European Markets Tick Higher Despite Nvidia Results | The Opening Trade 08/29

Bloomberg: The Opening Trade Good morning from London. I'm Pretty Gupta alongside Guy Johnson and Oliver Crook. We're an hour away from the opening trade. Here's what you need to know. And Nvidia falling in after hours trading with an underwhelming forecast and production snags in its much awaited Blackwell trips, all while reporting a sales beat an additional $50 billion buyback. Telegram's CEO Pavel Durov charged in France on allegations of being complicit in criminal activity on the messaging app as the EU investigates the company's accuracy in reporting user numbers. Next up, it's a focus on European data. Germany and Spain both due to report inflation numbers today ahead of tomorrow's PC figure in the U.S.. Ali Yeah, we're about an hour away from the market open this morning. The cash open, the Nasdaq futures really driving the action here. The central bank of Nasdaq are delivering yesterday upbeat but just not good enough, down by one half of one percentage point this morning that is spilling over into the euro. Stoxx 50 were down by about 1/10 of 1%. If you look at the ftse 100 futures, however, they are bucking the trend up by almost one fifth of a percentage point. And then euro dollar, let's not lose sight of the fact that we get that CPI data out of Europe starting today. The countdown to the opening trade starts right now. The demand is so great, but we're going to have lots and lots of supply and we will be able to ramp starting in Q4. Jensen Huang, the CEO of a video speaking to Bloomberg's Ed Krug after the company dropped its numbers yesterday. The numbers were good. The outlook was a little bit disappointing. He was referencing there what was happening with the blank well, chips. What I find surprising this morning is that there isn't a bigger reaction. Yes. In videos down. Yes. We are seeing some weakness maybe in chip stocks broadly related to the company. But this does not feel like a risk off kind of a morning. And I find that a little surprising, Kristie. So, Ed Ludlow, how the conversation with Jensen Huang, as you said, Kruk, who is actually my father, is he? Yeah, we were both on the mine, clearly. All good. All good. No, thank you. You clearly made an impression. This is a really fascinating one because I'm actually waiting for for the bigger market reacts that we didn't get off of this necessarily, even though these were good numbers from from a sales perspective. I'm in a little bit of deja vu there from Microsoft Azure, Apple, you pick your big tech name. Well, if except the standard so high and then didn't meet it. Absolutely. And I wonder if that sort of market reaction really is fair for Nvidia, maybe not in the sort of cosmic sort of, you know, sense of it, but really, is it actually accurate? Are we going to see if we go for the next 24 hours, 48 hours? I mean, it seems like what is really fundamentally different today after those numbers about the Nvidia story, it feels like a tactical story, doesn't it? They've had a few issues they're struggling to get. Maybe the black wall chips out of the room in the way that they anticipated. The market was anticipating so much, looking for maybe an excuse maybe to sell negative sentiment going into the numbers. We get the reaction. Maybe therefore we deserve on that. But but is it just the tactical story? Is there any sort of strategic shift here in the narrative around what is happening with a I, I struggle to see it in this quarter's numbers. I struggle to see it, although I thought it was interesting that and the clear played l Blueberry made this point yesterday that when talking about enterprise demand, that's where we're starting to see the softness. Consumer demand is still fairly strong when it comes to the broader tech sector as well. We'll get to that in a moment. But when it comes to that enterprise demand that maybe where you're seeing we're still seeing growth, but that growth isn't as fast or as accelerate as well, especially when it comes to the HYPERSCALERS, They're still making about 45% of the revenue, but is still not the biggest kind of bet there. I should also add that when you talk about the diversification space, you're still seeing a bit of a struggle on that front. So they're really still heavily dependent on on those other folks. Plus weakness, I should say, in the automotive sector. I thought that was interesting. Not much reaction broadly in the market, is it video? Can I say this idiosyncratic? Is it is it a single stock story that we're watching unfold here? Because at the moment, Nasdaq futures are down by half of 1%. It's not a big move. So we're seeing them come lower. Yes. Some of this was priced yesterday. Yes. This is something that we factored in in terms of the session that we saw Wednesday. So maybe Thursday is just an aftershock. But nevertheless, this was a this was a company's set of numbers that was equated to and we all did it. And we all had the story yesterday afternoon comparing it to a non-farm payroll number. You saw the non-farm payroll number did at the beginning of August. In terms of concerns around a recession. We are not seeing that kind of reaction this Thursday morning. And how much of a do you think that the anticipation was around the negative space around what is a very significant market event in a week when there's not a huge amount going on within the markets and looking at those sorts of things, you know, and how much of it was sort of outsized there. And then the reality of it maybe just not delivering in the same way. And we'll out to the point as well when you point out this kind of negativity going into it, the down the hedges on the side were actually quite significant going into the numbers. The market closed down or NVIDIA stock closed down 3% ahead of the numbers. So people were expecting some sort of pullback, some sort of disappointment to a greater degree, at least than they have in previous quarters. The options market had a 10% swing either way. Yeah, that was about right. Yeah. It turned out to be at one point as the Asia stocks fall on Nvidia forecast earnings call kind of unfolded down 8%. So the options market did see the swings and we did price some of this. So some of this has to be protected. Some of this was anticipated and priced into the market. You also saw CrowdStrike out with numbers last night. Actually, the numbers look so. Right. The outlook is where kind of the disappointment maybe came through. CRM Salesforce actually looks pretty good as well. They're going to focus on profitability. Those numbers look okay. Is tech ring fence, is tech a different story? So everything else or is there a wider kind of read across into the into the into the bigger economy story that we're kind of matching the macro story. Thorsten stock was out with a note yesterday talking about the CapEx impact that the spending on on video chips and the whole story is generating at the moment how big that is. So maybe that's the translation effect, but it feels weirdly ringfenced this morning, this tech story. Well, there's there's there's two pieces to this, right? There's the again, Bring It Back the enterprise story, which is, by the way, where you saw a slight softness, slight pullback in Salesforce and in the CrowdStrike numbers as well. It was coming from, again, the big those bigger players. If you really want to macro this to your point about the nonfarm payrolls, you could make this argument that some of the business spending, some of that CapEx spending, for example, is slowing down and that is perhaps the macro, rather that to your point, markets aren't necessarily reacting to. But this is also goes into the point of kind of how do you play this this next level. If you don't invest in NVIDIA, you invest in the adopters that second level of adoption, but they don't have the cash spend and the CapEx spend. Your apples, your Microsofts, your Amazons do. Can I take it even more macro? Hit me. Hit me. All right. So we also have to talk about the European inflation data that we're getting out today. We're counting down to the Spanish number, which comes in in just about 54 minutes time. We're expecting their 2.5% year on year, 0.2%. That is not an exceptional number. That is still above the ECB's, you know, target, but it's pretty good. And I don't think it's going to do anything to dissuade the ECB from moving in September. And what we're really watching closely is the German number. Now, we're expecting that to come in at 2.2%. That is really, I think, within striking distance of what the of what the ECB wants to see. And the month on month figure, we're expecting dead flat out of Germany. Bostic is worried that inflation is going to reaccelerate. Yeah but in the U.S., how big a risk is that? Because the European Central Bank seemed more sensitive to that risk. Certainly you saw that coming from Philip Lane when he was talking a Jackson Hole. You heard that from the governor, the Bank of England as well, Andrew. But yeah, I think it's now we're going back into the narrative. We're slowly creeping back to the narrative of a tale of two stories within Europe to your point about kind of Spain and Germany dynamic can turn out about Spain forever. Will put that on pause for a sec. But then also what's going on between the states and Europe, Because if we are seeing Europe, to your point, fall on those inflation numbers and have those underlying growth worries, the inflation narrative separates them yet again. Just when the Fed, the ECB, were thought to be on the same page. So let's identify as a couple of those risks to the sort of the narrative that inflation is actually coming down. In Germany, for example, it's Commerzbank is expecting that to sort of flatten out and that actually that coming down is going to stop. But also what you're talking about is wage bargaining. There are unions that are asking for up to 7 to 19% over the next 12 months. So the wage story is still very much alive. And that's sort of the medium term threat. I think longer term, we need to think about the tariff story and what is going on with China and particularly the impact that that has on the German economy, both on inflation and in growth. These stronger euro. It's going to be a factor in the decision this year. 112 Yeah, Yeah, it's going to be a factor. You need to kind of think about maybe I do think it's going to have a material. It's not gonna have a significant impact at this point, but it's just worth bearing in mind in terms of the effect that it's going to have a view about a parity right now that will be a different narrative. It absolutely would be. And we should mention, as long as the top of the euro cable continues to see strength, it's the stalled weakest story that's driving all of it. And we should tease the guest that we've got coming up. We've already teased as that. That's classic. Get solid. That solid that. That's all. Well, let's talk a bit about what we've got coming up on the show. The Jp morgan's Matthias Rescue is going to be joining us shortly to talk about the market themes. We'll talk about what is happening with the Nvidia story with Radio Free Mobile's Richard Windsor. Just posting a note talking about the fickle markets at the open. We're going to speak to Michael Falcon from Titan Capital coming exit. Murray and Alya is going to be joining us to talk fixed income a little bit later on in the show. What is the rest of the day look like? Yeah, a lot going on in the macro space. After that. We've got Nvidia out of the way. We're looking ahead to the payrolls numbers next week as well. But 1 p.m. UK time we get that Germany CPI, we're talking some of that regional breakdown about 9 a.m.. So I think you're going to be breaking that down for Bloomberg TV. But then we also get some other data out of the out of the UK. 1:30 p.m. UK time got a little bit of a data deluge. Some central bank speak as well. Philip Lane Joaquin Nagle And then of course Bostic you already gave him a shout out earlier, continues to hit the wire. But for me, I've got to say the highlight of I think the next 24 hours for me will be that 2 a.m. if you're still awake here in the UK. Kamala Harris Tim Walz giving the first joint interview. And this is a really big deal. They've been very treading very carefully when it comes to speaking to the press, having the first televised interview, giving any real policy signal. It's been working for them in the polling. What happens in the next 24 hours with those numbers? It's it's the media versus the press. All steam seems to be at the moment. There's real tension building up right now. You wonder how they're going to manage it. I fact that the media is frustrated, tells me everything that that they are managing to actually deliver a message without talking to the media, which I think is fascinating. It it is. And it also almost kind of rips the page out of the Biden playbook here a little bit because he also for I mean, for perhaps for different reasons, was very hesitant to do sit downs with The New York Times, with CNN, only until he was really called out, pressured to do so. What I think is interesting is that despite the negative space around policy and things like that, everything that the Trump team has been saying hasn't really been able to stick nonetheless, in that void. I wonder that now if you can actually get some teeth into what they're actually planning to do, that the attacks become a little bit more salient for the Trump team. I should also mention there's another piece of news coming out of the US politics team, especially as we're trying to decide what is going to have an economic read through what the policy story looks like. The Supreme Court halted Biden's student loan forgiveness initiative that he had. And the reason this matters from economic standpoint is because the criticism around that from economists was that was stimulatory. It was actually pushing against some of that kind of rate cut help and that a rate hike, I should say, that Sherpao was trying to feed through the economy now kind of need it fiscal versus monetary. Yeah, it's been an interesting tension. Let's talk about what else we need to know what is going on this morning. Senior White House official Jake Sullivan sat down. For a rare set of talks with a Chinese general, a top Chinese general. The meeting of between these two marks the highest level public exchange between a Biden administration official and the People's Liberation Army to play. Both nations are trying to prevent regional spats spiraling into open conflict. Berkshire Hathaway has become the first US firm outside of the tech sector to top the trillion market value mark. Warren Buffett's group has outperformed the S&P this year with a 30% gain. Berkshire joins an exclusive club dominated by tech giants, including Alphabet's. Matter. In video, we mention that name again. It's interesting to see what she's doing in terms of selling quite aggressively at the moment. Take a signal from that, if you will. I'm Pavel Durov, the chief executive officer of Telegram, was charged in France for alleged complicity in the spread of sexual images of children and other crimes, such as drug trafficking on the messaging app. The billionaire has been ordered to post €5 million in bail and is now banned from leaving France. Telegram didn't immediately respond to a request for comment on the charge. Is this again an idiosyncratic story? Is this telegram related? He has been adamant in resisting pushes from various European countries to open up to provide evidence to help with law enforcement. He has not done so. Therefore, is this just a telegram related issue? Or if you're Mark Zuckerberg should be worried about what is happening here? Mark Zuckerberg. Elon Musk, Evan SPIEGEL over Snapchat, you name your social media company, they're paying attention to this because this has been such a big concern of misinformation, of criminal activity as well. To me, what I thought was interesting, I'm having a little bit of deja vu here when it comes to the EU. All you're going to love this is that EU goes tough on we'll call it big tech if put Telegram under the interview. And yet the penalty, even the bail here is €5 million for a billionaire. Yeah, it's pretty remarkable. I mean, listen, I'm not a legal expert, but when I saw 5 million, you know, for a billionaire, it's not even a drop in the bucket. I mean, I also think it's interesting that it's giving in the EU level is that they're also looking into investigating the EU level about these sort of numbers of user numbers that that telegram has within Europe that would actually open them up to more stringent regulation. If they're over that 45 million user line they have claimed. I think the last one was about 41 million. So we'll see what comes out of that. But clearly there's a lot of European sort of focus on Telegram, the 5 billion, isn't it? But he's not largely France, right? Yeah. He also holds, I think, four passports and he does. And so clearly there is a concern around that. But he's now being told he is not allowed to leave France, which I think is is for a globetrotting executive of a big tech company, is quite a is a significant moment. Is a significant moment. I think we should also mention there's there's also a lot that we don't know here in terms of the communications between the French government and him. Like what have they what have they refused to release? And of course, also I saw that from Politico saying that actually they had issued this arrest warrant back in March. So this is something that's been going on in the background for a lot longer, I think, than yeah, quite quite a bit of a build up there, which is interesting because they were caught he was caught at airport. Knowing this you think you would of of avoid avoid the area but of course that's something we keep in mind. What kind of precedent are set for the EU, for social media companies and of course for the geopolitics that are at play here as well. Coming up on the program, let's stick with the EU. New car registrations out of the region. A little bit of a mixed bag. We're going to break down the numbers and you know which engine type has been faring the best. Plus, we'll check in on her. No record in the open after the drinks maker sounded off warnings on U.S. and Chinese demand. But up next, we stick to our top story this morning, which is Nvidia dominating the market narrative. But how important will the European inflation prints be? I'm going to be diving into those details next. But any questions for us or for our guest? Get involved in the conversation. I b plus b B2B go is the function on your terminal. This is Bloomberg. I'm not concerned. I think if you look at India, they still control this market and will continue to, I would say, dominate the space over the next 3 to 5 years. Delivering chips at this rate, at this scale is fantastic and unprecedented. I don't think there's much of a revenue issue here of a growth issue here. I think that a little bit of a push back is probably more around the margin situation. That type of growth isn't necessarily realistic or sustainable in the long term too. It's not necessary in the long term either. At the end of the day, we still sense enormous and urgent demand across the board, and that really mitigates, in our view, the risk of a pause in shipments as customers wait for the next generation of chips to be available in volumes. Some of the guests we were talking to here on Bloomberg Television reacting to in videos, good numbers, underwhelming outlook, I think probably is the way of putting it. But we're ahead of European investment grade finance at Jp morgan, sitting around the table with us this morning, not necessarily your bailiwick, global technology. So we'll just kind of bear that in mind. But is tech is tech isolated? Can I put in video in its own bucket? Can I put tech in its own bucket? Think about what is happening kind of with that narrative and the API story and then think about kind of what else is happening elsewhere, kind of separate the two. It certainly feels like it's certainly, you know, the tech story has been a lot around, you know, adoption and, you know, specific stories around that rather than the overall economy. I would say that in a slowing economy, you know, are they protected completely? I don't think so. But it might be a bit early to use that as the story that that's driving this. So I can put that over there and then I can think about this lovely soft landing everybody else is thinking about and kind of what is going on. Does it feel like maybe in video is having a soft landing this morning? Do you believe in the soft landing? Should I invest around the soft landing? Are people telling you that the soft landing is the narrative that they want to be positioned around? What are you hearing right now? What is your sense of what is going on? Yeah, certainly, you know, the market wants to believe in it. The market wants to be positive about the, you know, the inflationary story rates coming down. It was extremely positive about it. In the beginning of the year. We took a step back as we were going through for the first half of the year as rates weren't coming down as quickly as the market was hoping. I think we're back at that now. Let's remember, you know, we're coming from an exceptional period of low interest rates and that builds up bubbles everywhere in the economy. And, you know, constructing a soft landing from a central bank point of view would be, you know, I wouldn't call it the Great Escape, but, you know, pretty much close to it. So I think there are risks to it. The market wants to believe it in it right now. But, you know, I don't think we are fully out of the woods yet. So one of the issues in the tech space or one of the concerns around it has been the fact that so much of Nvidia's revenue and I'm going to macro this out, don't worry, 45% of it's coming from the HYPERSCALERS and it's there's a concern around whether CapEx spend can really come from smaller tech companies that aren't your your Mach seven. But this is coming in the context of a lot of companies having issued so significantly post-COVID with super ultra rates that they can access. And I'm curious if you think this is a market where corporations on both sides of the Atlantic are overleveraged. We don't think so. Certainly not in the investment grade space. So, you know, if you look at cash flow production of, you know, the investment grade space overall, it's been very Mathias Reschke, JPMorgan European Investment Grade Finance Head solid. I would say that, you know, if anything, leverage levels of the average corporate is probably, you know, below well, you know, below cycle. So we feel pretty comfortable with, you know, with what companies have been doing. We've also seen a relatively slow M&A market over the last 18 months. So, you know, that sort of that aggressive build up of leverage that we often see driven by that, you know, has been fairly muted. So, you know, I think we're pretty comfortable with it. But give us a give us a timeline on that then When does that change? And this is coming, I should say I know you're in the investment grade space, but when you have conversations in the private equity space, there's so much money tied up in those alternatives because they're waiting for those capital markets to properly open up. What does that time horizon look like in your view? So we've certainly seen the M&A sort of activity increasing over the last, you know, say 9 to 12 months. We've seen, I would say a decent year of M&A financings. But, you know, nowhere near the peaks that we've seen. You know, ultimately, you know, activity in that space is driven by confidence of boards and the economic outlook. You don't want to do a massive acquisition into a downturn. So, you know, we feel pretty comfortable that companies will become more positive. And certainly from a financing point of view, we are ready for it. Well, from a financing point of view, then, does that mean in the next 12 months we're going to see an issuance build up or more on the sidelines given the macro risks that you're talking about? So if you look at this year as an example, we're up 25% in issuance volumes compared to last year. That's partially last year being a low year. But this is the. The second highest issuance activity that we've seen outside Covid. Yeah, so it's been a fairly strong year. You know, we've had we've played catch up this year. Generally, you know, we had to convince issuers in the beginning of the year it was that it was the right time that rates weren't coming down any further. And this was already a good environment. But I think everybody got that point and we are now in a pretty healthy environment. I don't think we're going to see a massive spike from here. But, you know, we're back into what we see is a regular market that is functioning well and we get inflation data over the next couple of days out of the European Union. I'd like to know from you where is your focus geographically, but also within the inflation complex? Yeah. So I think that in Europe, obviously the inflation, you know, sort of speed has already, you know, come down more materially. The economy is not as strong as the US One. I think the big question has been around the U.S. where, you know, unemployment was low, the economy was growing well and inflation was coming down a little bit more slowly. We've seen recent data in the, you know, in July and August that obviously move the market and also, you know, sort of helped the Fed come to the conclusion that inflation is now less of an issue and unemployment in the economy is more. So for us, the focal point of the sticky inflation is still the U.S.. And what about what are you expecting in in Europe and in Germany and things like that? Are you expecting that that that story to be intact, the sort of disinflationary narrative to remain intact and the ECB just keeps going and the markets got the pricing correct? Yeah, I mean, Germany is an interesting point because the economy is very, you know, globally economy driven. So, you know, whether German companies, you know, in the inflation environment in Germany continues or not is as much driven by what happens not only in the U.S., but particularly China and obviously in China. You know, we've seen economic data recently that's been weaker than expected. I think that's actually the biggest question mark for me in the global picture at the moment, which comes back to the point that I made earlier. You know, are we really going to get this miraculous soft landing or are there other factors that potentially, you know, so we have those estimating the China risk at this point. I think markets are underestimating that. The effect, the global effect of the China slowdown, I mean, Germany is already seeing it. What about anybody else? Well, I think that, you know, I think that's a real risk. And I think, you know, it's pretty you know, it's a it's pretty you know, it seems pretty obvious, you know, how reliable our data coming out of China. That's always a bit of a question. But, you know, certainly it's been the, in my view, the biggest swing that we've seen over the last quarter in terms of, you know, where global growth is. Okay. That's nice to see. Thanks for stopping by to see us. We greatly appreciate it. Matthias Resco, head of European investment grade finance at Jp morgan. Coming up, we're going to focus back on what is happening with NVIDIA revenue forecasts missing some of the most optimistic sales estimates. Richard Windsor though I've just read his note, his take on what is happening here. He actually sees this as a pretty solid set of numbers. He thinks the Blackwell issues are really that material and he thinks that actually next time round maybe in video beat expectations that have been lowered a little bit nice little maybe a bit of sleight of hand may be coming through from video. We'll focus on that story next. I'm surprised, guys, that we're not seeing a bigger market reaction this morning. I'm genuinely a little bit shocked that that actually video is down as much as it is in video as misses missed. I can sense the disappointment and I don't know, I we saw volatility at the beginning of the month based on what was happening with that payroll number in video has not delivered that this time around. Anyway we'll talk about it next. This is Bloomberg. It's not necessarily. Sometimes it's deals with a particular regional service provider that's been funded by the government. And oftentimes that's the case in the case of in the case of Japan, for example, the the Japanese government came out and offered subsidies of a couple billion dollars, I think, for several different Internet companies and telcos to be able to fund their air infrastructure. India has a sovereignty initiative going and they're building their air infrastructure. Canada, the U.K., France, Italy, missing somebody, Singapore, Malaysia, you know, a large number of countries are subsidizing their regional data centers so that they could become able to build out their infrastructure. They recognize that their countries knowledge their country's data. Digital data is also their natural resource, and not just the land they're sitting on, not just the air above them, but they they realize now that their their digital knowledge is part of their natural and national resource, and they are to harvest that and process that and transform it into their national digital intelligence. And so this is a this is what we call sovereign air. You could imagine almost every single country in the world will eventually recognize this and build out their air infrastructure. Jensen You use the word resource, and that makes me think about the energy requirements here. I think on the call you you talked about how the next generation models will have many orders of magnitude greater compute needs, but how would the energy needs increase and what is the advantage you feel Nvidia has in that sense? Well, the most important thing that we do is increase the performance of and increase the performance and efficiency of our next generation. So Blackwell is many times more performant than Hopper at the same level of power used. And so that's energy efficiency, more performance worth the same amount of power or same performance at a lower power. And that's number one. And the second is using local cooling. We support air. We support air cooling. We support cooling. But liquid cooling is a lot more energy efficient. And so so the combination of all of that, you're going to get a pretty large, pretty large step up. And video CEO Jensen Huang speaking exclusively with our very own Ed Ludlow. Let's bring in another voice here on those and your earnings. Richard Windsor, founder of research company Radio Free Mobile and longtime cell site equity research analyst, joins the program this morning. Richard, a pleasure to have you on the program. Look, you're very I'm just reading your notes here. You're very optimistic around these results is perhaps a one time kind of bump in the road for you. But I'm curious if you're concerned I'm going right into it. If you're concerned about the diversification story. One of the criticisms Nvidia has had is that they're really catering more to the business clientele, whereas consumer adoption isn't as fast as perhaps the stock or even their acceleration may suggest. How are you thinking about that? That's a good question. I think I mean, the issue here at the moment is, is that the products that the company is selling are only for enterprises because they cost hundreds of thousands of dollars each and only go into a datacenter, which no, no consumer owns. I think the what's really happening at the moment is, is that you've had this huge build out phase and now comes the phase in which all the services supported by this infrastructure needs to be rolled out to consumers. And there is some question mark, some debate around the uptake of these services. But if you look at the CapEx, if the big players look at Google in particular and measure that are building a AI like crazy for the services that they already own. You know, I think from that perspective, the adoption of in consumer services is pretty much on track. I don't I don't see any change from these results in that expectation. So in these results, though, and we have a great kind of graphic up right now that's showing growth in every single business unit of NVIDIA, save one, and that's the automotive unit. And Richard, I know it doesn't make up the bulk of their growth or the bulk of their earnings, but I'm curious about your take on this particular part of their business and why that weakness may exist. That's very simple. Twofold, two answers to that question. The first one is that if you look at the automotive sector, the automotive sector has been pretty weak right now. And so from that perspective, obviously that flows through into demand from NVIDIA. The second one is autonomous driving. Problem with autonomous driving is and that's what Nvidia is selling its products for. Lovely idea, but no one has really yet got it to work very well and so consequently the expectations for when that's actually going to work properly remain very uncertain. And so obviously automotive customers are nervous about making large commitments to a video when they don't know when they're going to be able to generate revenues from the silicon that they buy. Richard, do you think the stock market reaction was an overreaction? Do you think it was about right? Do you think it's about letting a little steam out of this story? What do you make of it? I think there's a it's any any excuse to take a bit of profit. You know, the stock's down ten acts in the last 18 months or so. Now, the thing the thing that is very interesting is if this had been like a 50 times multiple stock of 70 times multiple stock shares would be down 30% today. You know, you're looking them down seven. And, you know, it's quite possible that it doesn't go much worse than that. So. And that's really playing directly into the excellent performance financially that in video has put up. And that's why the shares, despite going up so much, are still only on 30 times forward, which is in line with the rest of really big tech and in video is still growing faster. So, you know, there is a value, there is valuation support there. Is there an issue around Blackwell? Is it just a tactical story rather than a strategic story? I know there was definitely a problem. You know, these things happen. It turned out when they tried to make the thing at scale, they couldn't quite get the yields that they needed. And so what they did was, is that they redesigned, made some small design changes in order so that the yield at TSMC would be much better. And that's really all that's happened. It's called several weeks of delay. The key point here is there's no competition for this product. And so consequently, if is delayed for a few weeks. So what? I mean, the demand is still going to be there. The customers are still going to roll in. It's not as if they're going to go and buy it from somebody else. So, you know, very small hiccup, which I think is irrelevant once this thing starts shipping in scale. And Richard, I'd like to drag you away, if I might, from a video for just a moment, because we also have a product launch coming from Apple in just a couple of weeks time. And it's sort of surprising that, you know, ordinarily to go 7 minutes into a conversation about tech and not mention that. What are you expecting there? Well, what I'm. I think more of the same. Really. What you're going to see is incremental improvements, probably focused mostly around photography, computational photography, the cameras, because that's at the moment is what is differentiating Apple's products from everyone else's. We are not yet in the at the point at which Apple is going to make a major design revision. So frankly, it's going to be more of the same that allows Apple just to keep its edge over Android in the digital ecosystem. Yeah. And also elsewhere in tech as well. We've been watching very closely what has been happening with Telegram and thinking about the sort of precedent that that sets for some of these companies in terms of moderation. I'm wondering sort of your initial reaction. I know there's still a lot that we don't know about this situation in France with the founder and CEO. What is your reaction? Do you think that it has a ripple effect or is this just a telegram story? No, I think what it does is it reignites the whole free speech debate, and it also reignites to a great degree the moderation debate. All these social networks, are they platforms or are they publishers now that publishers? Sorry, big money for their platforms. Arguably, they bear no responsibility for the content that's put on their platforms. If they are publishers, like, say, you know, you guys, Bloomberg or the New York Times or anyone else, then of course they're responsible for the content. And I think that's really what the real that's what the debate that's really ignited as a result of this incident. Richard, when we're talking about I'm going to bring it back to to the tech story and the big tech story, I should say, and ask you more about the liquidity. And I'm curious, we talk about this in the context of NVIDIA, the Hyperscalers driving so much of the growth. But I'm curious in the broader story, it feels like Tech is able to rally and almost invest in their CapEx and their R&D and and even deal with with fines in their social media space from the EU and in other parts of the world because of this massive cash cushion that they have. How long does that last, Richard, especially if we have a potential downturn in the future? Well, I mean, the thing about it is even if there is a downturn. So let's take let's take the big guys, Apple, Google, media platforms, Microsoft, even if there is a downturn, they're still going to be generating cash and over fist. These are mature, well-run, highly cash generative businesses. And so from that perspective, their ability to invest is important, to differentiate, ability to invest from willingness to that their ability to invest, an unimpaired willingness to invest. Maybe the shareholders are putting a bit of pressure on them and saying, look, you're investing too quickly. There's a downturn coming, perhaps you should slack off a bit. So I think what would most likely happen, there'd be no change in their ability. I think they may in a downturn, of course, then I would expect them to slow down their investments. All these companies are going to capture the value in the story If they're not going to, who will? Good question. At the moment, when we look at it right now. So my position is, is that the a generative is a bubble and the bubble will burst. When that happens, there will be a reckoning. And that means that anyone who hasn't got a lot of resources or is not generating cash is going to have to consolidate or raise more money, which is going to become increasingly difficult if sentiment sours. In that scenario, the biggest survive. So what know? Let me give you a classic example. So let's say the bubble pops and stop. It gets into trouble because it doesn't generate any cash. Amazon acquires it, it becomes part of Amazon, and that is Amazon's generative strategy. And I think you could say the same thing for Microsoft, an open A.I., and certainly I would not be surprised to see Apple also acquire one of these big generative A.I. companies if if, if they start to get into trouble. Richard Windsor, founder of Radio Free Mobile. Thank you so much for your time today on the top story of the day. Let's take it from the tech story to the political story. We have live pictures coming in from Brussels right now. There's an EU foreign ministers meeting that is happening in Brussels. This was supposed to happen in Hungary. That was changed after Orban's visit to Russia. Let's have a listen to what they're saying. And they have a ministerial level. This will be an important moment in order to make everybody understand why. Some date Since the start of the war in February 2022, Russia has fired two games. Ukraine more than 14,000 drones, one for 4,000, almost 10,000 missiles. Ukraine, Gaza, Venezuela high on EU FM agenda U.S. 99,000 9500 last week. They must be ready about 10,000 and many more guided bombs. You know, this kind of bombs that are being launched at the high altitude and high speed and they glide hundreds and many of them are being launched from Russia. The good news me discussed about it is that we have we started using the revenues from the windfall profits from frozen Russian assets in windfall profits from these frozen assets has been sent to Ukraine and sent to the member states. We will provide with this money more military equipment to Ukraine. The important thing is that for the first time we are financing directly the Ukrainian industry. We are providing financing for the Ukrainians to make their own industrial capacity to work. 1.4 billion of have already been sent. After military comes diplomacy, we have to be more proactive. Also, in this field, we will have a change in our global outreach. And hear about Ukraine and President Zelensky. Peace plans. So the first item of our very busy meeting today will be about Ukraine military support, diplomatic approach, lifting restrictions and increasing the support of these brave people who have surprised the world by launching an audacious attack in Russia, showing that Putin's narrative was completely false. It's our great pleasure to have you with us today. Thank you. Thank you. Hearing there from Yosef Burrell and the man standing next to him, the Ukrainian foreign minister, Kuleba, who I will be speaking to a little bit later today. There are a lot of topics, guys, to talk about with Ukraine from the Zelensky victory plan that we sort of got the outline of this week, which we don't have any details on. That'll be sort of the top of the agenda talking to him. Also the bond restructuring story. And of course, what they're alluding to there is the frozen assets with the Russians. They've paid out the windfall, but they still have not found the delivery mechanism to make and to to monetize that $50 billion. They're trying to get to Ukraine at a time when everyone's sort of fiscal situation is a bit stretched and there's questions about how the financing is going to go going forward for Ukraine. I think the restructuring is fascinating. It's been a long time coming. We've been anticipating this. But but it sets Ukraine up for a little bit more stability in terms of its longer term story, in terms of managing that bond portfolio. And and it fits, as you say, only with the with the financing story. The critical bit here, though, is figuring out this peace deal. I am fascinated to see how Zelinski thinks this peace deal is going to work. And he's going to present it to Biden. We've got the UN General Assembly coming up. This is the pivotal moment I think everybody is now waiting for with the Trump Harris election story coming up. Can we get a plan in place that could work its way through that election and be ringfenced from that election? I don't know. But I'm fascinated to see how it's going to work if he has a plan that could potentially deliver peace. That's game changing for Europe. It's also a tricky one, I should say. Again, I'm to bring right back to the president story because if Ukraine is getting all the support from private investors to restructure from the EU, arguably from the IMF and the World Bank as well, there are plenty other other war zones as well around the world that are seeking that same kind of support and aren't getting it. So I'm curious what kind of Ukrainian precedent is set here in other for other parts of the world? Well, what's that one? Very carefully as well. What else are we going to be watching this morning? Stocks to watch. We've got the drinks make plan to record out with numbers this morning. It's it's a soft sell story in China and in the United States. I think we largely knew that. So I'm curious to see kind of how big a reaction we ultimately get to that. But it tells us more about what is happening to the consumer maybe than anything else. We'll come back to that story in just a moment. We are counting it down to the open here in Europe. This is Bloomberg. If it goes down, the market isn't. Let's talk about why. Rachel Evans, Bloomberg managing editor for effects and rates coverage for the US and EMEA joins us now. Not exactly your wheelhouse, but but nevertheless, Nvidia is down a reasonable amount, but not a lot. 3-minute MLIV The market's not reacting a great deal. It doesn't seem to be a ripple effect in a meaningful way at this point in time. Can I think of Nvidia as idiosyncratic in its own little bucket? Like is that a step too far here this morning? I think it's not idiosyncratic. I think it's something that people have been looking for. I mean, it's so much as you point out, that this kind of crosses my desk that we get into sort of thinking about single stocks and earnings. And video is such an important driver of the S&P and the Nasdaq in terms of their returns this year. I don't think anyone has been able to kind of take its eyes off it. You know, it's become to have the same weight as a Fed meeting in terms of how people are kind of looking at the earnings. So it's not necessarily idiosyncratic. But I think what we're seeing here is that the numbers were good. There's no big issue there. It's just that they weren't absolute. Knock it out of the park. Exactly. And it sort of speaks a little bit to how much froth has been in the market that we've become really used to seeing just absolutely sky high figures, sky high beats, and maybe we're just starting to see a little bit more realism come into the market. But let's not forget, these are still crazy good numbers. Like, you know, if if we are see this continue like that. ARPU is still very, very strong indeed. So I think kind of we need to sort of the market is digesting this. Yes, there was a little bit of disappointment. There's been a lot of hype, a lot of like putting money in, a lot of retail investors putting money in and expecting to see kind of, you know, to the moon type performance, you know, our bitcoin. But instead, you know, we've kind of started to see, you know, this is has to have some fundamentals and therefore people are just taking a little bit of heat out. How does the Fed play into all this, especially at a time when I was also supposed to be, in the words of Larry Fink over at BlackRock, the solution to our labour market problem is the Fed paying attention to something like this or still say the p e number tomorrow? The highlight I think the Fed has been very clear that it's looking at the data and specifically looking at inflation, but also labor and I think we've got a very important jobs printing next week. But to the degree that, you know, the stock market kind of does play into their thinking, it reflects wider concerns about growth, it reflects wider concerns about inflation. So when you think about in video, given how important it's been to S&P this year, it does give you a sort of read on the health of the tech sector, which has been a huge kind of like power of growth in the US economy. So I think they are looking at it and they are interested to the degree that, you know, it gives them a gauge on kind of the health of that sector and therefore a health of the wider economy, but not necessarily something that they're going to be watching as closely as as you say, you know, we've got GDP today, peak tomorrow, and then I think jobs next week is going to be the really big one. Yeah, I want to pick up on that growth data out of today. The Fed is going to be watching GDP or is it just for the Fed? Me, I guess. I think, you know, GDP is going to be the second reading. So we're not expecting to see anything monumental coming through in that. But like it's another kind of gauge of a healthy economy. And at the moment, the Fed is preparing to cut. It needs to see this data go the right way. So it's going to be something that they do. Check it out. Well, Rachel Evans, thank you so much for joining us. Bloomberg's managing editor for Effects and Rates coverage for the US and EMEA. Let's get to Joe Easton with the movers this morning. So we're watching the main chip makers in Europe today only following invidious, disappointing results that $32.5 billion in quarterly revenue not enough for the biggest bulls on Wall Street. And as we can see in video, down almost 7%. So we're going to keep an eye on the classic stocks here in Europe today the likes of asml p e Semi, also SD micro and perhaps infineon as well. Now remember, these stocks did slump in July amid the downturn in global markets and potentially a bit of room for upside in them. Keep an eye on that sector today. Meanwhile, we're looking at booze as well. Pernod Ricard is out once again. It's very negative in terms of their like. It's basically another profit warning, warning of too much inventory in the US. Also, a weak market in China for the maker of Absolut Vodka. But as I say, something that we've seen a lot of over the past year, look at these massive drops in the drinks stocks potentially that might be priced. And finally video games, CD Projekt beats expectations, sales up 30%, profit up 30%. It's the best performing stock in Poland over the past year, but a lot of sales on this stock. 12 analysts recommend selling maybe the is going too far. All right. Joe is in there with our stocks to watch. We are about a couple of minutes away from the opening trade across Europe. Stick with us. This is Bloomberg. It's the 29th, a couple of minutes to go until the start of trading here in Europe. In some ways, this chart is absolutely of relevance in video came out after hours. That was the big story. That's what we've got to price in first thing this morning. Just in terms of the clues it's going to give us. Basically, we finished at roughly the same level in Europe, but as the US markets went out, this is not a kind of clear and obvious discernable direction that we get from that, but it is an all about in video. I was hoping that in video in some ways and provide a little bit of a catalyst. In some ways it's reassuring that it hasn't only got a few just telling us, Yeah, Guy can feel your disappointment from across the room here. If we look at the euro Stoxx 50 futures basically dead flat. You know pricing in a little bit of selling this morning. I mean look at the footsie futures bucking the trend from what you're seeing across europe up about what 1/10 of 1% i should say. Of course, the Nasdaq is what we're paying attention to. That's sort of the mood music behind all of this, down about half of 1% this morning after those in video numbers, which now we're going to get priced across the market in just a few seconds. Time now, pretty. Yeah, it's an interesting one. We look a little bit closer, zoom in to what the potential movers might be. Joe, in the last block. Just walk us through a little bit, but we are still waiting for what the read across might be from a video because even if doesn't have a macro effect, to your point, it could still have a little bit of a micro effect. TSMC over the age of session taking a bit of a beating off those numbers, will it show up? And the ASML, the ACP, the Infineon, the chip story of Europe, that's one stock are going to keep an eye on some softness in piano Ricard as well. We're going to keep an eye on how that stock opens up as well. Also got those EU car registrations, I believe, at the top of the hour. At about an hour ago, we did see some weakness in those numbers. So we're going to see whether or not the market can actually digest it. But when it comes, it feels like from a macro point of view, were zooming back out. It is still that chip story that matters, but perhaps not from a risk sentiment perspective guy that we were waiting for. Maybe a little bit of a sum of all parts trade. Absolutely. But it's going to be interesting what the aggregate effect is, as you say. Let's talk about what the opening trade looks like. Here we go. Are we going to see some volatility? The trend thus far this week has been for no volatility. And I suspect we're going to see a bit more of that. The next big volatility event maybe comes tomorrow in terms of the the inflation data out of the states, but definitely next week in the form of the payroll number. So here we go. European markets are out of the gates. The Footsie 100 is weakening up a little bit 1/10 of 1%. The Stoxx 600 is up by less than 1/10 of 1%. The IBEX absolutely flat at the get go of trading this morning. Are we going to see a put no effect into the luxury sector? We'll wait and see whether or not that delivers on the CAC this morning. But it is absolutely flat as well. The dax is absolutely flat. If you have said yesterday that we're going to see a big move in NVIDIA and we're going to see very little reaction in terms of the European markets this morning one way or the other, I think you could be in a little bit surprised, but maybe the reaction in NVIDIA wasn't actually that big. But if you going to sell big tech, do you buy Europe? Is that the value trade? Is that where you want to position money? I don't see much reaction to that story this morning. Only deep dive, if you will. Yeah. Yeah. Looking into the sectors this morning, as we saw yesterday, we saw sort of chemicals outperform basic resources down this morning. Again, we have media sort of up one half of one percentage this morning. Real estate catching a bit of a bit travel and leisure just a bit to the upside, 2/10 of one percentage point. What we're seeing being sold today, perhaps not shockingly, technology is the second worst performing sector in Europe right now, down 2/10 of one percentage point and also energy down by about a third of 1%. She also mentioned we just got these CPI numbers from Spain and I think worthy of noting it month on month, harmonised Spanish CPI 0%. There was zero inflation in Spain in the month of August and the estimates were higher to to to your point and you pointed that out, the estimate there from a year on year perspective was 2.4. They're coming in 2.2%. So this is a really big deal. This is a a success story in Europe and arguably in the rest of the world where we're seeing it. Look at the corner by the numbers up. The core number is up, the economy is up versus expectations down versus last time. It is it's that sticky core that I think the ECB is worried about. It is. But I think as to energy prices, if you look at the sensitivity as well, it's from Spanish economy, of course, all of Europe is far more sensitive to the energy story. But within that, Spain, of course, has that as well. Let's bring it back right back down to the micro, because you were talking speaking of energy, the the story that's moving the markets this morning, the underperformance, you talked about commodities and the basic resources shell, BP total. That is where your biggest weights are coming from. I should also point out that Morgan Stanley strategists cutting European energy to underweight. So I'm sure there's a little bit of a read through there as well. Guy, You don't see much of a moving Brent this morning, so it's not coming off the fundamental story. As you say. It may be coming off that note. Yeah. We're seeing in terms of the stock story. So it's a sell side story rather than anything else. Let's go to some of the other movers and just see exactly what we're seeing here. We've kept an eye on what's happening. The luxury sector. You've had the the put a record numbers out this morning to just keep an eye on that. Elsewhere, though, in terms of the points, I can't really see a discernible trend this morning. Luxury is not moving significantly down on that. So you've got LVMH and L'Oreal, both of which have been really big drags recently on the French market. Actually performing reasonably well. As you say, you've got a mixed bag on the downside. SML Novartis, Diageo think you might be ex-dividend this morning. Nestlé and so are all seeing a little bit of softness this morning. Yeah, and we're just getting the opening price from Bruno Ricard right now up about one percentage point after flagging that sales in China and the United States are soft in the first quarter. That is sort of continuing a trend that we've seen for this company for basically the whole year. I mean, this is a company that is down 30% over the last year. So that is something that we watch very closely, particularly when we consider the possibility of an escalating trade war within with Europe and China. This is one of the only categories food and drink, where Europe has a surplus with China. Yeah, dairy products. The cheese is going to be an area you want to watch out for the cheese. I think we want to talk about yogurt as well. Yeah. So we're going to keep a lot of that. But that's in the grocery space. We're still have that right through in the geopolitical overhang over the chip space as well. ASML, of course, taking a little bit of a hit off of the NVIDIA numbers as well. Let's get back to that story, because even though it may not be having a macro effect, it is having a micro effect. Take a listen to a Jensen Huang told our very own Ed Ludlow yesterday. We're expecting Q3 to have more supply than Q2. We're expecting Q4 to have more supply than Q3 and we're expecting Q1 to have more supply than Q4. And so I think our supply, our supply condition going into next year will be in will be a large improvement over this last year. Jensen Huang, CEO of NVIDIA there speaking exclusively to Bloomberg about how supply continues to improve. Let's get another viewpoint here. Michael Falcon, CEO and co-founder of hedge fund Titan Capital, joins the program this morning. Pleasure to have you around the table. Thank you for joining me. Of course. Look, we have such a big anticipation, a ramp up to these and video numbers. And I'm not sure if you have individual thoughts on Nvidia, but I'm curious about why we're not seeing a bigger reaction here. Is this just kind of investors, the rest of the world really, even economists looking at this and saying this is a one off, this is not something to be concerned about, or is there a macro read through here? I'm not sure so much about a macro read through, but they obviously have had some some ramp up issues with Blackwell shipping. And, you know, that was partly expected. Michael Falken, Tidan Capital CIO & Co-Founder I think in terms of video after markets reaction, it was obviously some disappointment with the next quarter. Market has gotten used to them beating by about a couple of million, the beat by a billion. Now the talking down numbers better in terms of Q-on-Q growth around seven one half, 8% versus 15% in the last quarter. So that's obviously a concern. But they're going to make it up towards the end of the year. So I guess this all remains to be seen. You know, I'm having a little bit of deja vu here in that comment here, that there are production issues in the chip sector, potentially more supply than expected in the future. Doesn't this give you a little bit of tone of of 2021, especially when it comes to the chip space? No. Yeah. Obviously the chip space is hugely cyclical and it's always tough to predict when when the turn is coming. But so far a span has been a huge driver for foreign video, of course. In terms of what comes next. What are we looking at? Is that a read across into the broader market here that I need to be thinking about? How do I can I put it in its own bucket or do I need to think about it? How are you thinking about it in terms of how you're positioning your portfolios? Yeah, So from our perspective, you know, NVIDIA in isolation. Yeah, great numbers for several quarters in a row, but that spend being put to work in chips and GPUs has to come from somewhere. So last night Salesforce reported, yeah, they pretty much beat expectation by fraction top line but you have clear slowdown in the growth numbers coming from 11% first quarter 9% second quarter guide and 7% in the third quarter. So their apps are obviously seeing a slowdown in growth. So that suddenly is becoming more of a cost cutting story. And we see that just as an aside, example, Klarna, which is the Swedish fintech company that cut the workforce here, went up with it on Tuesday from 5000 to 3800 employees because of the use of A.I.. There you have a user example down there also cutting the use of Salesforce apps, which is quite interesting. So demand is moving around. So we're starting to see an effect actually beginning to happen if we see. I was going to say is this is exactly what Larry Fink of BlackRock talked about. The AI would basically take over the labor market and now you're seeing an actual effect of that maybe, but we don't know yet having an effect. It's going to be I client is an obvious example but but maybe the other story I thought was interesting yesterday we were talking about it was the fact that maybe some companies won't use won't use other companies to write their code, basically to use A.I. to write their own code, and you going to see huge savings as a result of that. So maybe that's one area as well that you want to think about as you see the effect coming through that you don't need to go to the CRM company, you don't need to go to the company that's going to write your software. You could do it in-house. You just need to have enough capability using the AI to make that make that happen. So we're starting to understand why the value falls in terms of the A.I. story. As the AI story starts to develop, do I stay in the States? Do I stay here? Can I look to Europe? If the if the story struggles, does that give me a reason to buy Europe? How does this change the geographical breakdown of how you think about where you want to put money to work? It's obviously US innovation first. It's been extremely impressive. Well, the valuations of S&P is quite high and expectations for earnings growth is mid-teens. Yeah. So do you want to buy that 20 times plus earnings? I'm not sure. You know, we're pretty much peak ish market near all time high on S&P, but we're also near all time high on DAX. Yeah, in Europe and in Europe, last growth data isn't exactly encouraging though. So yes, I'd rather stay in the US, but it's very top ish markets and there opportunities to be short. Okay. Are those opportunities in the tech space? I think several of the app developers are in for a tough time going forward. Can you name some. Yes. Salesforce, I think are in a very tough, tough spot. Tell us why the like. Explain that, though, even though these are some of the biggest companies are sitting on piles of cash and you're not the only kind of hedge fund manager to me to be talking about that. It's not a secret that so much of the smart money here has been driving these big moves in tech. But why not stay invested in the long term, especially in both a positive macro scenario where you do have an expansionary business investment cycle, but even in a negative scenario where plays a more defensive role, where is the downside here? Well, there's a lot of spend and there's a lot of upstarts coming out and there's going to be increased competition. So increased competition when you also have user cases like Klarna, they said they're going to ditch Salesforce. They said they're going to ditch work, they're coming forward. Yeah. So there's going to be more like flooring, like samples. So you're finding potentially smaller pie with increased competition. That's that's a tougher spot. And I want to just bring it back to the CPI number we just got because obviously this is what we're watching over the next couple of days to determine where the ECB goes in just two weeks time. So just to recap what we got, the month on month figure in Spain for the month of August, that 0% expectation was for an increase of 0.2%, so much better than had been anticipated. As Guy pointed out, the core a little bit stronger. What are you expecting in terms of inflation? Do these numbers actually matter where we get over the next couple of days to determine where the ECB is going? Or is that just kind of locked in? Yeah, I don't have a real strong view on ECB per say how much they're going to cut, but what the price down as was priced in and usually tend to be for you've seen the flip flop in the U.S. now we're pricing in hundred bips for the remainder of the year, a 35% probability of cutting 50 bips in September. So you're right, much faith in the market on this one. It's a tough call. Let me ask a little bit. Moving on, who do you have faith in to boost growth in Europe? Whose responsibilities as the ECB? I mean, you're talking about how there's basically been zero growth. Is that just the story that's going on, or are we just in a coma for these sort of months and years to come? Well, let's just wait for some fiscal boost. But do you think that that will come? Because, of course, there is like limited headroom and a number of a number of countries maybe at the EU level? Well, I think the the the national economies themselves, they have to focus on what's best for them and of course, at the broader EU level as well. But but I think that we're in for some pretty tough GDP numbers and let's say three or four quarters down the line and then fiscal has to come to help, you know, rates. Yeah, it's great when they get cut, but it takes some time to get them to work. Just look at the US, you know, the raising of rates took forever to work. If. If it has worked. Is equity going to lose out the credit scene? I just this is your kind of stick to kind of the relationship between the two and you trade that relationship. Are we seeing a value transfer from equity to credit? Do you see that happening in a meaningful, big way? What are the examples that you're seeing right now in terms of how that that is working? Spreads seem very tight at the moment. Yeah, I credit is pretty strongly bid too, so I'm wanting where the extra juice could come from there. Yeah, no, it's a great question because on a pure index basis you see high yield spreads at 300 and that's tied historically is near all time tight. So yeah, that's kind of a scary scenario. But outside of the bigger indices, there's a lot of dispersion happening. You know, companies have to refocus on rebuilding the balance sheet of these ten, 12 years. So nothing rates and tight spreads. You know, they've had coupons in the kind of mid-single digits for companies that are in some under some structural pressures. And when they have and come back and fix the balance sheet, they have to use equity. So what happens? Well, the dilute equity holders to the benefit of creditors and over time, you see more of that happening. Oh, absolutely. Several examples as of late, you know, lucid, the even maker having to spend a bundle to build out their factory in Saudi in and around production, you know, have a huge backer in the Saudi payoff but they've done convertible preferred a done common equity in what you know to help the balance sheet so you transfer value from equity holders to creditors. And I think there's going to be more and more examples of this. And we see that throughout the year. Maybe same example, you know, it's volume coming in, 5 billion ticket to be spent over time, but still at the benefit of the balance sheet in the end at the detriment potentially of equity holders like equity story. It's a hope it's liquidity transfer. Yeah. Yeah exactly. And credit that's a legal obligation but but it is a legal obligation. But how do you protect against the downside of that? Because right now it almost feels like in the last six months we've gone from almost a liquidity crunch, a conversation when it comes to like a short squeeze in the equity market driven by tack or even a bit into the Treasury market, there's been a question of kind of yield error there as well. How do you hedge that? Are we still concerned about liquidity? Yeah, liquidity is a concern that comes in ebbs and flows, as we all know. But but dive into the details of that. Where where's where are you seeing are you seeing any crunches? No, not at the moment. Obviously, there's days where there's volatility, as we saw the other week and in August. But it's not anything that is flagging at the moment. Usually liquid. It takes some time to to to show its ugly head, so to say. So it's a bit too early to say. And I think credit spread tells you to story. You know when it's high yield is at 300 but the hedging to the downside, what does that look like? Well, we usually take a long position in the credit and short the equity against it. Let's see. That is on by to see us. We'll keep an eye on this one looks like is going to be a story that's maybe got some legs. Michael Falcon, CEO and co-founder of Titan Capital, thank you very much indeed. Let's take a look at the big stocks, see how they're moving. The court in Europe looks a little bit like this first thing this morning. Is it a strong core? Is it a weak core? Clearly, you're going to see some effect coming through from in video, but it's not that great. Look at that. ASML is up this morning. That is fascinating, Ferrari. Take a look at the Ferrari charts over the last year. It's taken a significant leg higher of late. It continues that turn higher this morning. LVMH is up. This despite the warnings we're getting through in the drinks sector. It is tracking higher as well. Europe's call looks pretty strong this morning. What else are we watching? Joey, over to you. So, as you say, Guy, these chip stocks really holding up in the face of that decline for in video. Remember, $32 billion in quarterly revenue still pretty good. And these stocks already down sharply since that July selloff that we saw in the global tech market. So actually, most of the main chip companies actually had a bit of weakness in be semi. But remember, some of those issues within video were potentially stock specific on productions and not a huge read across today. Then in terms of the drinks stocks, another sector that's been battered really over the past couple of months, Pernod Ricard actually managing a gain of 2.2% despite warning of yet more weakness in both the US and China. Those key markets we're seeing Remy edging higher as well. Also, Campari sky I mentioned earlier, perhaps Diageo might be a next step worth bearing that one in mind at the moment, but not too much impact in terms of that update. Then there is a big move this time. It's going to be in the shipping space because we have got a bit of M&A. A.P. MOLLER-MAERSK is buying this company concentric over in Sweden. The maker of hydraulic pumps sells into the auto space. But look at that 58% gain for that stock. Clearly, unexpected bit of M&A news for us today. Then over in the energy space, it is driven by that Morgan Stanley note, Morgan Stanley saying they see weakness in the oil and gas industry in terms of the pricing, the crude price, gas price, that could potentially mean fewer buybacks in the energy space, according to our math. Got a couple of downgrades up here at Kuno Repsol, but they do still see value. One stock they like is Nestlé day over in Finland and that was the best performer on the Stoxx 600 in early trading as Morgan Stanley still recommends buying that one over in earnings the project quick look at that one it has been one of the best performers in Poland over the past couple of years, edging very slightly lower today. Earnings looking pretty strong for the video games. The maker of the Witcher games. Finally, a quick look at Reckitt Benckiser. Jp morgan downgrades its stock after seven years recommending buying the company. Now Reckitt has an issue around baby formula lawsuits in the US, and that's the reason Jp morgan no longer overweight the stock and that one's edging 0.5% this morning. Joe Easton from our equities team, thank you so much as ever. I just want to take a look at the sectors again and what's going on in the broader market here. Because we opened a lower, the futures were pointing down by just a little bit. We have every single sector in Europe up today except for energy and the best performer right now, guys, technology. It's amazing, isn't it? This is exactly what we wouldn't have expected this morning. You get an Nvidia beats, but then a little bit of disappointment. The stocks comes down, you're expecting some sort of translation effect. But actually, maybe actually the market's just looking at this Blackwell issue. And you know what? Actually, this is just a story that is going to get better. It is going to get better. They're going to fix it. The yields are going to go up. And as a result of which, maybe this is going to be good news ultimately further down the road. The market definitely want to see it sees the glass half full this morning. But can we also point out, though, that earlier this week, ASML did actually take a pretty big beating and they did last week as well. So the stock has been down for a little bit. And arguably some of the weakness going even into NVIDIA was well telegraphed. I'm sure the ripple effects were also well telegraphed there as well. Not to mention you love to say this. We're still in August. Light volume, light liquidity. That's that's a piece of the puzzle as well. But that could have exacerbated the moves to the downside. That could have the opposite effect. Absolutely. We did see that at the beginning of August. You saw a kind of a miss on the payrolls number. You get a lot of volatility. We haven't seen that volatility around the ability of numbers this time around. Yeah, maybe it could have been worse. Maybe that's just the kind of view this morning that actually all things considered, a 6% drop after announcing NVIDIA, we could shrug our shoulders that I'd like to see. I like to see how shows up in the U.S. before I before we before other shakes out because that could yeah we're not done yet and it could very much reverse as well right. If you see a 9% drop in after hour sessions and a great buying opportunity for people who were looking for an excuse to buy the dip into in video. Yeah, absolutely. Well, speaking of buying, definitely some weakness. Coming up, we're going to be talking about car sales stagnating in Europe as those that demand weighs on the sector. We're dive deeper into the numbers next and what it means for the broader sector. Stick with us. This is Bloomberg. Welcome back. 22 minutes into the market session. 23 minutes. This is what equities are looking like. They are a bit surprising, maybe given what we saw from NVIDIA overnight, but that is where we are this morning. We're up by around 2/10 of 1%. But a breaking news coming out of HSBC. George al-Hariri is going to be taking over on the second as CEO. We're now getting some management changes around that at HSBC. That is worth noting. We are seeing that it matters. He's going to step down from being the CEO of Global Wealth. O'Byrne is going to replace him. So that's going to be interesting to see how the effect of that comes through. Group Chief Operating Officer John Henshaw is also going to be leaving the bank. These are going to be changes that will take effect from October the first, i.e. a little later than the CEO shift comes through at HSBC. Keep an eye on this. We were waiting for kind of the details of what the shakeup is ultimately going to look like at the top of this big European bank, this big global bank. Let's talk about what is happening in the auto sector this morning. We saw some data coming through in terms of auto sales out of Europe. The data broadly roughly flat. But within that, there are some big geographical shifts there, some big engine type shifts that are really worth paying attention to only. Yeah, absolutely. And if we look at the macro story here, we're looking at the EU new car registrations over the last sort of two years and you can see post-pandemic. There was all that sort of buildup of demand. There were these sort of chip shortages. You saw those car sales just sort of recover. And this is just the top line for all kinds of cars. You can see now in the month of July, up by only 0.2% in the EU. That's really very, very flat. And that is across all the sort of different types. Let's try to drill into what we saw in terms of the actual engine types, because these have been in focus as we know. So too have diesels, gas and hybrids. Well, EV demand in July, as you can see, deliveries down 11%. This is moving sort of against the direction that a lot of people in Europe would like to see, a lot of the policymakers. But guess what? You look at diesel and gas, you're not seeing much better. In the month of July, they're down 10%, down 7%. And we should say that for the EVs in Germany, that figure in Germany for the month of July was down 39%. What is bucking that trend? Guy and Creedy what I think is interesting are the hybrids up 26% in the month of July as people sort of try to establish what's going on with the EV picture charging stations a little bit freaked out potentially about going into the EV story, particularly with the secondary market not holding up. Seems like people are going into hybrids. When we look at what this means for the actual carmakers, that is sort of an interesting story here. Tesla down 50% in the month of July, Volkswagen down 2.2%. Mercedes and BMW bucking the trend a little bit. BMW was up 2.8% there. So, you know, the sort of a mixed bag here. But as you can see, the EV maker and Tesla down 50%. Really a material move here in the month of July from what we're seeing. Certainly some are going to be keeping an eye on. And I think what's interesting is time out that bump into the hybrid space. I'm just curious how much of this from a as a ripple effect of governments around Europe kind of pulling back on some of that infrastructure spend when it comes to the RV story range, anxiety is a huge factor. You can deal with it by buying a hybrid. Toyota has been the biggest proponent of the hybrids and everybody took the mickey and said, Why are you doing this? You've got it all wrong. You ought to be making and accelerating the trend into EVs. Turns out maybe Toyota got it right in figuring out what was going on here. And what's interesting is also Mercedes and BMW also holding up. So part of the luxury trade still holding up, which is what we saw in a lot of when the rest of the auto sector was going down, the luxury was still holding up. That being said, guys, Porsche from the VW Group down 15% in terms of deliveries in the month of July. So, you know, not really sort of welcome news of course and Volkswagen value in the aftermarket when it's affecting to take in other products like that. The electric story for Porsche, you see some real value collapse in the aftermarket, which which may be maybe putting buyers off in the primary completely. That's going to continue to happen in the EV space until this sort of reaches maturity in that market. And we know we're going to be keeping a close eye on that for us. Coming up on the program, we're right back to the Nvidia story. Revenue doubling. Actually, we're going to dive into more of the details and the market ripple effect. Stick with us. This is Bloomberg. Jensen Huang, Nvidia CEO We made a mass change to improve the yield functionality of Blackwell. Blackwell's wonderful. We're sampling Blackwell all over the world today. We show people giving tours to people of the Blackwell systems that we have up and running. You could find pictures of Blackwell systems all over the Web. We have started volume production. Volume, production will ship in Q4, Q4. We will have billions of dollars of Blackwell revenues and we will ramp from there. We will ramp from there. The demand for Blackwell far exceeds its supply. Of course, in the beginning, because the demand is so great, but we're going to have lots and lots of supply and we will be able to ramp starting in Q4. We have billions of dollars of revenues and we'll ramp from there into Q1 into Q2 and through next year. We're going to have a great next year as well. Jensen What is the demand for accelerated computing beyond the hyperscalers and matter? Hyperscalers represent about 45% of our total data center business were relatively diversified. Today we have hyperscalers, we have Internet service providers, we have sovereign ice, we have industries, enterprises. So it's fairly fairly diversified. A site outside of Hyperscalers is the other 55%. Now the application use across all of that, all of that data center starts with accelerated computing. Accelerated computing does everything, of course, from well, the the models, the things that we know about, which is generative AI and that gets most of the attention. But at the core we also do database processing pre and post processing of of of data before you use it for generative AI, transcoding, scientific simulations, computer graphics, of course, image processing of course. And so there's tons of applications that people use our accelerated computing for and one of them is generative AI. So the Nvidia CEO speaking exclusively with Bloomberg's Ed Ludlow, Nvidia earnings demand for the black. Well, Chip, this is all part of the conversation. We were really thinking about it in terms of a market driver this morning, seeing kind of futures bid down. But in the market this morning, we've seen a real turn around. And in fact, technology is the best performing sector within Europe. Let's get more on this from Robert Lee of Bloomberg Intelligence. Robert, I'd like to just start. Do you think that this was a fair reaction to the earnings in terms of the move in NVIDIA? And do you think it was the correct one? Okay, Great question. I think on the fundamentals, nothing has massively changed. We've maybe got a bit more clarity on the Blackwell rollout, although there still is some residual risk that maybe A can come on to in a second. So fundamentals, I think, you know, it's sort of steady as she goes. But I think within video, again, it's a classic potential mismatch between expectations sort of tying into where the valuation was and what was being factored in there and what they actually delivered. And while, you know, the headline numbers were strong, that was expected and there were many in the market expecting numbers to be even better than that. So it didn't quite meet those very highest of expectations. And it's inevitable you're going to get profit taking. But having said that, I think there are potential question marks and clouds are cloud on the medium term horizon, which maybe we can discuss in a second. Hit me. Tell me about the cloud. Hmm. Okay. I would say people took comfort that the Blackwell is getting back on track following these sort of surprise announcements a few weeks ago. So, Johnson, as you heard in the interview a moment ago, said this thing is sampling now. It will end to end initial volume production at the tail end of this year, generate a few billions of revenue and then ramp into next year. So this product is a main product driver for next year, a main revenue driver. However, you know, having dabbled in semiconductors for some years. The analogy I used with one of your colleagues earlier on, it's like making a cake. Say you're the world's best chef, making one pristine cake is amazing. So suddenly you've got 200 relatives coming over from Ireland or whatever. You know, delivering 20 cakes simultaneously is a massive task. So the the challenge of ramping up production, which is what the company hopes to achieve for the tail end of this year into next year is a non-trivial task. There is residual risk there. So I think people should just bear that in mind. And then the other medium term risk, as I've mentioned numerous times, is, you know, obviously it is a sort of arms race amongst the hyperscalers at the moment to build out capacity, but they are not monetizing at a fast enough rate. I don't think that will impact the near-term demand outlook from video. But at some point perhaps there's a day of reckoning. Again, if the customers aren't paying for these services, the Hyperscalers have got to stop and say, well, we're spending tens of billions a quarter. The money's not really coming through. You know, does this really make the most commercial sense? That is a medium I major, medium term question mark overhanging the story. Jensen sounds pretty positive, though. It sounds pretty confident that the outlook medium term looks good. Well, he's the CEO of the world's largest tech company. You would expect nothing else. You know, I'm sure he's a very fine, honorable man, but he's there to give you the, you know, the outlook, hopefully a very realistic one. Again, I'm flagging here the risks. Maybe none of these risks come through. But again, I guess, you know, one of the basic premises in a world of investment is risk and reward. So there's risk with everything. But when a stock is trading at such a high multiple, you know, it's a fair balance of risk reward. And based on what we saw last night, the market decided to take some money off the table. Okay from it. The market did take a little bit off the table. Feels like we got to kind of bounce back, though, this morning. Maybe not in in video specifically, but certainly tech stocks not having the kind of morning you would have anticipated. I smell a little bit more positive than I would have first thought, looking at the numbers overnight. Robert, great to see you this morning. Thank you very much indeed for updating us. Robert Lee joining us from Bloomberg Intelligence. Coming up, European inflation data continues to trickle. We'll get to discuss the read across with fixed income in the fixed income market with come next. Mary and Ali, she is going to be joining us next. This is Bloomberg. Welcome back to the opening track about 40 minutes into the session, Green on the screen in today's story. Look, we're still getting low volume, light liquidity as well, but you are seeing outperforms the near Stoxx 50 despite underperformance in the energy sector tech outperforming how much of this is reading through invidious results? How much of this is maybe just a little bit of a rotation? Trade also feels like showing up in this market. We're going to see how this all shakes out going into the rest of the trading session, certainly building up into the US as well. But outside of the equity story and the NVIDIA story, we've also got some economic data that hit the wires. Well, Spanish CPI coming in actually European stocks tick upward better than expected when it comes to that inflation easing. The expectation there was that 2.4% on a year over year basis. We came in at about 2%. The core, however, still coming in a little bit higher. Let's bring in our economist. Bloomberg's ANA underwriting, of course, covers the region and other parts of Europe as well. And what has Spain been doing right here? The other European economies have been doing wrong when it comes to tackling inflation. Hi. So, yeah. So today we had great news from inflation. As you just said, inflation fell to 2.4% from 2.9%. Unfortunately, that's not so much to do what Spain has been doing right or wrong, because it was mostly driven by fuel. So energy contributions dragged on the headline measure because essentially we had an increase in fuel prices at the same time last year. And this time around we had a decline. But actually, when you look at the core inflation, I mean the harmonised core reading isn't available yet, but we actually think that the national measure that we got today actually keeps our forecast broadly on track and we expect it to remain unchanged at 2.8%. So core is still sticky. And compared to the euro area, actually, Spain has been having sort of higher inflation and the wider euro area. Now, again, that's nothing to do with the underlying picture being worse because core inflation is broadly the same as what we're seeing in Germany. But it has been more to do with dynamics in food and energy prices. Yeah. And anticipation really building up for those German numbers that we get in about 18 minutes time across the regions and then the sort of number in the afternoon and of course the eurozone tomorrow. What are we expecting there? What are we expecting in terms of stickiness for CPI, particularly in Germany? Yeah. So, I mean, the story that we've seen today out of Spain, CPI numbers, so these are those energy driven fall will be a common story across the main euro area economies. We're going to see that also playing out in Germany, although the fall will be closer to the ECB target. And of course, that will also play out in tomorrow's euro area inflation number. And there we expect the fall to 2.1% from 2.6%. So this is good news. At least it gives good optics for the European Central Bank, which is trying to loosen policy. But of course, if you go a bit deeper into that reading, we are actually expecting services inflation to be to be stubborn. So to remain unchanged at 4%. So the ECB is expected to cut. Is your assessment, though, that the ECB is correct to be cautious about how sticky inflation still is? I think. I think yes, I think there are several reasons for it to be cautious, although I think maybe we can say that it's being maybe maybe later in the year, it will seem that it's being overly cautious. I mean, right now, what a sticky services inflation tells you is that you should proceed cautiously. It won't stand in the way of a rate cut in September. But there are other things that need to be will also consider. And we've got negotiated wages for the euro area for the second quarter as well this month. And that actually showed a fall in the headline measure to below 4% for the first time in a while. But actually when you go a little bit deeper as well and you look at the German wage data, the underlying picture, there was actually a tick up in an underlying measure. So there are these sort of signs in the data that gave some cautious to the ECB. But we think that at the same time, the ECB will also be considering growth risks because there are signs of ongoing ongoing weakness in the euro area. And I think it will also be a bit encouraged by, you know, the dovish pivot, let's call it, from Fed's Powell at Jackson Hole. So I think on overall, it's a rate cut in September, it's likely, but it will still be continued to be a slow pace down in terms of records. Another dovish pivot from Powell, I guess we should probably call it an awesome pleasure. Thank you very much. And Andrea joining us from Bloomberg Economics on the latest data out of Spain. Looking forward to the German numbers that are going to be dropping a little bit later. We'll bring those to you at the top of the next hour as we start that process. Let's get a take on this from Paris. Marianne, earlier fixed income fund manager coming back, joins us now. How do you see the ECB progressing from here? Signs of caution. It sounds signs of caution from from people like Philip Lane. Do you think the market is overestimating how much and how many cuts we're going to see from Frankfurt? For sure. For the moment, the market is expecting more than three cuts for 2000. And this year, which is above what you know, the Governing Council speakers are talking. They are thinking about, you know, quarterly cuts. So no more than to the market is at two and a half. So, yes, maybe the market is over estimated. You know, the the weakness of the ECB and the influence of people like Schnabel but or will depend you know, inflation seems to be the old story of past years. Now everybody is looking at gross labour market and the and and no more inflation or looking at the what polls say that checks or. If I'm still worried about inflation, how do I protect my portfolio against it? Well, because the market is very optimistic about inflation. When you look at five year, five year inflation, swap out things like that. The market seems to believe that inflation will be a target in two years and will stay at 2% forever. So if you want to protect your portfolio, one thing's to do is to buy breakeven, to buy inflation in bonds and to avoid very long term rates. Nominal rates in the sense that if central banks are dovish, maybe you will have some inflation and the curve could steepen and you know, you can have higher long term yields. So stick on the short term by break even by inflation linked and and wait for a more, you know, evidence of where the inflation where the growth will go. It's pretty in London. I'm curious how you're thinking about the peripheral credit, specifically because that Spain, Greek, Portuguese, even Italian bonds have outperformed, of course, French bonds famously, but by a massive margin and a dislocation that hasn't quite come back to Earth yet. We're expected to get more news around a new French prime minister or a new French government in the coming hopefully the coming week, if not in weeks to come. How does that shake out in terms of a trade that's already maybe served its purpose? What do you think? When you look at Perry Farrell, do you put friends in to the Perry Farrell outside the Perry car? That's now the big question. You tell me. Well, look at if you have no history and you just look at the numbers. As of today, you can see that Greek, Portugal, not Italy, but Greek. Portugal are doing great progress in terms of debt to GDP, which is absolutely not the case of friends and the not for yet for Italy. But people that bet against Italy during the past ten year, they lose money. You lose every time money when you bet against Italy. So I think the people are just thinking that, you know, you have one more than 100 basis points every year when you buy Italian bonds versus German bonds. What could go wrong? Yes, it could, you know, increase by 20 or 30 basis points. But at the end, you really think that Italy will go into the limbo. So my take is that probably France at 40, what it was before the snap election was a bit rich, was too expensive at 70. I have no clue. Maybe it can go to 80 or to 60. What is sure is that France has to to to reform that Greek Portugal as the. Well, talk to us a little bit about what you're watching there to impact that spread, though, and you compare it to to Italy, where and I love that you said that you would lose money every time you bet against it. But so much of the outperformance is coming from the fiscal. And I'm curious if you can apply that same logic to the French spreads as well. Is it still all about the deficit in France or is this about stability in France? And both you and that French government debt is probably the most liquid and the most easy to to to trade when you want to invest, you know, in the euro area German but is not so liquid for for example big Japanese or big pension fund. You know the French market is still the the best liquid market you can find in Europe. So it has a price. It has some basis points out due to that. After that, yes, is deficit is all about deficit. And I am not totally convinced that the announcement of a new prime minister in one week or two weeks or whatever will change, you know, the dynamic that we had seen, say, 30 or 40 years now, you know, in France. So for me. So do you think it's the spread has to go higher? So it's continuation of status quo in France. Can we price out the political risk then? It sounds like Michael is trying to steer this towards a centrist government. Whether or not he'll be able to do that is, I suppose, another question. But can we at this point say that the politics are sort of irrelevant to the conversation, or is there still some surprises left? But I don't see how they can find a government that will be able to do reform. You know, we have a split. You know, I somebody nationally, we went south once on the way out and said, so every coalition will be made of, you know, no reform and and nothing very harsh for the for the deficit, meaning that nothing will improve. So it's irrelevant in the sense that we know that what whoever the next prime minister will be, we will probably have no big reform in the French deficit and the French deficit trajectory. Yeah. Now we'll talk a little bit more also about some of the data that we've been getting out of Europe. Obviously, we're focused today on CPI data. But if you look at the Bloomberg surprise index in terms of an aggregate of all the data we've been getting out of Europe, it's been really bad. We've been seeing a lot of surprises to the downside. At what point does this sort of the growth side of things become a bigger concern for the ECB in their approach to rates? But for the moment they didn't. They only, you know, point the wages and the productivity in a sense, on the radar. They didn't speak very loudly about growth and the risk of growth, but obviously growth is decelerating too much. We know that it will have an impact in in in in prices, even though if you look at the past year where growth was not, you know, in Germany, we had a bit of recession, inflation was still sticky. It's a service inflation that is sticky. And this part is again due about labour market. And there as in the US, I think the labour part of the ease of the inflation data is more important that the growth part of the inflation data. Belle Mary Marian Year Fixed Income Fund Manager Academy, ENIAC. Thank you very much for joining us from Paris this morning. So listen, we have a couple of more had we have a couple more headlines coming out from HSBC this morning saying that now we're having some management shakeup. The global head of wealth and personal banking is stepping down. This all in anticipation of the new CEO HSBC unveils sweeping management changes taking over in September. We saw also some stories out yesterday from Bloomberg about how basically there's going to be some cuts in terms of a potentially a bloated management structure. Let's get more now from Jonas Bergman, who is covers banking for us here at Bloomberg. So take us through the latest moves. Well, yeah, Today we saw that it was pretty expected that Noonan Mattis, the head of wealth for HSBC, would be stepping down. Uh, she was one of the other main candidates for the top job. And now that we see George al-Hariri taking over as CEO next week. So Barry O'Byrne, the CEO of Global Commercial Banking, will step in as the global wealth and personal banking head for HSBC. No, no matters. However, we'll be staying on with the bank through 2024 and then leave or go on gardening leave in 2025. So pretty pretty expected that there will be some changes there. I asked George, who takes up his new role starting next week. We also saw other other changes. For example, the CEO is stepping down and they're doing a split of that role and as well as the head of h.r. Is leaving as well with a new a new had appointed there. So. So some changes are on the way here ahead of ahead of george el hariri taking over for next week. As you say, some of this is expected. We are obviously going to see management changes when the CEO departs. Unsurprising. But does it tell us anything about strategy? Can we read anything into the names that are going to be taking over in some of these key positions? Well, that's that's hard to say. Now, Barry O'Byrne. I mean, he's a he's a veteran of, I think, seven years at HSBC. But he does not have a much of a of a wealth and personal banking, you know, in his career. He's mainly spent it on the on the commercial banking side. So that is interesting to see. But it must be that he has to click click with the new CEO and commander, because the global wealth, as we know, is one of these key targets for them going forward, especially in Asia, where O'Beirne will continue to be based in Hong Kong. Now, that's it's it's interesting interesting play to see what what what he can do with the wealth franchise going ahead with relatively little experience. He does have global experience, though, having led the commercial banking group and also from his previous jobs, as has worked quite extensively across the world. All right. Bloomberg's Jonas Bergman joining us this morning for that update on the HSBC shakeup. We thank you so much for that crucial context. And of course, we should bring us some headlines here. Crossing coming out of China. They are saying they're finding dumping in EU liquor, perhaps that tit for tat that Ali was just talking about. Previously, the program. However, alongside that, they're saying they will not be imposing an anti-dumping duty on EU liquor now. Now, let's get a quick check on how some of this is showing up in the stock Pernod-Ricard is the outperformer here this morning, higher by 8% among several in the drink sector rallying this morning. Weakness in the numbers, softness in the numbers. But this is the headline. This is the headline that changes the game for everybody in this space at the moment. Serious fear that we could see maybe the drinks sector being the targets in response to maybe the also headlines that we've been seeing. I this is do they do buy into this? I mean, basically the Chinese have said this trip is on the table. We're not activating it right now, but they're saying that it's there. So do you really buy into that? I think this is the market sees this as a positive. Yeah. Do you sell do you sell yogurt and buy drinks on the back of this? Is that the trend the guy trade this morning. Maybe maybe because maybe it puts the the dairy story back on the table but they're saying they won't impose anti-dumping duty on EU liquor. But as you say there is a now in that for. Yeah. Now I'd like to see the statement on that. Yeah. Diageo is ex-dividend this morning and even it is up. Yeah. And does that just mean we stock up on liquor. One of the worst thing in the world. The question is do you like per. That's, that's, that's the conversation. That's, that's my opinion. I do I love it. But I don't buy that guy and he won't talk. I will discuss it in the next hour of program. That does it for the opening trade. I've covered a lot, Guy Johnson. We'll continue with the Pulse up next. Stick with us. This is Bloomberg.