AI Tech Giants Google, Nvidia Ramp Up Europe Startup Funding | Bloomberg The Pulse 10/03/24
>> EUROPE'S MAIN INDICES FOR GOING FOR DIRECTION THIS MORNING, AS CHINA'S RECORD THE RALLY LOSES STEAM IN HONG KONG. IN JAPAN, THE YEN WEAKENS AS THE NEW JAPANESE PRIME MINISTER TASKS DOUBT ON FURTHER BOJ RATE HIKES THIS YEAR. TRADERS ADD TO BETS OF A NOVEMBER RATE CUT, AFTER THE BANK OF ENGLAND GOVERNOR ANDREW BAILEY SEES A CHANCE OF MORE AGGRESSIVE EASING. THE POUND SLIDES TO ITS LOWEST
IN A FORTNIGHT ON THOSE DOVISH COMMENTS. IN THE U.S., PRESIDENT BIDEN WANTS ISRAEL AGAINST ATTACKING IRAN'S NUCLEAR SITES, AS HE SEEKS TO DE-ESCALATE TENSIONS. THE G7 CONSIDERING RAMPING UP SANCTIONS ON TEHRAN. LET'S CHECK ON THE EUROPEAN EQUITY MAP.
GLOBALLY, YOU ARE LOOKING FOR THE FIRST WEEK OF LOSSES IN FOUR WEEKS. THE HANDOFF FROM ASIA WAS WEAK. CHINESE STOCKS LISTED IN HONG KONG WERE DOWN, A PAUSE IN THE 13-DAY CONSECUTIVE RALLY, AND THE EUROPEAN MARKET SEEING THE DOWNSIDE AS WELL. SECTORS LIKE TECHNOLOGY, THE AUTO SECTOR FEELING THE BIGGEST HITS. IN GERMANY, THE DAX IS DOWN 0.9%, IN FRANCE LOSSES OF 1.2%, IN THE U.K. MODEST DOWNSIDE DOWN A 10TH OF A PERCENT ON THE FTSE 100.
THE 10-YEAR YIELDING 3.79. YIELDS HAVE BEEN UP, THE POUND AND DOLLAR STRENGTHENED, THAT'S PART OF THE STORY, STRONGER DOLLAR. VERY DIFFERENT STORY WHEN IT COMES TO THE POUND. YOU ARE SEEING YIELDS LOWER AT THE FRONT END IN THE U.K., 3.94, MONEY MOVING INTO GILTS ON COMMENTS FROM ANDREW BAILEY TO -- SUGGESTING THERE COULD BE SCOPE FOR MORE AGGRESSIVE CUTS FROM THE BANK OF ENGLAND.
NOVEMBER IS PRICED IN BY THESE MARKETS, 3.90 FOUR ON THE FRONT END, THE POUND TAKING A KNOCK, DROPPING ALMOST 1% VERSUS THE U.S. DOLLAR. BRENT IN FOCUS ON THE CONTINUING TENSIONS IN THE MIDDLE EAST, 74.83, UP 1.3% SO
FAR. WE WILL BRING YOU THE NVIDIA PREMARKET MOVE IN JUST A MOMENT. WE HAVE BEEN HEARING FROM THE CEO ON DEMAND FOR THE BLACKWELL CHIP.
>> NEWSMAKERS AND MARKET MOVERS, THIS IS "THE PULSE" WITH FRANCINE LACQUA. TOM: GOOD MORNING, AND WELCOME TO THE PULSE, I'M TOM MACKENZIE IN LONDON STANDING IN FOR FRANCINE LACQUA THIS THURSDAY. NVIDIA PREMARKET, THE COMMENTS FROM JENSEN HUANG ON THE DEMAND FOR THOSE BLACKWELL GPU AI ACCELERATORS. THE NEXT ITERATION OF THOSE AI ACCELERATORS FOR NVIDIA. HE SAYS THAT DEMAND IS INSANE, I'M QUOTING.
IN A COMMENT TO CNBC, PREMARKET, NVIDIA WITH THAT 90% SHARE OR THEREABOUTS OF THE AI ACCELERATOR MARKET, UP 0.3% AS WE LEAD UP TO THE TRADING SESSION STATESIDE. MORE OPTIMISM IN TERMS OF THE DEMAND OUTLOOK FOR THAT KEY PLAYER IN THE GEN AI STORY. BACK TO MICROECONOMICS BECAUSE THERE IS PLENTY OF CENTRAL BANK NEWS, AS TRADERS UP THE ODDS OF A BOE NOVEMBER CUT. IN ASIA, THE NEW JAPANESE PRIME MINISTER IS WARNING AGAINST RAISING INTEREST RATES.
CASTING DOUBT ON A HIKE THIS YEAR. HE HAS GONE FROM HAWKISH TO DOVISH TRADE FOR MORE ON THE WIDER MARKETS, WE'RE JOINED BY NORA SZENTIVANYI, WHO IS GLOBAL ECONOMIST AT J.P. MORGAN. THERE IS A LOT TO UNPACK. WHAT DOES THIS GLOBAL ECONOMY LOOKING TO RIGHT NOW, ARE WE AFFECTING SYNCHRONIZATION OF CUTS FROM MAJOR CENTRAL BANKS? LEAVE TO ONE SIDE THE BOJ, IS THAT STILL THE VIEW IN 2025? NORA: YES, THAT'S EXACTLY RIGHT. THE GLOBAL ECONOMY IS HOLDING UP BETTER THAN EXPECTED. THERE IS RESILIENCE.
AT THE SAME TIME, INFLATION IS COMING OFF QUITE SHARPLY. THIS WILL ALLOW CENTRAL BANKS, AND IS ALREADY ALLOWING BANKS TO RECALIBRATE THEIR POLICY STANCES. RIGHT NOW INTEREST RATES ARE AT QUITE HIGH LEVELS, THEY ARE QUITE RESTRICTIVE ACROSS THE GLOBE, AND THIS GIVES CENTRAL BANKS AN OPPORTUNITY TO RECALIBRATE STANCES IN LINE WITH THE SLOWING IN INFLATION WE ARE GETTING.
THE WAY I WOULD CHARACTERIZE THE GLOBAL ECONOMY IS IT IS MORE A MIDCYCLE SLOWING, WE'RE NOT LOOKING FOR RECESSION, BUT THAT SLIDE IN INFLATION IS ALLOWING CENTRAL BANKS THAT SPACE LOWER INTEREST RATES. TOM: THE BANK OF ENGLAND, AS THEY MAKE ADJUSTMENTS, WHAT DO YOU MAKE OF THE COMMENTS FROM ANDREW BAILEY? IT SEEMS LIKE A PIVOT FROM A CAUTIOUS TONE TO A MORE DOVISH, MORE ACTIVIST AS HE FRAMED IT, BANK OF ENGLAND. NORA: THE U.K. ECONOMY POSTED IMPRESSIVE GAINS IN THE FIRST HALF BUT WE HAVE BEEN LOOKING FOR THOSE WHO SLOWDOWN IN THE SECOND HALF. WE HAVE GDP GROWTH SLOWING. KEY IS THE SLIDE IN INFLATION.
THE FIRST HALF WHAT WAS EXPECTED -- PREVENTING THE BANK OF ENGLAND FROM PIVOTING TO A MORE DOUBLE STANCE WAS ELEVATED INFLATION. NOW WITH THE SLIDE OF OIL PRICES THROUGH THE THIRD QUARTER AND WITH SERVICES INFLATION SHOWING SIGNS THAT IT IS BREAKING LOWER, AND WAGE INFLATION STARTING TO COME OFF, SIGNS OF THAT PERSISTENCE IN WAGE AND PRICE INFLATION FINALLY EASING, I THINK THE BANK OF ENGLAND HAS THE SPACE. THERE IS NOTHING SUGGESTING THEY NEED TO MOVE AGGRESSIVELY. WE HAVE BEEN LOOKING FOR A
QUARTERLY PACE OF CUTS. I THINK RISKS ARE SHIFTING THAT QUITE A FEW CENTRAL BANKS COULD BE IN POSITION TO DELIVER MONTHLY CUTS. TOM: CERTAINLY, THE MARKETS ARE PRICING IN A NOVEMBER CUT FROM THIS BANK OF ENGLAND. DO YOU THINK THAT IS THE MOST LIKELY SCENARIO? WHERE DOES THAT LEAVE YOU IN THE CYCLE OF CUTS FOR THE BOE AND WHERE RATES END UP NEXT YEAR? NORA: I THINK NOVEMBER, 25 BASIS POINTS LOOKS HIGHLY LIKELY. THEREAFTER WE THINK IT'S MORE LIKE A QUARTERLY PACE OF USING, WHICH WOULD STILL LEAVE RATES IN AUSTRALIA -- IN A SLIGHTLY RESTRICTIVE TERRITORY. IN THAT BACK GIVING THEM, THERE IS MORE SPACE FOR THE ECB IN TERMS OF THE OVERALL CYCLE, BUT THE BOE HAS AN OPPORTUNITY TO ADJUST RATES LOWER. TOM:
WE HAVE NONFARM PAYROLLS OUT ON FRIDAY. WHAT KIND OF NUMBER WHEN WE NEED TO PROCEED TO GET A JUMBO CUT FROM THE FED BACK ON THE TABLE? NORA: RIGHT, SO, WE ARE LOOKING FOR 125,000 NONFARM PAYROLLS. THAT WOULD BE, COMPARED TO THE LAST NUMBER, IT IS STILL A SLOWING IN THE THREE-MONTH RUN RATE, SO THERE IS SLOWING DEMAND IN LABOR ONGOING. THAT WOULD STILL LEAVE THE DOOR OPEN FOR A 50 BASIS POINT RATE CUT. MOST LIKELY IF YOU SAW SOMETHING AROUND 100,000, THAT WOULD MAKE A LARGER RATE CUT MORE LIKELY. I THINK THE COMBINATION OF
INFLATION COMING OFF, AND THAT SLOWING IN PRIVATE PAYROLL GROWTH IN PARTICULAR TO A 1% PACE, WHICH HISTORICALLY SIGNALED ABRUPT SLOWING IN THE U.S. LABOR MARKET. I THINK THAT WOULD LEAVE THE DOOR OPEN. CERTAINLY CHAIR POWELL IS GUIDING US MORE TOWARDS 25 BASIS POINT PACE AT THIS POINT. BUT WE HAVE TWO MORE PAYROLLS
UNTIL THE NEXT. TOM: LET'S SWITCH FOCUS TO THE LABOR MARKET AWAY FROM INFLATION. THAT SEEMS TO BE THE LINE FROM A NUMBER OF FOMC OFFICIALS. WHERE ARE THEY IN STRIKING THAT
BALANCE IN TERMS OF THE COOLING AT THE EDGES OF THIS LABOR MARKET AND ASSURING THAT DOESN'T DROP TO LEVELS THAT WOULD? BE UNCOMFORTABLE? ? HE DOESN'T WANT TO SEE ANYMORE LABOR MARKET EROSION. NORA: CORRECT. I THINK THAT SLIDE IN INFLATION TO THE 2% PACE, WHICH IS IN LINE WITH THEIR TARGET, IS ALLOWING THE FED TO FOCUS ON THE SECOND PART OF ITS DUAL MANDATE. WHICH IS DELIVERING FULL EMPLOYMENT. AT THIS POINT, THEY HAVE THAT SPACE TO EASE. WHAT THE FED IS SEEING IN TERMS OF THE LABOR MARKET DYNAMIC IS A SLOWING IN HIRING, BUT NOT SEEING THAT SHIFT TOWARDS LAYOFFS. WE HAD THE JOLTS DATA THIS WEEK, THE ADP PAYROLL NUMBERS WHICH ALSO SUGGESTS STABILIZATION IN THE LABOR MARKET AFTER THE EARLIER SCARE WITH UNEMPLOYMENT RATE PICKING UP.
WE THINK A LOT OF THAT RISE IN THE ON EMPLOYMENT RATE WAS DUE TO LABOR FORCE GAINS. LABOR SUPPLY AND IMMIGRATION BEING QUITE STRONG. THERE IS SLOWING IN LABOR DEMAND BUT NOTHING TO SUGGEST THEY NEED TO MOVE VERY AGGRESSIVELY. IT IS ABOUT THIS RECALIBRATION FROM A VERY HIGH RATE LEVEL. IT DOES LEAVE THE DOOR OPEN TO
A 50 BUT WE WOULD NEED TO SEE FURTHER SLOWING. TOM: AND CHINA, WE ARE WAITING FOR MORE DETAILS IN TERMS OF THE FISCAL COMPONENT, WE GOT THE DETAILS ON MONETARY POLICY. WHICH OF CHINA'S TRADING PARTNERS WILL BENEFIT AND TO WHAT EXTENT? DOES IT CHANGE YOUR OUTLOOK FOR GROWTH NEXT YEAR FOR THESE TRADING PARTNERS? NORA: CHINA HAS ANNOUNCED A PRETTY BOLD AND COORDINATED SET OF STIMULUS MEASURES. THE MARKETS HAVE REACTED POSITIVELY TO THAT. IT HASN'T REALLY ALTERED OUR OWN MACRO FORECAST MATERIALLY. IT PROBABLY REMOVES SOME
DOWNSIDE RISK TO THE NEAR-TERM GROWTH OUTLOOK. WE ARE LOOKING FOR CHINA TO SLOW TO A 4% PACE NEXT YEAR. THE MAJOR ISSUE IS THAT THERE IS A BALANCE SHEET RECESSION, INCLUDING THE HOUSING MARKET, SO HOUSE PRICES CONTINUE TO FALL. A LOT OF HOUSEHOLD WEALTH IS TIED UP IN THE HOUSING MARKET. THE SHARE OF HOMEOWNERSHIP IS
VERY HIGH. THOSE CONSUMERS AND HOUSEHOLDS HAVE SEEN LARGE EROSION IN THEIR WEALTH. UNLESS WE CAN TURN THAT AROUND, AND I THINK RATE CUTS WILL NOT HELP THAT SITUATION. UNLESS WE GET THAT MORE DIRECT FISCAL SUPPORT, IT'S QUITE HARD TO SEE A STRONG BOOSTER TO OVERALL GROWTH. IN TERMS OF BROADER GROWTH IMPLICATIONS, THE SPILLOVERS ARE MORE LIMITED, BECAUSE A LOT OF CHINA'S ISSUES SEEM TO BE HOMEGROWN AT THE MOMENT. THE MAIN SPILLOVERS TO THE REST OF THE WORLD HAVE BEEN THROUGH THE DEFLATIONARY CHANNELS, SO CHINA EXPORTING DEFLATION TO THE REST OF THE WORLD. TOM:
ON THE QUESTION OF INFLATION, ARE MARKETS UNDERESTIMATING THE IMPACT OF HIGHER OIL PRICES ON THAT INFLATION PICTURE GIVEN THE TENSIONS IN THE MIDDLE EAST? WITH SOME FORECASTS YOU COULD BE LOOKING AT $100 PER BARREL OIL IF THINGS ESCALATE FURTHER FROM HERE. NORA: YEAH, SO THROUGH THE THIRD QUARTER, WE HAD A SHARP SLIDE IN ENERGY PRICES DUE TO THE SLIDE IN CRUDE OIL AND WE ARE STILL SEEING THAT PASS THROUGH TO THE INFLATION NUMBERS. IF WE DO GET A SPIKE, 10-15 PERCENT HIGHER OIL PRICE, THAT WOULD REVERSE SOME OF THAT EASING IN INFLATION. IT WOULD ALSO BE NEGATIVE FOR GROWTH. THIS IS A SUPPLY DRIVEN INCREASE -- POTENTIAL INCREASE IN OIL PRICES THAT WOULD CUT GLOBAL GROWTH BY A COUPLE PERCENTAGE POINTS.
I THINK THE RANGES WE'RE SEEING IN THAT WE THINK ARE LIKELY, OUR BASE CASE IS FOR OIL TO GO TO $80 PER BARREL, THAT WOULDN'T MATERIALLY MOVE THE NEEDLE EITHER IN TERMS OF INFLATION OR GROWTH. BUT THAT BENIGN SLIDE IN INFLATION AND BOOST TO GROWTH WE SAW IN THE THIRD QUARTER COULD REVERSE A LITTLE BIT. TOM: CURRENTLY 74.79 ON BRENT, UP 1.2%, WITH YOUR VIEW AROUND $80 POTENTIALLY IN CERTAIN SCENARIOS. NOR OUT WITH A WIDE-RANGING TAKE ON WHAT IS HAPPENING ACROSS THIS ECONOMY AND FOCUS ON CENTRAL BANKS AND THE ENERGY INPUT. NORA SZENTIVANYI, GLOBAL
ECONOMIST AT J.P. MORGAN. U.S. PROSECUTORS ARE WIDENING A PROBE OF POTENTIAL PRICE-FIXING BY S.A.P. AND TECH RETAILER CARAHSOFT. JUSTICE DEPARTMENT DEMANDED
DOCUMENTS RELATING TO SALES OF SAP PRODUCTS TO GOVERNMENT AGENCIES. CARAHSOFT SAYS THE ALLEGATIONS ARE UNSUPPORTED. WE WILL HAVE THE LATEST FROM THE MIDDLE EAST, AS PRESIDENT BIDEN WARNS ISRAEL AGAINST STRIKING IRAN'S NUCLEAR FACILITIES. THIS IS BLOOMBERG. ♪ TOM: WELCOME BACK. THE U.S. IS URGING ISRAEL NOT TO ATTACK IRAN'S NUCLEAR FACILITIES IN RETALIATION FOR THIS WEEK'S MISSILE BARRAGE ON ISRAELI CITIES. PRESIDENT BIDEN PLANS TO SPEAK WITH PRIME MINISTER NETANYAHU AS THE U.S.
AND G7 ALLIES PLAN FURTHER SANCTIONS ON IRAN. ISRAEL VOWED TO RETALIATE. IRAN HAS DEFENDED THE MOVE. >> IRAN'S MISSILE STRIKE OR A NECESSITY AND PROPORTIONATE RESPONSE TO ISRAELI CONTINUED TERRORIST ADVANCING ACTS OVER THE PAST FEW MONTHS. THE REGIME IS PUSHING THE
REGION TO THE EDGE OF AN ALL-OUT, UNPRECEDENTED CATASTROPHE. ISRAEL HAS NO INTENTION TO PURSUE PEACE OR A CEASEFIRE. >> WE ARE UP IN THE MIDDLE OF A TOUGH WAR AGAINST THE EVIL AXIS OF IRAN WHICH SEEKS TO WIPE US OUT. THIS WILL NOT HAPPEN BECAUSE WE WILL STAND TOGETHER, AND WITH GODS HELP, WE WILL WIN TOGETHER. WE WILL RETURN OUR HOSTAGES IN THE SOUTH. WE WILL RETURN OUR RESIDENCE IN THE NORTH. WE WILL GUARANTEE THE ATTORNEY
OF ISRAEL. -- ETERNITY OF ISRAEL. JOUMANNA BERCETCHE, OUR HORIZONS MIDDLE EAST & AFRICA ANCHOR, JOINS ME. MAP OUT WHAT ISRAEL'S RESPONSE COULD LOOK LIKE. >> ONE THING WE KNOW FOR SURE IS THERE WILL BE A RESPONSE. AND THAT ISRAEL ACROSS ALL PARTS OF THE POLITICAL SPECTRUM, THERE IS A NEED FOR RETALIATION, AND YOU HEAR IT EVEN FROM NETANYAHU'S POLITICAL OPPOSITION SAYING IRAN MUST PAY A HEAVY PRICE. THE QUESTION IS WHAT DOES THE REPRISAL LOOK LIKE? BACK IN APRIL WHEN ISRAEL RESPONDED TO THE FIRST DIRECT ATTACK FROM IRAN, IT WAS LIMITED IN NATURE. THEY WENT AFTER MILITARY ASSETS.
THEY HIT AN AIR DEFENSE BATTERY AND THAT WAS IT. THIS TIME AROUND, THE EXPECTATION IS THEY WILL GO FOR SOMETHING MORE FORCEFUL. IT COULD BE FURTHER ATTACKS ON MILITARY ASSETS. IT COULD BE IN THE FORM OF
CO-HEARD ASSASSINATIONS. ISRAEL -- COVERT ASSASSINATIONS. ISRAEL NEVER CLAIMED RESPONSIBILITY FOR THE KILLING OF HIS MILE CHANIA -- ISMAIL HANIYEH, BUT THERE IS TALK THAT SENIOR MEMBERS OF THE IRGC COULD BE PURPOSE. THERE IS TALK OF POTENTIALLY ENERGY INFRASTRUCTURE.
IRAN'S OVERALL PRODUCTION IS 3.4 MILLION BARRELS A DAY, ABOUT HALF OF THAT IS EXTORTED TO GLOBAL MARKETS. CITI JUST PUT OUT A NOTE SAYING IF THEY WANTED TO HIT SPECIFICALLY THE PRODUCTION THAT GOES TO EXTERNAL. THEN YOU ARE LOOKING AT TAKING THAT 1.5 MILLION BARRELS A DAY OFF THE MARKET. IF THEY TARGET SPECIFIC DOWNSTREAM SECTORS TO PROCESSING PLANTS, THEY HIT COULD BE A CAN TO 300,000 TO $450,000 A DAY.
IT IS SIGNIFICANT BUT NOT AS SIGNIFICANT AS TAKING ALL OF IRAN'S SUPPLY OF THE MARKET. THE FINAL OPTION, AN OPTION THE U.S. DON'T WANT TO GO FOR, WOULD BE IF ISRAEL GOES AFTER SOME OF IRAN'S NUCLEAR SITES. THAT WOULD BE THE MOST EXTREME OPTION. EVEN FROM THE MILITARY STANDPOINT, IT IS UNCLEAR
WHETHER ISRAEL ARE MILITARILY EQUIPPED TO ENACT LASTING DAMAGE ON IRAN'S NUCLEAR PROGRAM. THOSE ARE OPTIONS ON THE TABLE BUT I SHOULD EMPHASIZE, AT THIS POINT, WE DON'T HAVE INSIGHT INTO WHAT ISRAEL IS THINKING. THESE ARE SOME OF THE OPTIONS BEING DISCUSSED. TOM:
JOUMANNA BERCETCHE WITH THE DETAILS IN TERMS OF THE POTENTIAL MOVES ISRAEL COULD TAKE IN ITS PLAN TO RETALIATION AGAINST IRAN, AND THE IMPACT ON THE OIL MARKETS. COMING UP, MORE OF OUR DISCUSSION WITH THE FRENCH PRESIDENT EMMANUEL MACRON, AND HIS BACKING OF A TEMPORARY TAX. THAT IS IMPORTANT, TEMPORARY TAX, THAT IS COMING UP. THIS IS BLOOMBERG. ♪ >> HAVING AN EXCEPTIONAL TAXATION ON CORPORATE IS SOMETHING WHICH IS WELL UNDERSTOOD BY LARGE COMPANIES. THIS IS FOR ONE YEAR AND GIVEN THE LEVEL OF EFFORT WHICH WILL BE MADE. BUT IT SHOULD BE LIMITED AND WE
DON'T HAVE TO FORGET THE REALITY OF OUR ECONOMY. THE REALITY OF OUR COMPETITIVENESS ON OUR POSITION. TOM: THE FRENCH PRESIDENT, EMMANUEL MACRON, SPEAKING AT THE BERLIN GLOBAL DIALOGUE ON A PANEL MODERATED BY BLOOMBERG'S STEPHANIE FLANDERS.
FOR MORE ON THAT INTERVIEW, LET'S BRING IN CAROLINE CONNAN, COVERING ALL THINGS FRANCE FOR US OUT OF PARIS. MACRON PUSHED ON THE DOMESTIC CHALLENGES HIS NEW GOVERNMENT IS FACING. HE MADE THOSE COMMENTS AROUND TAXES ON CORPORATES. WHAT STOOD OUT FROM WHAT WE
HEARD FROM THE FRENCH PRESIDENT? >> FIRST, HE IS BACKING HIS PRIME MINISTER MICHEL BARNIER, AND HIS STRATEGY TO REDUCE THE DEFICIT AND SAVE 60 BILLION EUROS. SECOND MACRON IS TOTALLY ABANDONING HIS IDEA OF NEVER RAISING TAXES. WE JUST HEARD FROM HIS FORMER INTERIOR MINISTER SAYING HE DOESN'T AGREE AT ALL WITH THIS IDEA OF RAISING TAXES. SINCE THE BEGINNING, MACRON ALWAYS PLEDGED TO LOWER TAXES. THIS TAX ON MULTINATIONALS, WE HEARD FROM THE TOTALENERGIES CEO SAYING THIS IS UNFORTUNATE, BUT IT WILL HAVE LIMITED IMPACT ON TOTAL BECAUSE THEY PAY MOST OF THEIR TAXES ABROAD. BUT THERE IS ANOTHER ISSUE THAT'S COMING.
MICHEL BARNIER AND THE FINANCE MINISTRY YESTERDAY TALKED ABOUT POSSIBLE GREEN TAXATION AND POSSIBLY TAXATION ON THE AVIATION INDUSTRY. THAT DIDN'T GO WELL WITH THE IATA ASSOCIATION, SAYING THIS COULD BE A DISASTER FOR THE FRENCH AVIATION SECTOR. TOM: MACRON ALSO ASKED ABOUT THE EU TARIFFS. WE WILL GET SOME ANSWER, WE EXPECT, ON SOME OF THOSE TOMORROW BUT ALSO THAT DRAGHI REPORT ON COMPETITIVENESS. AN ISSUE OF MACRON HAS WRESTLED WITH HIMSELF.
>> HE ACTUALLY DOESN'T AGREE WITH THE GERMAN CHANCELLOR OLAF SCHOLZ ON THESE TWO FRONTS. FIRST, ON THE EV TARIFFS ON CHINESE CARS. OLAF SCHOLZ WANTS TO FIND SOME COMPROMISE, WHEREAS MACRON SAID HE IS SUPPORTING THIS EUROPEAN TARIFF ON CHINESE EV'S. SECOND, REGARDING THE MARIO DRAGHI REPORT, MACRON HAD A PESSIMISTIC PICTURE ABOUT THE FUTURE OF EUROPE. AND THE FACT THAT EUROPE IS LAGGING BEHIND THE U.S. AND CHINA. HAVE A LISTEN.
>> OUR FORMER MODEL IS OVER. IT IS NOT A QUESTION OF ADJUSTMENT, IT IS NOT THE SAME WORLD 2024-2025. ON TOP OF THAT, WE ARE MAKING THE SAME MISTAKES ON TOP OF THE ELEMENTS I MENTIONED. WE ARE OVER REGULATING AND UNDERINVESTEING. IN THE TWO TO THREE YEARS TO COME, IF WE FOLLOW OUR CLASSIC AGENDA, WE WILL BE OUT OF THE MARKET. TOM: SOME FRANK COMMENTS FROM EMMANUEL MACRON.
CAROLINE CONNAN WRAPPING UP THE CONTEXT OUT OF PARIS. WE WILL LOOK AT OPENAI. THIS IS BLOOMBERG. ♪ TOM: GOOD MORNING, AND WELCOME TO "THE PULSE." I'M TOM MACKENZIE IN LONDON, IN
FOR FRANCINE LACQUA. EUROPE'S MAIN INDICES LIKE THIS MORNING AS CHINA'S RECORD RALLY LOSES STEAM IN HONG KONG TRADING. THE YEN WEEKENDS AS THE NEW JAPANESE PRIME MINISTER CASTS DOUBT ON FURTHER BOJ RATE HIKES THIS YEAR. TRADERS ADDING TO BETS OF A NOVEMBER RATE CUT, AFTER BANK OF ENGLAND GOVERNOR ANDREW BAILEY SAYS HE SEES A CHANCE OF MORE AGGRESSIVE EASING. THE POUND SLIDES TO ITS LOWEST IN A FORTNIGHT ON THOSE DOVISH COMMENTS. IN THE U.S., PRESIDENT BIDEN WARNS ISRAEL AGAINST ATTACKING IRAN'S NUCLEAR SITES, AS HE SEEKS TO DE-ESCALATE TENSIONS IN THE MIDDLE EAST. THE G7
CONSIDERS RAMPING UP SANCTIONS ON TEHRAN. NOW WITH A FOCUS ON TECHNOLOGY. OPENAI HAS RAISED MORE THAN $6.5 BILLION IN A NEW FUNDING ROUND. ONE OF THE LARGEST EVER PRIVATE INVESTMENTS.
IT VALUES THE AI COMPANY AT MORE THAN $157 MILLION. LET'S BRING IN ROBERT LEA, SENIOR TECH ANALYST FROM BLOOMBERG INTELLIGENCE. WHAT DO YOU AND THE TEAM MAKE OF THIS DEAL, WHAT IT TELLS US ABOUT THE APPETITE FOR EXPOSURE TO GEN AI, AND WHETHER THE VALUATION CAN BE JUSTIFIED? >> WHENEVER WE DISCUSS AI SUPERLATIVES ALL THE WAY. I GUESS IT SHOWS THE DEMAND FOR AI INVESTMENTS REMAINS INSATIABLE TO SOME DEGREE.
AS FOR THE VALUATION, IT IS A PUNCHY EVALUATION FOR A COMPANY THAT REMAINS LOSSMAKING AT THIS POINT. THE GENERIC MODEL WITHIN THE INTERNET AND SOFTWARE SECTOR AS A WHOLE IS TO BUILD SCALE, CONSOLIDATE YOUR POSITION AND PUSHING TO PROFIT AT SOME POINT LATER. AS AND WHEN THAT MAY BE FOR OPENAI, IT REMAINS TO BE SEEN. TOM: MEANWHILE, ON THE QUESTION EVALUATION, MAYBE THIS PLAYS INTO THAT DEBATE. WE ARE HEARING FROM AN M.I.T. PROFESSOR WITH RUNDOWN IN THIS SPACE, IN HIS COMMENTS TO BLOOMBERG ABOUT AI ONLY BEING ABLE TO DO 5% OF JOBS, THIS IS WELL WORTH A READ BY THE WAY. THE QUOTE THAT STOOD OUT TO ME
IS YOU WILL NOT GET AN ECONOMIC REVOLUTION, SAYS THIS PROFESSOR WHO SPENT A LOT OF TIME STUDYING THIS SPACE. >> I HAVE TO SAY I'M MORE IN HIS CAMP. ONE POINT I WOULD MAKE IS I STILL THINK THERE IS A MISMATCH OF EXPECTATIONS, IF THAT IS IN STATING THE OBVIOUS. THERE STILL NEEDS TO BE A PROPER FUNDAMENTAL UNDERSTANDING, PARTICULARLY IN FINANCIAL MARKETS, ABOUT WHAT THIS TECHNOLOGY IS, WHAT IS DRIVING IT, BUT IT CAN AND MORE IMPORTANTLY CAN'T DO. IN TWO SECONDS, THE BASIS OF ALL AI WE SEE AT THE MOMENT IS PATENT RECOGNITION, A POWERFUL TECHNIQUE THAT CAN BE EMPLOYED IN MANY DIFFERENT END USES. BILL DRIVE COST SAVINGS AND EFFICIENCIES, HOWEVER, THE CURRENT GENERATION OF AI THAT WE SEE IS NOT SENTIMENT IN ANY WAY. IT CANNOT THANK OR REASON, THAT
BEGS THE WIDER MORE PHILOSOPHICAL QUESTION WHICH WE DON'T HAVE TIME TO ANSWER RIGHT NOW, BUT IS THIS THING REALLY INTELLIGENT? I WOULD BE IN THE PROFESSOR'S CAMP THAT THESE ALGORITHMS ARE VERY POWERFUL IN SOME APPLICATIONS. BUT I THINK EARLIER CONCERNS, OR WORRIES ABOUT AI TAKING OVER THE WORLD, TRIGGERING WORLD WAR III, THE RISE OF THE MACHINE REMAINS WITHIN THE REALMS OF SCIENCE FICTION. THIS IS A POWERFUL TECHNIQUE THAT HAS APPLICATIONS IN SOME AREAS BUT I DON'T THINK IT WILL REVOLUTIONIZE THE ECONOMY AS WE SEE IT TODAY. BUT IT IS AN EARLY STEP ONTO THIS JOURNEY. TOM: JENSEN HUANG OF NVIDIA MAY TAKE
THE OTHER SIDE OF THAT THAT. -- THAT BET. HE IS TALKING ABOUT DEMAND FOR THE LATEST ITERATION OF THEIR ACCELERATOR. HE SAYS DEMAND IS INSANE. WHAT SHOULD WE MAKE OF HIS COMMENTS ABOUT THE OUTLOOK FOR DEMAND IN 2025? >> THAT WAS AN INTERESTING CHOICE OF WORDS.
CALLING IT INSANE, YES ABSOLUTELY, DEMAND CONTINUES TO OUTSTRIP SUPPLY. BUT IS IT INSANELY SUSTAINABLE? FOR PEOPLE WHO HAVE LOOKED AT THE TECHNOLOGY SECTOR OVER THE YEARS, THIS SECTOR IS RENOWNED FOR BUBBLES, RENOWNED FOR HIKE CYCLES. ARE THESE COMMENTS GOING TO GO DOWN IN THE ANNAL IS A MARKER OF PKI EUPHORIA? GOING BACK TO THE PROFESSOR'S COMMENTS, I THINK EXPECTATIONS ARE AHEAD OF THEMSELVES AT THE MOMENT, THIS IS A POWERFUL TECHNIQUE, BUT IT ISN'T GOING TO REVOLUTIONIZE INDUSTRIES AND I THINK THE LEVEL OF MONETIZATION THESE COMPANIES ARE GENERATING REMAINS AT A LOW LEVEL RELATIVE TO THE HIGH EXPECTATIONS THAT ARE BEING PRICED, BOTH WITHIN PUBLIC MARKETS AND PRIVATE MARKETS WITH OPENAI BEING THE EXAMPLE OF THAT. AT SOME POINT, THERE IS A DEAD
RECKONING COMING ON THAT. TOM: A DEAD RECKONING, THERE WE GO, ROBERT LEA WITH SOME WOULD ARGUE A HEALTHY DOSE OF SKEPTICISM AROUND GEN AI. WE STAY ON THIS SPACE RIGHT NOW BECAUSE BIG TECH IS RAMPING UP INVESTMENT IN EUROPEAN STARTUPS DRIVEN BY THIS AI BOOM.
THE VALUE OF EUROPEAN VC ROUNDS WITH BIG TECH INVOLVEMENT INCREASED TO $3.1 BILLION JUST IN THE FIRST HALF OF THE YEAR, UP FROM $545 MILLION IN 2023. THAT IS QUITE THE JUMP. ACCORDING TO A NEW REPORT FROM FOUNDERS FORUM.
THE CEO JOINS ME NOW. THIS IS THE FIRST REPORT OF ITS TYPE THAT YOU AND THE TEAM AT FOUNDERS FORUM HAVE PUT OUT. IT IS TIMELY GIVEN THE INVESTMENT INTO OPENAI FROM THE LIKES OF NVIDIA, MICROSOFT AND MANY OTHERS. THE ROLE THAT MEGA CAP TECH, THE MAG SEVEN, NVIDIA AND THOSE PLAYERS, MICROSOFT, AMAZON AND META ARE PLAYING IN TERMS OF RESHAPING EUROPEAN STARTUP SCENE, WHAT KIND OF IMPACT ARE? THEY HAVING? CAROLYN: WE ARE DELIGHTED TO VIEW THIS, THE FIRST REPORT GARNERING INSIGHT FROM THE FOUNDERS THEMSELVES PARTNERING WITH BIG TECH COMPANIES, WHICH IS A CRITICAL PART OF THE ECOSYSTEM. WE SEE PHENOMENAL GROWTH IN THE INVESTMENT, FIVEFOLD FOR THAT FIRST HALF OF THE YEAR, BUT IT IS CONCENTRATED TO A SMALLER GROUP OF STARTUP PLAYERS. OVER 99% OF THEM SAY WE NEED MORE. IT ISN'T JUST AROUND
INVESTMENT. THEY NEED TANGIBLE AND PRACTICAL OUTPUTS TO SUPPORT THEIR GROWTH STORIES. THE HEADLINES ARE THAT GOOGLE AND MICROSOFT COME OUT AS THE LEAD IN INNOVATION AND INVESTMENT SPRAYED META AND NVIDIA LEAD IN INVESTMENTS, PERHAPS LESS SO, BUT EACH RAISED AWARENESS IN THE PROGRAMS THEY ARE DELIVERING. AMAZON SEEN AS THE STARTUP BUILDER, PROBABLY THE BEST REPUTATION ONLY ACROSS THE GROUP AT FOUNDERS, BUT SEEN AS THE GRASSROOTS ALL-AROUND PLAYER. AND APPLE STILL WORK TO DO IN TERMS OF REPUTATION AND INVESTMENT FROM THE FOUNDER SENTIMENTS THAT WE SURVEYED. TOM: INTERESTING THAT AMAZON STANDS OUT AS THE BEST PARTNER.
META HAS BEEN VERY ACQUISITIVE AS WELL, IT STANDS OUT IN THE ACQUISITIONS IT IS MADE IN THE SPACE. WHAT HAVE THEY BEEN TARGETING? CAROLYN: PEOPLE FORGET THESE ARE NOW MAJOR COMPANIES THAT NEED TO INNOVATE IN THE SAME WAY THAT PERHAPS 100-YEAR-OLD CORPORATES DO. THAT PARTNERSHIP BETWEEN THE TWO IS CRITICAL AND WE TALKED ABOUT THE PACE OF CHANGE AND DEMAND BEING INSANE, THERE IS A REQUIREMENT TO KEEP THAT TECHNOLOGY INNOVATION AT PACE, AND WORKING WITH STARTUPS INVESTING IN LOWE'S COMPANIES IS JUST A CRITICAL TOOL FOR THE BIG TECH COMPANIES. TOM:
YOU HAVE USED THE WORD CRITICAL, I THINK, THREE TIMES AND PROBABLY APPROPRIATELY SO, BUT I WONDER IF CRITICAL IS ALSO AN OVERRELIANCE. IS THE EUROPEAN ECOSYSTEM OVERLY RELIANT ON THIS U.S. FUNDING? CAROLYN: WE NEED SOURCES OF CAPITAL FROM ALL FORMS, THAT CAN'T JUST COME FROM BIG TECH PROVIDERS, AND IT IS JUST INVESTMENT GRADE WE HEARD FROM FOUNDERS THAT THEY NEED THE PROGRAMS THESE BIG TECH COMPANIES ARE OPENING. WE NEED PROOF OF CONCEPTS AND SANDBOX ENVIRONMENTS WHERE BIG TECH COMPANIES PLAY A ROLE TO BRING TOGETHER CORPORATES, ACADEMICS, SCIENTISTS AND THE STARTUPS TO LOOK AT THE NEXT FRONTIER OF TECHNOLOGY AND GROUNDBREAKING ENVIRONMENTS REALLY. IT ISN'T JUST AROUND THE
INVESTMENT BUT WE NEED IT FROM MULTIPLE SOURCES. TOM: IS IT A REMINDER THAT EUROPE LACKS THAT GROWTH LATER STAGE FUNDING, THE FIREPOWER, WHEN IT COMES TO THOSE BIG-TICKET INVESTMENTS? CAROLYN: THERE HAS NEVER BEEN A BETTER TIME TO BE A FOUNDER IN EUROPE RIGHT NOW. BUT WE HAVE SEEN THE LAST FEW WEEKS AND MONTHS IS THAT REALLY EUROPE IS LEADING, IN THE SENSE THAT SOME COMPANIES IN AI, IN VOICE AND SOFTWARE TOOLS, SO WE HAVE BEEN IN FRONT OF THE TECHNOLOGY CURVE AS WE HAVE NOW, BUT WE HAVE TO REMAIN COMPETITIVE, TO CONTINUE THAT COMPETITIVENESS AGAINST THE U.S. AND CHINA WE NEED LATE STAGE CAPITAL FROM MULTIPLE SOURCES, AND WE NEED THESE PARTNERSHIPS. THAT SENSE OF INVESTMENT IN TALENT AS WELL. WE HAVE SEEN THE EUROPEAN
ENGINEERING ECOSYSTEM HAS REALLY MATURED. BUT WE NEED MORE LEADERSHIP AT SCALA. THIS IS WHERE THE BIG TECHNOLOGY COMPANIES CAN PLAY A ROLE IN PROVIDING MENTORSHIP AND PARTNERSHIP TO HELP LATER STAGE COMPANIES. THEY ARE TRADITIONALLY KNOWN FOR THE GRASSROOTS AND EARLY-STAGE, BUT HOW CAN THEY PARTNER WITH COMPANIES TO HELP THEM COME AT SCALE? TOM: I WOULD IMAGINE THERE WOULD BE REGULATORS ON IN THE U.K. AND BRUSSELS LOOKING AT YOUR REPORT THINKING THIS IS A REMINDER THAT THERE IS A MONOPOLISTIC, ANTICOMPETITIVE PUSH COMING THROUGH FROM MEGA CAP TECH. THAT IS NOT WHAT YOU SAY IN THE REPORT BUT CLEARLY THERE IS CONCERN ABOUT THE SIZE OF THESE COMPANIES HOOVER RING UP THE STARTUPS AND EXPANDING THAT MUCH FURTHER MAKING IT MORE DIFFICULT TO INNOVATE. CAROLYN:
IT IS NO SECRET THAT THE BIG TECH COMPANIES ARE QUITE FOCUSED ON THAT. TOM: IS IT A FAIR CRITICISM? CAROLYN: WE NEED TO MAKE SURE WE HAVE A FAIR PLAYING FIELD FOR ALL. IT IS A BOLD MOVE FROM OPENAI RECENTLY SAYING NO COMPETITIVE INVESTMENTS. VERY FEW COMPANIES CAN PULL THAT OFF. IS THAT THE RIGHT THING FOR A COMPETITIVE MARKET? TIME WILL TELL. BUT WE NEED OPEN AND FAIR PLAYING FIELD FOR THESE COMPANIES TO GROW IN SCALE. TOM:
WHAT ARE THE CAPITAL MARKETS LOOKING LIKE? THAT IS ANOTHER CHALLENGE FOR EUROPE. SCALING THESE BUSINESSES, GETTING THEM TO SIZABLE EXITS OR IPO'S. CAROLYN: LET'S SEE HOW THAT TRANSPIRES. WE NEED TO SEE MORE FAMILY OFFICES INVESTING. IT USED TO COME FROM MULTIPLE SOURCES AND NOT ONLY FROM BIG TECH PLAYERS OR U.S. INVESTORS. TOM:
SO WE LOOK FOR THOSE ADDITIONAL REFORMS. MAYBE WE WILL GET ANNOUNCEMENTS AROUND THE BUDGET. TALKING OF WHICH, ARE YOU HEARING ANY CONCERN FROM THE TOUCH POINT INDIVIDUALS YOU HAVE, INVESTORS ARE FOUNDERS, AROUND WHAT MIGHT COME OUT IN THE BUDGET WITH A FOCUS ON CAPITAL GAINS, CARRIED INTEREST, HIGH NET WORTH INDIVIDUALS IS THAT PERCOLATING TO THE SURFACE IN YOUR COMMUNITY? CAROLYN: WE DON'T KNOW YET, IT IS A CASE OF WE NEED TO MAKE SURE WE STAY COMPETITIVE AND HAVE THE RIGHT INCENTIVES AND THE RIGHT OPPORTUNITIES FOR FOUNDERS TO MAKE THE U.K. A PLACE TO GROW. TOM: CARRIED INTEREST COULD BE A COLD WIND ACROSS THE SECTOR IN THE U.K. CAROLYN: I HOPE NOT. TOM:
GREAT REPORT, VERY TIMELY. CAROLYN DAWSON, CEO OF FOUNDERS FORUM. COMING UP, THE YUCAIPA MINISTER -- THE U.K.
PRIME MINISTER PROMISING TO STAND FIRM IN NEGOTIATIONS AS HE SEEKS CLOSER TIES WITH THE EUROPEAN UNION. WE ARE LIVE IN BRUSSELS ON KEIR STARMER'S TRIP. THIS IS BLOOMBERG. ♪ TOM: WELCOME BACK. 9:43 IN THE CITY OF LONDON. THE FX SPACE, THE CURRENCY TO WATCHES THE POUND. THE BANK OF ENGLAND GOVERNOR GAVE AN INTERVIEW TO THE GUARDIAN IN WHICH HE SAID, "THE BOE COULD BECOME MORE AGGRESSIVE." LOOK AT THE PRICE ACTION ON THE
POUND, DOWN OVER 1% VERSUS THE U.S. DOLLAR, TRADING AT 1.31. FALLING OVER 1%, THE LOWEST SINCE AT LEAST SEPTEMBER 16, ANOTHER SUPERLATIVES FOR YOU. THE EURO STRENGTHENED 1% VERSUS THE POUND, THAT'S THE HIGHEST LEVEL SINCE SEPTEMBER 20. YOU ARE SEEING THAT IMPACT ON THE POUND AND A MARKED IMPACT AS WELL AS IN THE GILT MARKETS. MONEY MOVING IN, YIELDS DOWN AT
THE FRONT END, DOWN SEVEN BASIS POINTS ON THE TWO-YEAR, COMFORTABLY BELOW 4% AND THE 10-YEAR AT 4% ON THE NOSE. THE WORK AT THE FRONT END OF THE GILT CURVE AS MONEY MOVES IN ON EXPECTATIONS THAT THE BOE PEOPLE CUT AGAIN, TO ANY FIVE BASIS POINTS, IN NOVEMBER. THERE IS THE QUOTE. IF THE NEWS ON INFLATION REMAINS POSITIVE, THERE IS A CHANCE THE BOE COULD BECOME "A BIT MORE ACTIVIST" IN CUTTING INTEREST RATES. ANDREW BAILEY ON THE PROSPECTS
OF A DOVISH BANK OF ENGLAND. THE U.K. PRIME MINISTER PROMISED TO QUOTE STAND FIRM DURING WHAT ARE LIKELY TO BE DIFFICULT NEGOTIATIONS TO FORGE CLOSER TIES WITH THE EUROPEAN UNION. KEIR STARMER MADE HIS FIRST VISIT TO BRUSSELS AS BRITISH PM YESTERDAY MEETING WITH THE COMMISSION PRESIDENT URSULA VON DER LEYEN. >> WE ARE DETERMINED TO PUT THIS RELATIONSHIP BACK ON A STABLE, POSITIVE FOOTING. I THINK WE ALL WANT TO SEE. TOM: BLOOMBERG'S U.K. CORRESPONDENT LIZZY BURDEN IS
IN BRUSSELS. LIZZY, MY HAVING FLASHBACKS TO THE BREXIT NEGOTIATIONS, BUT THIS TIME THE TILT IS DIFFERENT. WE ARE TALKING POTENTIALLY ABOUT A WARMING UP, MAYBE A REDRAWING OF U.K.-EU RELATIONS. LIZZY: FOR THE FIRST TIME IN A LONG TIME, THE UNION JACK WAS FLYING AT THE EUROPEAN COMMISSION YESTERDAY. KEIR STARMER IN THE PRESS CONFERENCE TOLD THEM IT IS GOING TO BE VERY DIFFERENT. THERE ISN'T GOING TO BE A DRIP,
DRIP, DRIP OF LEAKS COMING OUT OF THESE NEGOTIATIONS. HE WANTS TO MARK THIS AS A DIFFERENT ERA FROM ONE THE CONSERVATIVES WERE IN POWER. THIS WAS AN INCREDIBLY FRUSTRATING PRESS CONFERENCE FROM THE NEW PM. AGAIN, FOCUS ON THE VIBE, NOT ON THE DETAIL. HE SAYS HE WANTS A MORE PRAGMATIC RELATIONSHIP WITH BRUSSELS. HE SAYS CHANGING THE TONE IS
IMPORTANT IF YOU WANT TO RESET THE RELATIONSHIP. BUT BEHIND THE SCENES, EVEN EU DIPLOMATS ARE GETTING ANNOYED AT THE LACK OF DETAIL. JUST AS IN THE U.K. YOU'VE GOT THE U.K. NEWSPAPERS FEELING THE POLICY VACUUM WITH STORIES ABOUT FREEBIES AND NUMBER 10 IN FIGHTING. THE POLICY VACUUM HERE IS BEING FILLED BY EU OFFICIALS WHO HAVE THEIR OWN IDEAS FOR WHAT THEY WANT FROM THE U.K. THEY WANT REASSURANCES ON FISHERIES AND A YOUTH MOBILITY DEAL.
KEIR STARMER VERY CLEAR THAT HE'S NOT GOING TO REJOIN THE CUSTOMS MARKET OR THE SINGLE UNION, OR GO BACK TO FREEDOM OF MOVEMENT, BUT INTERESTINGLY, NOT RULING OUT THOSE TWO BIG ASKS FROM THE EU. TOM: WHAT IS THE CONTROVERSY FOR THE U.K. AROUND A YOUTH MOBILITY DEAL? THIS IS ONE OF THE BIGGEST LOSSES OF BREXIT OBJECTIVELY, THAT YOU CAN PICK UP YOUR PRESS PORT AND WORK IN THE EU.
WE ARE TALKING ABOUT STUDENTS DOING THAT TO SOME EXTENT, WHERE IS THE CONTROVERSY FOR THE U.K.? LIZZY: THERE IS A KEY DISTINCTION BETWEEN MIGRATION AND MOBILITY. THIS IS WHAT THE EU OFFICIALS ARE EMPHASIZING. THEY SAY THIS IS TIME-LIMITED, IT'S ON A VISA BASIS, AND IT IS A PARTICULAR DEMOGRAPHIC. OF COURSE, FOR KEIR STARMER, THE DANGER IS THAT IT REMINDS PEOPLE OF FREEDOM OF MOVEMENT WHICH IS WHAT BREXIT ENDED. HE CANNOT RISK ADDING TO NET MIGRATION FIGURES, EVEN IN THE SHORT TERM.
FRUSTRATINGLY FOR EU OFFICIALS, THEY ARE LOOKING AT HIS MAJORITY IN WESTMINSTER SAYING WHERE'S THE AMBITION? POTENTIALLY THE WAY THIS WILL GET OVER THE LINE IF THEY CAN CHANGE THE WAY THIS APPEARS ON A MIGRATION NUMBERS, SO THERE IS A WAY THROUGH FOR URSULA VON DER LEYEN TO GET SOMETHING ON THE TABLE. TOM: LET'S SEE IF THEY HOIST THE UNION JACK ONCE AGAIN OUTSIDE THE COMMISSION. LIZZY BURDEN ON THE VISIT BY KEIR STARMER TO BRUSSELS. NOW TO THE U.S., WHERE PROSECUTORS SAY DONALD TRUMP SHOULD STAND TRIAL FOR QUOTE HIS PRIVATE CRIMES IN TRYING TO OVERTURN THE 2020 ELECTION. THE NEWLY UNSEALED COURT FILING ALLEGES THAT WHEN TOLD THAT VICE PRESIDENT MIKE PENCE COULD BE IN DANGER AT THE CAPITOL DURING THOSE RIGHTS THE FORMER PRESIDENT REPLIED "SO WHAT?" THE SPECIAL COUNSEL FILES COME AFTER THE U.S.
SUPREME COURT RULED THE PRESIDENT IN MANY INSTANCES CANNOT FACE CHARGES FOR OFFICIAL ACTS WHILE IN OFFICE. AS THE EU PREPARES TO VOTE ON TOUGHER TARIFFS FOR CHINESE EV'S, GERMAN CARMAKERS PUSH BACK. THIS IS BLOOMBERG. ♪ PRESSING GERMANY TO VOTE AGAINST IMPOSING SIGNIFICANTLY HIGHER EU TARIFFS ON CHINESE MADE EV'S.
AS GERMAN CARMAKERS PUSH TO AVOID A SPAT WITH THEIR MOST IMPORTANT MARKET. WE HAVE BEEN SPEAKING TO THE VICE CHAIR OF XPENG, ONE OF THE LEADING STARTUPS IN THE EV SPACE IN CHINA, BRIAN GU TALKING ABOUT HOW THEY ARE THINKING ABOUT THE POTENTIAL TARIFF IMPACT. THEN WE BRING IN CRAIG TRUDELL, OUR CAR CZAR, FOR THE ANALYSIS. >> BEING MORE LOCAL IS NOT BECAUSE TARIFF, NOT ONLY BECAUSE OF TARIFFS. BECAUSE AS A COMPANY HAS ASPIRED TO BE A LEADER IN A MARKET LIKE EUROPE, WE HAVE TO THINK ABOUT BECOMING MORE LOCAL. WE HAVE TO HAVE MORE LOCAL TEAMS TO BUILD OUR LOCAL BRAND. AND ALSO HAVE MORE LOCAL
PRESENCE. YOU CANNOT RELY ON THE EXPORT ONLY STRATEGY TO DEAL WITH A LOCAL MARKET LIKE EUROPE. TOM: BRIAN GU OF XPENG SPEAKING TO OLIVER CROOK IN BERLIN.
LET'S BRING IN OUR AUTOS EDITOR. WE ARE GETTING THE RESPONSE FROM THE GERMAN AUTOMAKERS ON ONE SIDE, THE CHINESE ON THE OTHER LOOKING TO BUILD OUT CAPACITY IN EUROPE TO WEATHER THIS INCOMING STORM. WHAT DO WE MAKE OF HOW THIS IS RESHAPING THE AUTOS MARKET AND WHETHER EUROPE WILL GO AHEAD WITH TARIFFS TOMORROW? >> IT'S A BIG RISK FOR THE INDUSTRY. BECAUSE IT'S NOT JUST A MATTER OF HURTING SOME AND SPARING OTHERS, OR EVEN HELPING OTHERS. THAT'S THE CASE THAT A LOT OF COMPANIES ARE MAKING AND EVEN SOME GOVERNMENTS. I THINK IT IS LIKELY THAT THE TARIFFS WILL GO AHEAD.
WE HAVE ONLY SEEN DAY BY DAY MORE JUSTIFICATION FOR THOSE IN FAVOR OF THESE TARIFFS, IN THE SENSE THAT WE'RE SEEING MORE COMPETITION, TIGHTER MARGINS, THREATS OF PLANT CLOSINGS, ALL THESE THINGS FEED INTO THIS NARRATIVE OF MAYBE WE SHOULDN'T BE SO OPEN TO THE CHINESE MANUFACTURERS THAT HAVE SO MUCH CAPACITY AND HAVE AMBITIONS TO GROW HERE. THEY NEED TO BUILD HERE. AND WE NEED TO DO SOMETHING TO PROTECT OUR HOMEGROWN COMPANIES. TOM:
BRIEFLY ON TESLA, WHAT IS TESLA LOOKING LIKE IN TERMS OF THE DELIVERIES? >> YESTERDAY'S DELIVERIES WITH THE FIRST YEAR-OVER-YEAR INCREASE FOR THEM. IT WAS LIGHTER THAN SOME ANALYSTS WERE EXPECTING. WE DID SEE A BIG RUN UP IN THE STOCK IN THE LEAD UP TO THIS REPORT. THEY TOO WILL BE AFFECTED OF TARIFFS GO INTO PLACE BECAUSE THEY ARE RELIANT ON THEIR PLANT IN SHANGHAI FOR MODEL 3 SUPPLY.
THEY TOO ARE LOOKING AT TOMORROW'S VOTE WITH SOME TREPIDATION OF IMPACT IN THE MONTHS TO COME. TOM: SIGNIFICANT DAY FOR THE SECTOR. WE HOPE TO BRING YOUR EXPERTISE BACK TO UNPACK THAT TOMORROW AHEAD OF THAT DECISION.
BLOOMBERG'S AUTO CZAR CRAIG TRUDELL WITH THE DETAILS. UP NEXT, BLOOMBERG BRIEF WITH MANUS CRANNY IN NEW YORK, AS U.S. FUTURES POINT LOWER 0.4%. EUROPEAN STOCKS DOWN 0.7%. STAY WITH US. THIS IS BLOOMBERG.
♪
2024-10-05 16:06
