of the reported numbers or
more importantly, the guidance. And so as a consequence, it's
unsurprising really that you're going to get profit taking, But
(11:14):
in terms of the fundamentals, I think the outlook for
the company remains pretty solid. I mean, in Crewe terms,
the only only game in town still from a Western perspective.
But as you appreciate, there are some question marks. One
of them is on the level of returns that are
being generated within the AI industry in general.
Speaker 3 (11:33):
And if you remember, I think it.
Speaker 10 (11:35):
Was a week ago, there was a very important report
that came out of MIT in America based on a
survey of various corporations that were employing AI internally. I
think it was only around five percent of those were
making a meaningful return. In other words, ninety five percent
were making next to no return.
Speaker 3 (11:55):
Or were still loss making.
Speaker 10 (11:56):
So that raises big fundamental questions about the monetization outlook
within the users of AI, in other words, the software
companies that are utilizing these models to help develop new apps.
And then the other issue is obviously the ongoing saga
with the H twenty, and I think the most interesting
new development on that front is that it appears now
(12:19):
that debate is moving on. Jensen Wang and the CFO
both mentioned the fact that they are effectively lobbying the
US administration to try and persuade them to allow in
Video to sell the high performance Blackwell chip.
Speaker 3 (12:35):
So not the Age twenty.
Speaker 10 (12:36):
This is a far more powerful chip, but trying to
get some permission to sell that into China, I think,
you know, Age twenty is probably dead in the water
at the moment from a Chinese perspective.
Speaker 4 (12:49):
That's a really interesting point that was made during those
comments as well. I mean, how should we understand this
forecast in the count of the boom that Nvidia has
seen over the past two years. You know, sure, it's
slightly more tepid than some analysts had expected, but I
(13:10):
mean in the grander context of things, this is a
company that has massively benefited from investment in AI.
Speaker 10 (13:16):
Yeah, I think near terms, again, there were numbers themselves.
I mean, technically the guidance was marginally above what was expected.
But again, cast your mind back in certainly sort of
eighteen months or so ago. This company, you know, as
our Americans colleagues would refer to, they were beaten race.
They were substantially beaten numbers and then raising guidance significantly.
Speaker 3 (13:36):
So we've not seen that.
Speaker 10 (13:37):
So again, the rate of incremental beaten rays the cadence
of that. The momentum behind that has eased significantly. Part
of that's a base effect because the company is obviously
significantly bigger than it was. I don't think it has
any near term fundamental consequence, but you know, that explains
the Cheff price reaction. And again you know, in terms
(13:58):
of supply from a way perspective, they've got the market
to themselves.
Speaker 3 (14:02):
They've got an order book to die for.
Speaker 10 (14:04):
But the end of the day, if the users of
these chips, if the company's purchasing these chips, are not
monetizing fast enough, or they don't have the prospect to
generate a meaningful return and investment from the very very
high levels of investment they're spending at the moment, then
that raises a fundamental question about the whole whole AI
(14:26):
cycle that we're seeing at the moment, because clearly AI
is a great productivity tool, but again it comes at
a huge cost. Again, Microsoft from Memory is going to
spend around eighty five billion in CAPEX this year, but
the level of monetization that even the leading player like
Microsoft seeing at the moment is significantly lower than that.
(14:47):
And whilst the rate of monetization is increasing, I would argue,
or continue to argue, that the ramping monetization is nowhere
fast enough to justify such humongous levels of kapex being spent.
So some might argue, as I've said, there are parallels
with the dot com boom and the capex bubble that
(15:08):
we saw at that point.
Speaker 2 (15:10):
Yeah. Absolutely, let's see what people can actually deliver it
from all of their AI technology spend. Look, just very briefly,
in terms of the complexity of the sales to China,
the JOm administration wants to charge fifteen percent commission on
Nvidia's AI chip sales to China, which is a really
unusual plan. The CFO did also talk about that. Just
(15:33):
explain what he said. I mean essentially that it's there
needs to be a legal process for that to be possible. Right,
how do you see that?
Speaker 10 (15:42):
Yeah, on the I guess it's yeah, there are legal
complexities there. But I think no sort of discussion is
academic to some extent because at the end of the day,
if your potential and customer Chinese AI companies, which you know,
based on recent Bloomberg report though it appears that the
government is encouraging strongly encouraging Chinese AI companies to buy locally,
(16:07):
then you know effectively that there may well be no
market there. And also as a major geopolitical rival and
economic rival to the US. Again, why is China going
to buy US products? You know in the full knowledge
that fifteen percent of that is going to their main rival.
So I think the direction of travel from a Chinese
perspective is to double down on its efforts to become
(16:30):
self sufficient in tech. Those efforts are accelerating and the
country's making good progress. You've got the likes of Cambracon,
which is an a share listed Chinese company. If you
look at a stop price that's gone ballistic, is you
know recently the local suppliers are clearly benefiting from this.
Huawei as well, And I think on balance, you know,
(16:51):
the local AI companies like Alibaba, Tencent by do have
sufficient supply of chips on hand and are benefiting from
an increasing supply of domestic chips from the likes of
as I said, Huawei, cambricn SO net Net. With all
these geopolitical complications, on balance, I think it's highly unlikely
that Nvidia is likely to be selling meaningful level of
(17:14):
H twenty chips, or in fact probably none at all
from where we see it at the moment, with a
big question mark about their ability to sell Blackqell. So
you know it would be nice, but again it's all
tied up with a lot of geopolitical noise and complexity
at the moment.
Speaker 4 (17:31):
Okay, Robert Lee, Bloomberg Intelligence Senior analyst, thank you very
much for joining us.
Speaker 3 (17:37):
Stay with us.
Speaker 4 (17:38):
More from Bloomberg Daybreak Europe coming up after this.
Speaker 2 (17:42):
European car sales rose the most in fifteen months in July,
in a boost to the industry which has been battered
by President Trum's auto tariffs. Joining us this morning is
Bloomberg's transport or, reported Danny Lee. Danny, good to have
you on the program. So a big jump in sales.
What are Europeans buying then, by all.
Speaker 9 (17:59):
The being consumer concerns about spending in the past, the
money is flowing into new cars again and particularly into
the plug in hybrids and the fully electric models. Noticeably
saw German consumers continue to pile into these fully electric
vehicles in the various hybrids, so they led the way
in that front in terms of unis sales. At the
same time, continue to see petrol and DZE sales are full.
Speaker 3 (18:22):
But when you just look at.
Speaker 9 (18:23):
The cart brands as we set up this July sales number.
Biggest beneficiaries continue to be the VW Group, Renault and
BMW or seeing strong jumping sales high high single digital
or low double digits. So it's a really encouraging picture
given the strugs we've seen over recent months, particularly you know,
the kind of months we've seen over this year. It's
(18:45):
been a whip saw as we've seen new car registrations
in July up five point nine percent, whilst previous month
in July and June was down five point one percent,
So it has been quite a ratic over the recent months,
but at least there has been a real or flow
on in terms of car spending.
Speaker 4 (19:03):
How much is are subsidies playing into this bump in
in electric vehicle sales?
Speaker 9 (19:09):
Well, Ultimately, carbons are continued to position towards EV's and
you know, especially as these the threat of a ban
on combustion engines still looms into the next decade, so
you do see the European countries continue to think about
reviving subsidies and to try and jump stop the EV demand.
And we've definitely seen the benefits for the likes of
UK reintroducing grants for as much as three thousands some
(19:32):
three thousand, seven hundred and fifty pounds to stimulate EV purchases.
So they have seen in July a nice bump up
in sales and it is a kind of balancing out
for some countries who are still seeing a strain on budgets, frankly,
particularly the legs of France. So yeah, it's that subsidies
which are helping drive up sales for sure.
Speaker 2 (19:53):
Okay, well, how fragile there are European car manufacturers. I mean,
surely they'll they'll take this as good news. But the
upheave all of US tariffs has been enormous.
Speaker 3 (20:02):
Yeah.
Speaker 9 (20:02):
No, the Europe's co makers are really facing a delicate
balancing actor of the tariffs, and especially when you think
about their sales in a major market like the US
where they continue to still import from Europe and also
produce in America. It's the delicate balancing act. And you know,
as a reminder, you know, Europe's auto majors had downgraded
(20:23):
downgraded their four year earnings outlook not too long ago
because of the back of the higher tariffs. But the
Block is trying to lower tariffs on import for Russels,
is seeking to fast take legislation to remove all tariffs
on US and dust orgods and maybe that could help
EU car duties, which for now have a twenty seven
tariff level.
Speaker 4 (20:45):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Streets and beyond.
Speaker 2 (20:51):
Look for us on your podcast feed every morning, on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 4 (20:58):
You can also listen live each morning on London and
Dab Radio, the Bloomberg Business app, and Bloomberg dot Com.
Speaker 2 (21:03):
Our flagship New York station, is also available on your
Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.
I'm Caroline Hepka and.
Speaker 4 (21:12):
I'm Stephen Carol. Join us again tomorrow morning for all
the news you need to start your day right here
on Bloomberg Daybreak Europe
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