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And a very good afternoon everyone. And
it is Bloomberg Business Week Daily live
from the Bloomberg Business Week studio
in New York. I'm Tim Stenc. That is
Isabelle Lee. She's in for Carol Masser.
She's from the Bloomberg News cross
asset team. It is of course Nvidia Day.
Isabelle and it looks like stocks well
moderately higher ahead of that print.
Investors will be focused really on
everything Nvidia on the Blackwell chip
on the sales in China and really what
this means for the AI landscape widely.
We got a great round table coming up in
just a minute. Caroline Hyde is going to
be joining us. Also with us is Kunjan
Sabani of Bloomberg Intelligence. Also a
deep dive into the US economy. We're
talking everything from tariffs, labor,
AI, and yes, Fed independence. Michael
McKe is going to be joining us in just a
minute. And then Natasha Seren from the
Eel Budget Lab. All that and more coming
up over the next hour right here on
Bloomberg Business Week Daily. First up
though, here he is for a check of the
day trade and those top business
stories. Charlie Fel.
Hi, thank you very much Tim and all
about Nvidia right now with Nvidia
shares. They're gaining 2/10 of 1%. S&P
500 index trading at a record. Will it
close? Got to keep it locked into
Bloomberg television and radio for the
latest. S&P right now up 15. We're
trading at 64.81. That is a gain of 2/10
of 1%. The Dow up 148 now up 3/10en of
1%. NASDAQ composite index up 2/10 of
1%. The Bloomberg Mag 7 index flat on
the day right now, but Nvidia pushing
higher by onetenth of 1%. The 10-year
4.24% with a 2-year 3.61%.
Gold little changed up a dollar the
ounce 33.94. West Texas Intermediate
crude up 1.1% WTI 63.95 a barrel. And
Bitcoin now up 9/10en of 1% 112,371
on Bitcoin. Also reporting today after
the close of trading, we'll be hearing
from Crowd Strike and Snowflake. Crowd
Strike up by 2.2%. Snowflake up 3 and
a2% again. Nvidia after the bell up by
onetenth of 1%. I'm Charlie Pellet. That
is a Bloomberg Business Flash.
Hey, thanks so much for that update,
Charlie. We start with the US Central
Bank and the Trump administration's push
to remove Fed Governor Lisa Cook. The
Trump administration continues to push
for her ouster. Here's NEC Director
Kevin Hasset earlier speaking to
reporters outside the White House. The
president absolutely has authority to uh
fire a fed governor for cause and I
think the accusations uh are serious and
I look forward to seeing the outcome. If
I were her in her circumstance, I would
take leave right now. I think it's the
honorable thing to do.
That was National Economic Council
Director Kevin Hasset at the White House
earlier today. We should note the
expected lawsuit by Fed Governor Lisa
Cook that challenges her firing by
President Trump could be filed in DC
federal court as soon as today. This is
according to a report from CNBC. Michael
McKe is international economics and
policy correspondent for Bloomberg TV
and radio. He joins us up in our Boston
bureau this afternoon. Mike, how's the
Fed handling this? Because yesterday the
central bank said it would quote abide
by any court decision, but how is
someone like Lisa Cook able to do her
job as all of this is happening?
Well, obviously she's going to be
distracted. She has to defend herself.
She's hired a lawyer and I'm sure she'll
be working on that. But there is a very
important Fed meeting coming up on
September 17th. And this whole court
appearance that's going to happen is
going to be very important to that
because if the uh court rules that the
president can remove her from office,
even if they haven't completely
adjudicated whether he has the right to
do so, in other words, if they turn down
a stay, an injunction to keep her
working while they fight in court, then
her voice won't be heard at the meeting.
and that'll be one less person who will
be voting and she had indicated earlier
in the summer that she might be ready to
vote for a rate cut. So, it is uh
interesting to contemplate what might
happen.
But if the court decides that federal
governor Lisa Cook can stay, has the
damage already been done?
Uh not necessarily. A lot of it depends
on how this all works out in terms of
what she did and whether it's uh was
illegal or not. Uh if it was a small
thing or if it was a deliberate attempt
to evade uh taxes or to cut your
interest rate payment, something like
that. Uh the president will be seen as
political if it turns out to be nothing
and the Fed probably gets by. But if it
does turn out that she did do something,
even if it doesn't rise to the level of
legal cause, and that's a whole separate
argument, uh then the Fed does lose some
credibility. So the Fed is trying to be
very careful right now and not get
involved in uh much of the PR. They did
put out the statement yesterday, as Tim
noted, that they would abide by all
court rulings and that Lisa Cook was a
Senate confirmed
uh appointee, which is kind of a shot at
the at the bow of the president, but
beyond that, I wouldn't expect them to
say too much until they have a lot more
information.
All right, Michael McKe, international
economics and policy correspondent for
Bloomberg TV and Radio. Mike is going to
be joining us in just about an hour at
the top of the 3:00 hour on Bloomberg
Business Week Daily. Well, for more on
the economy, everything from tariffs,
labor, productivity, and yes, the
question of Fed Independence, I want to
bring in Natasha Sering. She's the
co-founder and president of the Yale
Budget Lab. She's also professor of law
Yale Law School. She's got an
appointment in the Yale School of
Management's finance department, too.
She worked at the Treasury Department uh
as counselor to Treasury Secretary Janet
Yell. and she joins us from New Haven.
Natasha, good to see you. I want to
start with a referencing an opinion
piece from Bill Dudley on the Bloomberg
earlier today. He's former president of
the Federal Reserve Bank of New York.
He's out with a column today that says
up to now he wasn't worried about the
threat that President Trump poses to the
Fed's independence. Now he writes he's
much more worried and he thinks the
markets should be too. Does the
president's attack on the Fed risk does
I mean should we be worried about the
president's attack on the Fed?
you should be and I agree wholeheartedly
with Bill. I think you're in such
unchartered territory at the moment
because remember this is coming on the
heels of many months of the
administration arguing that the Federal
Reserve should be cutting interest rates
in accord with the political whims of
the Trump administration rather than
based on its very particular dual
mandate which is about inflation and
it's about the labor market. And the
fact that we have a central bank that's
independent that cares about those two
things and those two things alone is a
really significant source of our
economic security. The way I know that
is because we have experimented in the
United States as have other countries
with federal reserves that become
politicized in this country in the Nixon
administration. We had Arthur Burns who
was pushing for interest rates to help
President Nixon get elected. And the
result of that was runaway inflation
that increased from three to 13% over a
two-year period. So, we do not want a
central bank that functions based on
short-term political whims. And I'm
really worried we're moving in exactly
that direction.
The Fed said they will abide by what the
court decides. And President Trump
yesterday also said he will abide by the
same. But if the court decides that Lisa
Cook can stay, are we past a red line?
Like, is the damage already done when it
comes to the credibility of the Fed?
hope that the answer to that question is
no. Um, and I really hope that what's
important to note in the context of the
legal discussion here is that the
Supreme Court has really gone out of its
way in a case about removal that had
nothing to do with the Federal Reserve
to signal that the Federal Reserve is
special and that these types of
positions because it's a quasi private
institution with a particularly
important role in our economy. these
types of positions are really only for
cause removal positions and frankly for
cause rises to a level in legal
nomenclature that it's pretty hard to
meet in the context of malfeasants and
so I think that the court has already
signaled directionally that they really
think protecting this institution and
protecting its independence is immensely
important and I hope that that's what
they continue to say as this particular
legal case plays out in the courts but
the thing that I'm worried about is the
sort of institutional credibility and
the view by the markets and by the
public and by other countries and other
investors that our central bank is
independent from any type of
politicization. That's kind of a genie
that you can't put back in the bottle.
It's something that's taken decades and
generations to build and I worry that it
evaporates um pretty quickly as a result
of some of the types of attacks that
we're seeing. So, I'm hopeful that the
judiciary is going to step in
appropriately here, but I'm still really
disheartened to see the types of attacks
that you've been seeled um at the
Federal Reserve of recent.
So, let's keep your law professor hat on
for a moment, Natasha, and talk a little
bit about the definition of for cause in
this context. You touched on it, but but
I'm curious if let's say the allegations
about mortgage fraud end up and we
haven't seen the evidence here that we
don't have that yet. Uh but when it
happened, if it happened matters, my
understanding is intent matters as well.
So from a perspective, from a legal
perspective, why don't you think this
would qualify as a four- cause reason?
You know, I'm far from an expert on for
cause removal, nor have I looked at the
specifics of this particular case, and
nor frankly could we have at this point
because Lisa Cook hasn't been charged
with any crime or anything. This is a
set of allegations that have been
leveled um at her by the president and
by the administration. What I can say is
that in the particular context of
removal with respect to the Federal
Reserve, the court has been pretty
explicit that it thinks it's important
and you saw it in the statement that the
Federal Reserve put out yesterday. These
are Senate confirmed positions with very
long terms that run cross
administrations precisely to try and
insulate this institution from exactly
the kind of political pressure that
we're seeing levied against it. And this
isn't just about mortgages, nor has it
been about the renovation of the Federal
Reserve building, which has taken a lot
of airtime over the course of the last
many months. It's very clear that what's
happening here is really frustration
with the direction of monetary policy.
And that's really no place for the
administration to be acting. In fact,
it's frankly counterproductive to their
goals of seeing interest rates come down
and seeing economic strength be very
significant in this country. We're
speaking with Natasha Serin. She's the
Budget Lab. She's a professor of law
Yale Law School and has a an appointment
to in the Yale School of Management's
finance department. I promised we'd go
all over. So, we're going to move from
the central bank to really what I think
a lot of the market is kind of moving
past, and that's tariffs. Because
earlier this month, our team reported
that the average US tariff rate will
rise to 15.2%
if rates are implemented as announced.
This is according to Bloomberg
economics. It's up from 13.3% earlier
and significantly higher than the 2.3%
in 2024 before President Trump took
office. Just today, the latest, the
president imposed a 50% tariff on Indian
goods to punish the country for buying
Russian oil. That's the highest tariff
in Asia. I'm wondering how you're
looking at the fraying relationship
between the US and India. And what's at
stake more broadly when it comes to this
tariff?
Importantly, what we should understand,
and my colleagues at the budget lab are
hard at work, by the way, um updating
our estimates with respect to what
happens to the effective tariff rate and
what happens to the type of revenue that
we're going to see coming into this
country. But roughly speaking, you've
seen about an eight-fold increase in the
average effective tariff rate over the
course of the last eight months of this
administration, bringing in about $3
trillion of revenue into the country
over the course of the next decade.
Importantly, and this goes a bit to your
point, Tim, it's never been super clear
to me what exactly the objective is of
this type of trade policy and where
exactly it is that the administration is
hoping to land because part of what
you've seen articulated is that this is
really about sort of China and national
security and being um sure that our
adversaries are held at bay. In that
environment, you really are quite
worried about the idea of alienating
allies and being particular with respect
to not just India, but if you think
about Canada and Mexico and other
countries where traditionally they've
been very strong allies of the United
States and in fact we've been
encouraging of more manufacturing to
shift particularly to India and Vietnam
um exactly because it shifts away from
China and so a little bit feels like
this policy has been kind of in cohhat
and all over the place and it's hard to
analyze like exactly why it is we're
doing what it is that we're doing in
order to be able to try and judge any
success. What I can say is as a result
of the tariffs so far, prices are going
up and going to go up further. The
economy is going to be smaller and it
doesn't seem like a win from the
perspective of the American consumer or
from American businesses.
I'm glad you brought that up because I'm
curious if you think this will undo all
the years of goodwill that the US and
India have built.
Well, a thing that I'm worried about,
frankly, is that you are in a situation
where we are very exposed to particular
um relationships that it's taken to, and
this actually relates to our
conversation about the Federal Reserve
in that a lot of the sort of goodwill
that you're describing are things that
it's taken decades across
administrations to try and build the
types of working relationships with our
allies that have made us this global
hedgeimon and have made us a real marker
of stability in the economy, a place
that other countries want to invest in
and other investors both domestically
and internationally are keen to spend
time in and around. And so what you
worry about in some sense is not just
are you alienating one particular ally
or are you moving us sending some other
countries closer into the arms of China.
Of course, you're worried about all of
that, but also I think what you're
worried about is the general sort of
chaos of not exactly knowing where these
tariffs are going to land, not knowing
if it makes sense to try and shift part
of your manufacturing supply chain into
India because if India's effective
tariff rate is 50%, it's no longer the
type of place where you're going to want
to be pursuing a lot of that type of
business. So I think it makes decision-m
really complicated for the United States
and for the businesses that are in this
country and it also runs real risks
geopolitically that are pretty
concerning.
I promised we'd go everywhere. We have a
few minutes left and I want to talk a
little bit about the labor market and
productivity in the context of record
low birth rates in the United States,
immigration that has come down quite a
bit during this administration and what
it means for a workforce moving forward.
How do you weigh those two things?
It's so interesting because I was
actually talking to um some colleagues
at the or some friends who work at the
Congressional Budget Office who have
said that one of the reasons why you
have productivity growth over the course
of the next decade that their estimates
are going to average in the 1.82% range
uh sorry GDP growth in the 1.82% 2%
range over the course of the next 10
years is precisely because it's on the
back of an increase in labor supply that
comes from immigration. And the reason
why that's so important is because, as
you're describing, Tim, we have an aging
population in this country. So, a big
chunk of people are going to age out of
the labor force, it's really important
that you have that supply coming in. In
a world in which you don't have that
supply coming in meaningfully and you've
kind of shut down pathways to
immigration as you've seen policy-wise
over the course of the last many months,
you start to lose a very significant
driver of labor force growth and then
driver of productivity and broader
economic growth. The thing that's
interesting is it's happening at the
same time as you're seeing potentially
this productivity revolution that's
coming from artificial intelligence. So
in some sense it's hard to know exactly
how to disentangle those two effects as
we watch the direction the economy is
going over the course of the next many
years. But restricting labor supply is
going to have a pretty meaningful impact
particularly on sectors of the economy
like construction and manufacturing. But
with AI investment booming, do you think
that AI will be able to offset the lack
of im workers whether in relation to
immigration, the supply of workers that
we have are are we facing right now?
It's kind of hard to answer that
question right now in some sense because
it's hard to know exactly what to make
of the very significant capital
expenditure investments we're seeing in
AI and hard to know what to make about
the role that AI is having in the labor
force thus far. There's a great new
paper by Eric Bon Austin and co-authors
where they look at the extent to which
you're actually starting to see
displacement in the labor force that has
to do with artificial intelligence and
its um growth uh and usage across
different sectors of the economy. And
they do find that you're starting to see
particularly for younger workers um who
are in the most exposed industries
you're starting to see actual impacts
with respect to their possibilities of
labor force entry. And so I do think
that there is going to be an effect here
that's meaningful. It's just really kind
of early innings with respect to this
type of productivity change and shift
and early innings with respect to
knowing whether AI is really a
compliment or a substitute for other
aspects of the labor force.
Yeah, perhaps a good segue to our
conversation coming up all about Nvidia.
Natasha Serin, co-founder and president
of the Yale Budget Lab, professor at
Yale Law School and the Yale School of
Management. Thanks so much for joining
us. This is Bloomberg.
It's 2:21 on Wall Street. We do check
markets all day long here at Bloomberg.
Nvidia shares pushing higher ahead of
earnings up now by 3/10en of 1%. The
Dow, the S&P, NASDAQ all advancing.
We've got the S&P trading at a record
64.84, up 18 right now. That is a gain
of 3/10en of 1%. The Dow up 158, up
4/10. NASDAQ composite index up 3/10.
NASDAQ 100 index up 2/10en of 1% and our
MAG 7 index up onetenth of 1%. Nvidia of
course a member of that index again
surging now actually higher by about
3/10en of 1%. The 10-year 4.23% with a
2-year that's currently yielding 3.62%.
Gold up a dollar the ounce, 33.94 up
less than onetenth of 1% while West
Texas Inovidia crude is up 1.3% 6407 a
barrel and Bitcoin up 1.1% 112,550
now on Bitcoin. Cole's shares are
surging after earnings. Kohl's up now by
17.1%.
Abocrombian and Fitch reported this
morning down now by 8/10en of 1%.
Officials in Minneapolis say a shooter
opened fire this morning during mass at
a Catholic school, killing two children
and injuring 17 other people before
killing himself. Minneapolis Police
Chief Brian O'Hara says the shooter, who
was armed with a rifle, shotgun and
pistol, approached the side of the
church and shot through the windows
toward the children sitting in the pews
during mass at the Enunciation Catholic
School. Recapping stocks higher, S&P up
now by 3/10en of 1%. I'm Charlie Pellet.
That is a Bloomberg Business Flash.
Thanks, Charlie. Appreciate that. Uh,
well, Nvidia reports after the bell
today. As we've been saying, there is a
lot riding on that report. It's the
world's biggest stock at more than $4
trillion in market cap. It makes up 3%
of the global market cap of all public
companies. The remaining 97%
of the stock market around the world is
82,551
stocks. So yeah, it's big and it's a
closely watched event and we're going
all in on it today ahead of those
numbers and for analysis and a breakdown
when we do get them. Here with what to
watch is Caroline Haj. She's the co-host
of Bloomberg Technology on a Bloomberg
TV. Check it out every day 11:00 a.m.
Wall Street time. Kungjan Sabani is also
with us. He's Bloomberg Intelligence
senior semiconductor analyst. Caroline
joins us here in the Bloomberg Business
Week studio. Kungjan out there in San
Francisco. Caroline, I want to start
with you and just what this has become.
This event for markets, for investors,
for analysts, for the tech industry.
It it really is the Super Bowl four
times a year.
Exactly. It's exhausting,
but it is. But and there's really
nothing like it. Why? Why? Why? What's
going on here?
Well, because we've got a $4.4 trillion
company. And not only is it relevant for
anyone's 401k, even if you're not a
direct holder in Nvidia, you're going to
be exposed to it in some way, but it's
the ripple effects. The entire AI trade
is built upon this particular
bellweather. If they send shock waves
that demand isn't as steady as people
had anticipated, the profitability isn't
as steady, if they got worries in China,
and more broadly, it will have knock-on
effects to not only its competitors, but
to the power industry that's meant to be
channeling through into the AI trade, or
whether it's just all of the ecosystem
that's built up around it, the
application of these generative AI
compute workloads that you do with these
GPUs. So, I think it's really important
that they continue to show that the
growth is there. the fact that even when
you're a $4.4 trillion company, there is
still room to have a 50% increase in
earnings per share and a 50% increase in
revenue. Yes, it's cooling down from the
more than 200% growth rate that we saw
in revenue in the previous fiscal year,
but we want to see what the forecasts
are like in particular because I think
that's where the discrepancy comes
between analysts. At the moment, you've
got a $15 billion range between the top
of the highs in terms of like $62
billion for the next fiscal quarter's
revenue and 15 billion below that is
where the lowest guide is. And so I
think analysts are just trying to
understand, do I put China in my numbers
or don't I?
So given that Quan, what do you think
can move the needle with this
spectacular runup of the stock? Is it
gross margin? Is it the China story? To
Caroline's point, what are investors
going to be closely watching?
It's going to be primarily the revenue
and the China story. I mean when you
look at the guide for the 3Q numbers
this is the largest variance we have
seen in the last two to three years when
it comes to consensus estimates and it's
because the consensus is really noisy
having some analysts inputting China
revenues coming back as early as 3Q
while a lot more or majority not so
there's a lot more wider range and the
buy side sort of range is even more
wider and much higher lofty expectations
so it is going to come down to them
clearing sort of this hurdle and a
variation as well as giving more intel
on when the China revenues start coming
and whether it's the Hopper series that
they will really ship to China or will
be a variant of the Blackwell that will
drive most of the revenues for China. So
Kuan, let's stick on that because the
we're talking, you know, about the about
China and the H20 processors and the
question that I think a lot of people
have is to what extent are Chinese firms
actually buying these processors given
the restrictions or the removing of
restrictions plus Beijing essentially
saying, "Hey, we want you to use local
competition instead." What's the read
through there?
There's very uh various factors driving
it. One is what you outlined that is
there demand still existing for the
issues? Do customers still want to buy
given the nationalist preferences in
China and given the options available.
The second really is can the supply
chain is really ready to push enough if
the customers wanted to buy them to
start showing revenues in 3Q or 4Q. So
you really have to uh try to balance
these two acts. We think on in our view
that the supply chain will take some
time to really ramp up the China back up
again especially when talking about the
H20. Secondly, we still believe that
despite of the preferences of the
governments for the big customers in
China not to uh use Nvidia chips,
there's still a lot of appetite to the
tier 2, tier three and the lower areas
where those customers cannot get any
chips whether it's chips from China or
whether it's Nvidia. So they still will
take whatever is available, whatever you
can ship. I mean they would still start
taking a a hopper or a ampier series
chips if they can get their hands on.
Caroline, can you imagine a world in
which Nvidia just doesn't exist in
China? I'm just imagining how hard of a
presence would it be to maintain one in
the US and one also in the Asian nation.
Well, I think that has been what's been
at the some rumors around why Deep Seek
hasn't been m able to make as bigger
iterations in its underlying model as of
late as if it's been forced to be
training more on locally homegrown
semiconductors rather than Nvidia's. But
this has been going on a while. The
government has been trying to push its
big LLM developers, whether it's Deep
Seek, whether it's Alibaba, whether it's
the others to use local sources,
just to look at that company, it posted
its earnings yesterday, technically our
time, but overnight. This is a company
that has added now, I mean, gone 44fold
in revenue in just a year. They're going
from a gross loss over into net revenue,
net profit finally because there is such
insatiable demand for local players. I
mean, it has doubled its market value to
$80 billion and that's not much compared
to 4 trillion, but it's doubled in a
month. And this is because there is so
much desire to back these local players.
So yes, there are all alternatives out
there, but they're not nearly as
powerful as an dumbed down obsolete, as
the president of the United States
called it, H20 chip, let alone what the
B30 could offer them if they do start
doing Blackwell architecture as well in
a more underperforming manner for the
Chinese market.
You mentioned the president, so we're
going there. And we're going to the big
news from just a few weeks ago that
certain products sold within the Chinese
market by AMD and Nvidia,
15% of that revenue will go to the US
government. Caroline, I what we're to
call this new form of American
capitalism yet, especially with regard
to Intel and US steel and MP materials
and everything happening there. But are
we going to hear details or get details
from Jensen on the call about this? Are
there still questions that you have
about the structure of this?
Well, I suppose for many analysts and
investors, the idea that 85% of
something was better than nothing. And
so they're hoping that maybe this is
some I think the questions might more
revolve around what about the Blackwell
iteration? That's what was hinted at by
President Trump. At the moment, we don't
know whether there's much demand for H20
full stop. Many are going to push on
that information report that was that
actually Nvidia's asked its suppliers to
stop making H20s for the time being. But
is Jensen Wang generally confident that
the president's going to give him an
okay to sell the next version of a
Chinese ship? Is he going to allow
Blackwell architecture into the country?
How much does national security trump
basically getting a little bit of cut of
the deal and ultimately continuing to be
able to do trade with China? It's going
to be the key question. I think I have
no idea whether Jensen's going to go
there or not. He's someone that people
want to give very long-term forecasts
and in general he's going to talk about
the Reubin, I think, in his next
innovations. But whether or not he'll
give clarity on actual profitability and
revenue guides past fiscal third
quarter, let alone his dealings with the
president, we don't know.
We're speaking with Caroline Hyde, the
co-host of Bloomberg Technology on
Bloomberg TV. Also, Kungjan Sabani of
Bloomberg Intelligence. He's the senior
semiconductor analyst out there in San
Francisco. Kung Jan, more broadly, do
you think there's just too much faith in
AI when we think of productivity? Will
this come from existing AI companies or
will it come from those that have yet to
be built? When it comes to the AI
ecosystem,
I think that it's going to be
combination of both. Um, you know, when
we try to answer that question, is there
is it a bubble or is there too much
weight? We try to look at the data that
we have available. uh over the last 12
months the biggest spenders when it
comes to this Nvidia GPUs have shown a
lot more return uh in the monetization
of these GPUs. Nvidia's own numbers if
you believe them is showing for the
Blackwell uh significant almost 2x
return when it comes to the dollar per
token generation and um most of these
companies are showing good projections
uh in terms of their monetization and
irring
the capital from Nvidia. So, so far it's
still looking good. Uh, but definitely
we don't think that this entire boom
from AI or the monetization or the the
sort of use cases will only come from
this handful of players. We think there
will be a lot more of sort of the new
open AI is getting getting born which
will drive or continue the extension of
momentum of this AI rally.
Caroline, you've mentioned I've been
watching you all day. you this is
probably your 10th hit and then you said
there's Meta, Microsoft, Amazon,
Alphabet. They account for 40% of
Nvidia's revenue and all those four
comprise 15% of the S&P 500. Talk to us
about how vulnerable this entire system
is. I feel like they're all
interconnected and if one falls, what
will happen to the rest and how will
that look like for the market? And I
think that's why the joyous reporting
and analysis that Bluemeg Intelligence
does is so great because I think in many
ways that's where in many analysts wants
to see a little bit more diversification
away from these hyperscalers. Actually
at the moment we've all got great moon
music coming out of these companies.
Alphabet says, "Oh, I'm upping my
capital expenditure just this year alone
to 85 billion." The market round of
applause for Alphabet and indeed it
signals great things for Nvidia. So all
of these companies are still seem to be
committed to capital expenditure
remaining at these ele elevated levels.
But I think many are waiting to hear
more talk of sovereign AI. What is it
that countries are doing? How is the
Middle East beefing up what it has to
offer? How is data centers and GPU
demand growing there? What about Europe?
We had a great guest on earlier on the
show really talking about the fact that
there's very bifocated development and
really fall in on AI across Europe. for
example, Denmark going great guns where
the other countries haven't yet. So
there's going to be a real pool of
demand from sovereign AIS worldwide. How
does that diversify Jensen Wang's
revenue stream so he's not so dependent
on just these four hyperscalers?
Kunjan, very quickly, 20 seconds left.
Giving you the last word, the question I
ask everybody whenever this time rolls
around each quarter. Can anyone hold a
chip uh hold a candle to Nvidia's chips?
Uh not at this point. Not in terms of
the overall end to end system and
software and networking which we we
expect good news to come out of
networking tonight. Uh not really when
you combine all of them together.
Okay, there it is. The moat still safe
at this point. We expect those numbers
to cross just after the market closed
last quarter just around 4:20 p.m. Wall
Street time. We will bring those numbers
to you live on Bloomberg TV and radio. A
big thank you to Caroline Hyde. She's
the co-host of Bloomberg Technology.
11:00 Wall Street time on Bloomberg TV.
Kunjan Sabani, Bloomberg intelligence,
senior semiconductor analyst. Check out
all of his research and from his
colleagues too on the Bloomberg
terminal. Coming up next, we're talking
retail. This is Bloomberg.
It's 240 on Wall Street. We do check
We've got the S&P 500 index trading at a
record uh very close to session highs
indeed ahead of Nvidia earnings after
the close of trading. Complete coverage
on Bloomberg television and radio as
that number drops right now. Nvidia
shares ahead of earnings up onetenth of
1%. The S&P up 19 up 3/10. The Dow right
now advancing 4/10en of 1%. The NASDAQ
composite index up 3/10. Interestingly,
uh we've got the Bloomberg MAX 7 index
little changed up by onetenth of 1%
again. Nvidia up 2/10en of 1%. Spot gold
right now up $2 the ounce upetenth of 1%
33.95. West Texas Intermediate crude up
1.4% 6415 a barrel. The 10-year 4.23%
with a 2-year yielding 3.62%.
Cracker Barrel Old Country Store getting
rid of that new logo that sparked
controversy and promoted a slump in its
share price. Today Cracken Barrel
surging 8.2%.
Recapping S&P up 3/10en of 1%, Nvidia
ahead of earnings up onetenth of 1%. I'm
Charlie Pellet. That is a Bloomberg
Business Flash. Hey, thanks for that
update, Charlie. Do appreciate it.
Certainly a lot of focus on Nvidia
today, but do not forget there are other
companies reporting today and tomorrow
in retail specifically. Cole shares
surged after the company offered a more
optimistic fullear outlook. Abberrom and
Fit shares, well, they've been all over
the place as high as 3.3% as low as down
10%. Investors are trying to decipher a
mostly and modestly better thanex
expected quarterly performance. Back
with us to talk retail and more. Dana
Telsey is here. She's the founder and
CEO and chief research officer of Telsey
Advisory Group. She joins us here in the
Bloomberg Business Week studio. So Dana,
we still have to hear from Victoria's
Secret, Dick Sporting Goods, Dollar
General, Best Buy, The Gap, Macy's, but
we've heard from a lot of the big ones,
Target, Walmart, and the like. It's not
a monolith by any means, but how are
retailers doing?
First of all, thank you for having me. I
think retailers are doing okay. They're
navigating this environment very well.
Navigating it because sales strength
exiting the second quarter is
continuing. You're seeing the fact that
consumers may be buying a little bit
earlier to avoid any of the price
increases given the goods in the second
quarter weren't as high tariff as what
you may have. And you know what else
they're doing? Marketing spend is
increasing. Product innovation is
driving conversion and denim jeans are
working. You're seeing across the board,
whether it's Kohl's, whether it's any of
the other retailers, widelegg baggie is
hot these days.
Like I'm in seventh grade all over
again. That's what it is.
Yeah. Keep repeating seventh grade.
It's what we were. That's crazy.
Yeah. That's what's that's what's
happening again. And the tariffs, yes,
there definitely are an uptick. And
you're hearing that consumers overall,
we don't know what they're going to
react to these higher prices. They're
first expected to come late Q3 and into
Q4, but the retailers are are managing,
frankly, a little better than what I
would have expected. So, you mentioned
sales strengthening. Do you view this as
a sign of durable consumer strength or
more like pre-tariff buying or because
of the great promos we're seeing? How do
you assess the health of the consumer?
I think the health of the consumer is
pretty much okay. I think consumers are
spending deliberately. I think the
high-end has traded down. We've
consistently heard of Walmart getting
the biggest growth from some of their
higher income customers. You're seeing
the Ralph Laurens or the Tapestry drive
average unit retail selling price
increases with product innovation. And
frankly, look today, Hollister delivered
a double-digit same store sales
increase, which was impressive. And you
look at Kohl's basically improved their
proprietary brands because that value
customer wants to see newness in
proprietary brands. And let's not
forget, we're going to get the last off
price of tomorrow. But TJX and Ross were
also solid. Consumers are buying ahead
of price increases. Retailers are
delivering product newness. It's back to
school season, and everyone's still
being discerning. Another thing I'm
looking at is retailers are still
investing in store openings and
remodels. So, how much is that
translating into traffic and conversion
versus just being more defensive? I
personally shop online and I don't go to
stores anymore, but it seems like people
still do. They do. When you think about
store openings in retail real estate,
there is more demand than there is
supply. There's not a lot of new
development. Any of the closures that
you've had, companies and retailers are
taking them. The growth of whether it's
a Five Below, a TJX or Ross Stores or
Burlington, there's hundreds of stores
that can open. You've seen the landlords
overall pivot. Basically grocery
anchored shopping centers can be
lifestyle also and vice versa. Wherever
the consumer is located and near it's
more a focus on where can I get the
goods and yes online is still there but
it's not either or it's both.
We got to talk about these India tariffs
50% on the country. It's upending ties
with Modi and with a long time and an
ally that wants to even become closer to
the United States. Exporters of
clothing, footwear, and small
manufactured goods like toys are bracing
for falling orders and possible job
cuts. What's going to happen as a result
of these tariffs?
I mean, we've se saw it when it was just
so high on China, too. Retailers work to
do three things. They diversify their
sourcing as fast as they can. They share
the expenses with the suppliers and
manufacturers. They raise prices to the
end consumer. Hard to do this so quickly
and it's an obstacle.
There's a great chart in the piece that
comes from data from the White House and
it shows that India tariffs are the
highest of any Asian nation 50%. But
other countries, Laos, Myanmar 40%,
China 30%. Uh you've got Sri Lanka at
20%, Taiwan, Vietnam, Cambodia,
Indonesia, I mean these places I'm
mentioning all export to the United
States. Many of them are areas that have
been diversified to away from China. So
you can only diversify so much if
everybody has tariffs.
Exactly. And there's you can't come back
to the United States for all intents and
purposes given it's you don't have the
labor and it's prohibit prohibitively
expensive. What we've seen happen is
we've even heard of some retailers who
diversified away from China. They went
back to China because the tariff was a
little became a little bit lower than
some of these other places. It is moving
pieces alto together and it's not it's
not staying stable.
When do we see it hit the actual price
of these goods? Because up to now, as
you mentioned, retailers are eating some
of this, but how long can that go on?
Since April 16th, we've had a price
tracker of 80 items. We price it every
single week. We've seen some increases,
but not across the board. Footwear is
where we've seen the increases.
expecting that by the end of the third
quarter into this fourth quarter, we're
going to see more expansive price
increases and we're still not seeing it
holistically across the board. We also
have to talk about uh interest rates and
with the potential to lower interest
rates, how much support could that
provide the shoppers uh for
discretionary spending when it comes to
the holiday and in the leadup to 2026?
Just the fact that we'll have lower
interest rates is a positive for
discretionary spending. It's something
that takes months in order to really put
in action, but the feel-good factor of
it will lead to more a more productive
spend. At the same time, when you're
looking at the labor market, we watch it
carefully because we can't see that
labor market weaken because that will
ultimately impact holiday season sales.
The strength of back to school is a good
pathway to holiday. It seems like
broadly, you sound really bullish. What
could be a headwind then? What could
really buckle all of this development to
the downside? labor weakening, price
increases coming and not really and the
consumer pulling back. That's why we say
our theme is everything's good but but
will consumers slow down but will
retailers have the inventory? Second
quarter so far though coming in better
than expected.
How's ultra luxury doing?
Slowed. Ultra luxury slowed. I think
that ultra you're not getting as many
international tourists here to the US.
You're seeing the Chinese not spend as
much as they had been and you're seeing
prices for some of the luxury brands.
Did they just get too high?
Interesting. So, what are they doing to
Well, look what the newest thing that
just happened earlier this week. Louis
Vuitton introduced be a beauty line for
Louis Vuitton. Usually,
this is the $160 lipstick.
It is the $160 lipstick,
but that is the newest thing they've
introduced. And so, they're diversifying
the categories that they can get in.
Is that going to work?
Everyone wants a little bit of luxury.
$160 compared to Hermes, which is $80
compared to Chanel, which is $50 or
under. Let's see what happens. But you
know what? One of the things is for all
different types of luxury, consumers
will pay up if there's exclusivity and a
desire along with authenticity. So, it
seems like consumers are trading down
and we don't see a lot of trading up. Is
that what you're saying?
Yes, we are. We're not seeing the trade
up like it had been before. If you look
at the Walmart numbers, you look at the
TJX, they're searching for value to
maintain their pocketbooks. Maybe the
lipstick will change it, Tim. $160. You
can do it.
I heard that the um there's like a
really nice case that it comes into and
that's like a big part of the app.
And then the refills don't cost $160.
Great.
That case, it's it's a real deal. Hey
Dana, always great when you join us on
Bloomberg Business Daily. Dana Telsey,
she's the founder, CEO, chief research
officer of Telsey Advisory Group. Taking
a look at markets right now, the Dow is
in the green higher to the tune of
4/10en of 1%. The S&P 500 up 3/10en of
1% as is the NASDAQ composite. Shares of
Nvidia up ever so slightly onetenth of
1% ahead of those earnings. I'm Tim
Stenc along with Isabelle Lee. Let's
take a look at some stocks that are on
the move today. We're joined by
Bloomberg News Equities reporter Carmen
Rhinicki. Nvidia, let's start there.
Yeah, I mean it's the stock that
everyone's watching as you just said up
slightly right now. We've seen it kind
of fluctuate throughout the day heading
up to this earnings report. Um I think
it's important to kind of take a step
back even though just from today's
session and note that it's less than 1%
from a record high going into earnings
and the stock has rallied 35% from the
last report in May. So we've just kept
seeing Nvidia go higher and higher and
it's actually a pretty uh normal setup
for the stock to be looking this good
going into earnings. ahead of this as I
was preparing uh Talia our producer
reminded me that the stock has close to
doubled since those April lows.
Yeah.
I mean that was like post deepseek. It
was a lot of questions about what
tariffs would look like and the markets
were down overall. But the stock is
close to doubled in just a few months.
Yeah. It's crazy and I feel like it's
something that the stock has done time
and time again. You know, we've seen,
you know, multiple years of triple digit
growth from from Nvidia. um you know it
was the biggest uh point contributor to
the S&P during that time. So it's it's a
huge deal and yeah we'll all be watching
it after hours.
All right. And NVDA, Nvidia is the
ticker.
What's going on in JM Smucker? I think
the ticker there is SJM.
Yeah, SJM is down today. It's down right
now about 4.6%. Uh, the company reported
first quarter net sales that were
weighed down by a decrease in sales of
coffee, dog snacks, sweet baked goods,
which specifically means Twinkies
because they own Hostess, and fruit
spreads. And I thought this was
interesting because usually these are
things that you would see people buying
if the economy is doing well. I think we
kind of were always reading the tea
leaves for how the consumer is doing.
Um, and this is a little bit more of
like a negative read um that you know
we're not seeing as many people buying
coffee and dog snacks
and Twinkies.
And Twinkies. Exactly. I thought
everyone loves their dogs.
Millennials, right? There's they're
supposed to be huge pet uh pet owner.
All right. MongoDB, ticker MDB.
Yeah. So, MongoDB shares are on an
absolute tear today. They're up 36%.
This is on track to be the best um
one-day performance on record. So since
their 2017 uh IPO and basically what
happened is they've reported earnings
that really outperformed um were much
better than analysts expected and they
raised their fullear forecast. Uh
analysts at city said the report was a
blowout and the quarter was a thesis
changing quarter for MongoDB. Um there
was broadra strength. This is also sort
of an AI name. um analysts at RBC said
while workloads remain early, they're
benefiting from larger durable use cases
and continued expansion across the
customer base. So really seeing growth
from that technology.
That's Bloomberg News equities reporter
Carmen Rhini with today's stock movers.
For more conversations like this, check
out our new Stock Movers podcast. You
can subscribe for 5minute episodes on
the biggest winners and losers in the
stock market. Listen to Stock Movers on
Apple, Spotify, or anywhere you get your
podcasts. Well, those were a few stocks
that were and are making big moves. For
a broader look at the stock market and
business news, let's head on over to
Charlie Pellet for a business flash.
Thank you very much, uh, Tim. Right now,
we're looking at an update for the Dow.
The S&P 500 index all advancing. S&P, by
the way, trading at a record right now,
up by about 3/10en of 1%, up 19 points.
64.85. That will be a new closing high
on the S&P. The Dow up 188 right now up
by 4/10en of 1%. NASDAQ higher by 50 for
the NASDAQ composite index a gain there
of 2/10 of 1%. The 10-year 4.23%
with the 2-year 3.62%.
Gold little changed up under 1/10enth of
1% 33.95 the ounce. West Texas
Intermediate crude up 1.2% 6404 a barrel
on WTI. And Bitcoin is advancing by 7/10
of 1% 112,190
on Bitcoin. So clearly the focus will be
on Nvidia. It is the world's most
valuable company. It's got a $4.4
trillion market cap. It also has an 8.1%
waiting in the S&P 500, which is why
everybody cares about what will happen
with Nvidia after the close of trading.
Again, uh Nvidia higher just under
one/tenth of 1%. Indeed, our MAG 7 index
is advancing. little change but also up
by under onetenth of 1%. For on demand
news 24 hours a day, subscribe to
Bloomberg News now wherever you get your
podcast. I'm Charlie Pallet. That is a
Bloomberg Business Flash. Hey, thanks
Charlie. Appreciate it. It is the uh one
of the most read stories in the
Bloomberg terminal over the last hour.
Sadly, that's the case. Uh, two children
were killed and 17 people injured after
a gunman dressed in black fired dozens
of rounds through the windows of a
Minneapolis Catholic church holding a
mass for elementary school students.
We're joined now by Miles Miller. He's
Bloomberg News senior reporter. He
covers Homeland Security and the FBI. He
Week studio. I do want to remind
everybody, Michael Bloomberg, the
founder and majority owner of Bloomberg
LP. is the parent of Bloomberg TV and
radio is a donor to groups that support
gun control, including Every Town for
Gun Safety. Miles, what what happened
here?
Yeah. Uh 8:30, uh kids are in school. Um
the the start of school, they're in this
mass uh and this gunman uh armed with
rifles uh walks into the building and
opens fire. As you said, two kids uh
were killed, 17 people were injured
after he went in uh to that school and
opened fire. And from what I've been
told by law enforcement officials and
from what I've been able to see from the
suspect's um uh social media accounts,
uh is a person who feels like he um uh
had lost his touch with the world and
really in in in great detail went
through lengths to write a 65page
manifesto. Uh, and none of it explains
how you open fire uh in a in a school uh
right after the start of the school day.
What else do we know? What else do we
know about the gunman? Do we know any
motivation?
Yeah, this is a 23-year-old gunman from
um Henipin County, uh Minnesota, which
is um where uh Minneapolis is. Um you
know, one of many children of his
parents. He actually referenced all of
his siblings in his manifesto. Um and
what we know about this uh person is
that um you know he you know he one
acted alone and two um had you know over
a period of time I mean in the manifesto
he um he dated the first page in May of
this year. So shows some level of
pre-planning. Um but but what we also
know about this uh individual based off
of his own writings and what uh you know
intelligence officials have been able to
figure out about him is that he had
become a loner uh and that he felt that
this was the only way um for him to go
out of this world number one and then
number two you know what we've seen you
know in terms of um of this case is that
he he wanted to be ma made famous you
know this is something we've seen with a
number of these school shooters and um
folks who do mass shooting incidents is
that they want their name to be out
there. They want the pages of their
manifesto uh to be in the press so that
they can get their message across. And
thankfully, we work at a place where
that's not going to happen. Um
especially given um the the the nature
of this. I mean, you've got two children
who were killed and and you and we heard
in the press conference from the local
um hospital, you know, you're hearing
about these emergency room doctors
having to treat kids who've been shot.
Um, it's just it's really painful to to
think about.
I hate stories like this. I hate talking
about this. I hate doing this, but this
is the world we live in, Miles. We have
to do this because this is this is what
happens in in our world right now. Uh,
you cover Homeland Security on the
federal level. The president has uh sent
a message out. He's been in touch with
Governor Tim Walsh. What do we know
about uh federal involvement in the
investigation? Yeah, the FBI is going to
be doing some background work on this
suspect to figure out just, you know, to
make sure uh that he was acting alone to
make sure that he's not tied to any
other group. Um, and they'll uh be doing
the work to to just figure out, you
know, what caused this. The FBI is in
Minneapolis. They have a field office
there. Uh, and they're quite trained to
deal with situations like this. You'll
remember just a few months ago, two
lawmakers killed in Minneapolis um
targeted and the FBI worked on that case
along with local law enforcement. But
Minnesota's got a great um state law
enforcement group there um who have been
able to work on big cases like this. You
know, this again will get at, you know,
um at the Trump administration, what
they've been trying to do in big cities.
You know, just before this shooting,
there was another big shooting in
Minneapolis overnight. several people
shot um you know a person killed and so
you know you you start to think will um
Trump say we should send folks to
Minneapolis as well.
Miles Miller, Bloomberg News senior
reporter. You're listening and watching
Bloomberg.