[Music]
Live from Washington DC, this is Balance
of Power with Joe Matthew.
The lawsuit has been filed. Welcome to
the Thursday edition as Federal Reserve
Governor Lisa Cook makes good on her
promise to sue President Trump over his
attempt to fire her for alleged mortgage
fraud ever escalating. the standoff
between the White House and the Fed.
We've got this story covered for you
this hour. White House is responding and
we'll have a live report coming up from
the White House with insights from
Bloomberg's Michael McKe and a special
conversation with Donald, former deputy
attorney general, President George HW
Bush's administration and former
principal deputy solicitor general. He
knows what it's like to argue a case
before the Supreme Court and he'll have
insights for us shortly. Our political
panel in place as well. Bloomberg
politics contributor Jeannie Shanzeno is
with us alongside Republican strategist
Lisa Kabuso Miller. So let's start as
ever on Wall Street. Charlie Pellet has
a look at stocks this day after Nvidia
earnings. Charlie, how we doing
>> right now? Higher across the board for
now. Joe Matthew, lots of moving parts
to this market. X the Fed story and Lisa
Cook. We've got economic data this
morning, economic data tomorrow. And of
course, as you pointed out, we got
Nvidia. We begin there with Nvidia
trading lower after earnings down now by
1.2%. Our MAG 7 index though it is
advancing by 2/10en of 1%. The Dow the
S&P NASDAQ they're all in the green. S&P
right now keeping it all in context up
eight up by onetenth of 1%. The Dow just
dipping lower as I speak down 10 now
dropped there up under 1/10enth of 1%.
NASDAQ composite index up 78 for NASDAQ
that is a gain of 4/10en of 1%. The MAG
7 index as we mentioned up 2/10en of 1%.
Dow transport though they are lower down
4/10en of 1%. 10-year 4.21% the 2-year
3.62%
spot gold now up $18 the ounce 3415 up
510 of 1% West Texas Intermediate crude
6358 a barrel down 9/10 of 1% and
Bitcoin just about flat on the day
$112,400
on Bitcoin. Uh we'll call it unchanged
on the day. You mentioned Nvidia as we
kick things off. It is the world's most
valuable company out with a tepid
revenue forecast for the current period.
Nvidia shares lower now by 1.1%. Again,
recapping here, the Dow just turning
lower. Little change down nine. S&P
holding on to a gain of onetenth of 1%.
Indeed, could see another record close
on the S&P. For on demand news 24 hours
a day, subscribe to Bloomberg News. Now,
wherever you get your podcast back, we
go to Washington. Once again, your host,
Joe Matthew. We thank you, Charlie
Pellet. And we'll get back to Charlie in
just about 20 minutes for the latest on
the Thursday trade. Welcome to Little
Friday and thank you for being with us
here on Bloomberg TV and radio as well.
Satellite radio channel 121. You can
always find us on YouTube. Search
Bloomberg Business News Live with the
headline on the terminal that says it
all. Lisa Cook sues Trump overmoved to
oust her from Fedboard. We saw it
coming. Her lawyer Abby Lol told us two
days ago that this lawsuit would be on
the way. And now it is reality. Suing
the president over his attempt to fire
her for alleged mortgage fraud. mortgage
fraud, challenging his claim that she
may have lied on the mortgage
application. And of course, in a fraud
case, you have to prove that it was
intentional, realizing we're talking
about documents here, mortgage
applications. In this case, according to
what we understand from the White House,
she wrote that in both cases, she would
be a full-time resident. part of this
case. The defense will zero in on the
idea that this may have simply been a
clerical error. And this is where we
start with Tyler Kendall. Bloomberg,
Washington correspondent has the latest
on all of this, including the response,
the reaction from the White House. She's
on the North Lawn. Tyler, what do we
know?
>> Yeah. Hey Joe. Well, we really have
gotten no signs from this White House
that they are going to let up on their
pressure campaign against the central
bank and now Fed Governor Lisa Cook. We
should say that we had breaking news in
the last hour that a 10:00 a.m. hearing
has been set for tomorrow inside a
federal courthouse here in Washington
where a judge is going to hear uh Cook's
request for what's known as a temporary
restraining order. This is going to
decide whether or not she's able to
retain her seat, perhaps even uh have a
vote in that September FOMC meeting
while the broader case about the firing
plays out in court. Of course, that
issue here has to do with what we have
been talking about. this issue of cause.
The White House today in a statement
through the White House press secretary
says that the White House has found
sufficient cause to fire Cook and that
this is well within President Trump's
right, his domain to do so. However, the
idea of cause, it's not explicitly
defined. This is outlined in section 10
of the Federal Reserve Act of 1913 that
says he has to prove this cause, but
historically, it's been meant to mean
malfeasants, neglect of uh ignoring
duties while on the job. But at this
point, these are just allegations. No
formal charges have been brought. I was
pretty struck during your conversation
with White House trade adviser Peter
Navaro yesterday, who gave us a little
bit of insight into how the White House
might be playing this down the road,
saying that it doesn't matter that these
allegations have to do with her private
conduct, nothing to do with her job at
the Federal Reserve. Now, in that
filing, we did hear uh from Cook's
attorney, and we got perhaps an outline
of some of the arguments to come. She
didn't explicitly deny the allegations,
but did give us a little bit of a
preview that perhaps uh when it comes to
the issue with these applications that
they were mislabeled unintentionally and
that is really one of the key things
here that the court is going to have to
decide. Joe,
>> well that's really important stuff and
we do have an emergency hearing as Tyler
mentioned set for tomorrow morning. So
Tyler, we're going to do this all over
again tomorrow it looks like and we do
appreciate the very latest from the
White House. Bloomberg's Michael McKe
has also been all over this and he joins
us from world headquarters in New York.
Of course, the man who brings you
coverage of the Federal Reserve and is
in the room with Jay Powell for the news
conferences. Uh Michael, you've been
learning a bit more about Lisa Cook.
She's been working from home. Do we have
any idea about how this will play out
tomorrow in this emergency hearing?
>> We don't. Although she does not have to
attend the hearing, her lawyers will be
there for her. It's not a hearing uh
before a jury or anything like that.
It's a arguments made by the lawyers
which will be backed up in writing by
their pleadings for the judge to make a
decision. However, we have been reading
the request I have been reading the
request for this temporary restraining
order that would keep her in place until
all this moves through the court and we
get the closest thing we have had to a
defense from her on the mortgage
allegations. The uh lawyers say
consequently, neither the type of
offense the president cited nor the
threadbear evidence against Governor
Cook would constitute cause for removal,
even if the president's allegations were
true, which they are not. So, it does
appear that Cook is is pleading innocent
in a way to this, that she did not do
anything wrong. And as Tyler was saying,
there are some hints as to what might
have happened, but that probably is a
story for another day. We'll get more
more information on that as it develops.
>> Okay. What are the odds that she's
actually going to take part in next
month's meeting, Mike?
>> It's a little hard to say at this point
if this follows the pattern that we saw
in the Willox case, Gwen Wilcox from the
National Labor Relations Board. They
they will go to the district court. And
given the pleadings that they've had uh
so far that I have seen, it it does
appear that she will probably get that
temporary restraining order from the
district court, which means that
immediately the Trump administration
goes to the US Court of Appeals to try
to get that overturned. And in Wilox's
case, it was overturned.
But uh how fast all that happens isn't
clear. We're going to get the TTRO
hearing tomorrow at 10:00 a.m. Eastern
time. uh we could see a decision by the
judge uh within the day. Then you have
the weekend and uh at that point uh we
wait for the appeals to to hit the
appeals court and then the appeals court
will have to schedule a hearing. So the
closer we get to September 17th, the the
the more likelihood she might actually
get to stay there if tomorrow the judge
decides she can remain.
Mhm. White House feels like it already
has not only the grounds but the due
process under its belt. That's what
Peter Navaro told me last night when we
talked about this. Uh Michael, what do
you make of the approach that the
documents themselves are due process?
>> Uh that is not going to pass in any
court of law. Uh due process means you
get to face your accuser and answer the
charges and get a chance to show you're
innocent. And in this case, that was
never provided as the uh charging as a
lawsuit charges. Uh she was never even
told that she was going to be fired. She
learned about it from the president's
Trump social feed uh feed. So in this
case, there was never any attempt to
find out what the circumstances around
this were.
>> Fascinating uh as always, Michael McKe,
thank you so much. Live from world
headquarters in New York. Michael has
been instrumental in our coverage here
of this case since it was first
threatened.
And we'll go back to what Peter Navaro
said in our conversation last evening
when I asked him about due process in
this case. Here's what he said.
>> On the face of it, that's malfeasance.
Now, the statute doesn't say the
malfeasants has to happen while you're
in office in the Fed. It just says
malfeasants. This is due process. The
president has the power to do exactly
what she's doing. Fire her for cause in
this case malfeasance.
>> This is where we start our conversation
with Donald. I told you he would be with
us and he joins in studio the former
deputy attorney general in the President
George HW Bush administration. Also
former principal deputy solicitor
general. This man knows what it's like
to argue a case before the Supreme
Court. And we want to take a 30,000 ft
view on everything that's been going on
here the last couple of days in
Washington. Donald, welcome back to
Bloomberg TV and radio. It's great to
see you.
>> Thank you. It's good to be here.
>> Just to start broadly with what we just
heard, and I know you were listening as
I was talking to Michael McKe and what
we just heard from Peter Navaro. How
should we define due process in this
case?
>> Well, I think I think due process as as
was just said is is a real process that
involves an opportunity to have a
hearing. Um and the uh you know the
situation here is like so many other
things that we're seeing now where
actions are being taken um that are
going forward and the impression that
one gets because they're allowed to go
forward is that there's a power there to
do it. And um the reality is that in
many cases there's not. Uh what's gone
on is courts have looked at a great many
things that the president has done and
the lower courts have in many many cases
essentially said this is unacceptable.
It should be stayed and then the Supreme
Court without actually deciding the
propriety of the ultimate action has
essentially given discretion and given
leeway to the administration. Um, so I
think, you know, I think the the the
Cook issue is one of many.
>> Uh, but I think we have a tendency to
want to look at the specifics and spend
a lot of time talking about the
specifics. What's far more important
than any one of these situations is the
pattern that's clearly emerged since the
inauguration,
>> which is a pattern of Donald Trump in
one instance after another working to
essentially overthrow the norms,
procedures, checks of our process. And
that's the real concern that we should
all have. I I understand the need to
cover the news as it happens every day
and the the stuff that's thrown against
the wall has got to be reported, but
focusing only on that and not on the
bigger picture is missing the
fundamental point. Well, let's stay big
picture because before you joined us, we
were also talking about the head of the
CDC being fired. We had the head of the
BLS. I could go down the the wrap sheet
for you here. Is is this composite that
you're referring to unconstitutional?
Well, yeah. It's not only
unconstitutional, it's it's a systematic
assault on all the things that we
fundamentally have relied on, much of it
based on the Constitution. And you can
just you can go through just a
collection of general things that I
think most listeners would probably
acknowledge. One is just on a
fundamental level. Um, we're dealing
with with a president who is not he
doesn't live in a factdriven world. He
basically makes up his own facts. If he
doesn't like the facts, he fires
somebody like the the uh, you know, this
the the the Bureau of of of Labor
Statistics uh, head. Um, but but he
makes up his own facts. So, he's not
fact driven. Um the second thing is that
uh there's been a a tremendous set of
threats against people to neutralize the
checks and balances. They're they're the
check they're the the the threats
against Republican Congress people to be
primar. Now that's not unconstitutional,
but it's an effort to eliminate the the
working of our system.
>> It's put a new burden on the courts.
>> Well, that's right. It gets driven to
the courts. um the uh the whole idea of
undermining checks and balances um of of
essentially figuring out ways, you know,
part of our checks and balances involves
the Fed. Uh the Fed is is a very
important part for the business world
and for our economy. Um and Trump is now
working very hard to overcome uh the
independence of of the Fed. Um but he's
also doing a lot of other things. If you
look at the Department of Justice, the
Department of Justice has been for the
last 50 years since Watergate really um
highly respected as an independent uh
fair, evenhanded people in this country
have not worried for most of the last 50
years about being having the the the
Justice Department come after them for
no good reason. Well, they do now worry
about that and there's reason to worry
about that. And so this again is the
president trying to neutralize people
who will stand in his way. Um that
that's that's the the the bigger concern
and the problem with getting obsessed
with every I don't want to call them
little
>> cuz they're not they're not little
things that that are happening but
they're individual things and if you
view them in isolation you miss the much
bigger picture.
>> Yeah. So we'll we'll stay with the
forest here for a moment. Our listeners
and viewers should know Donald he argued
19 times before the US Supreme Court. So
you've been doing this for a minute.
Have you ever seen a stress test like
this?
>> No. I mean, absolutely not. I mean, I I
think that's the thing that I think is
easy to lose perspective about is that
um what we've never had in this country,
we had a civil war. uh we had a
breakdown of the national sort of social
fabric as a result of conflict in terms
of interests between parts of the
country. So, we've been through a lot,
but I think we've never had we've never
had what the founders were, even after
all the great work they did on the
Constitution, still concerned about, and
that was they were very concerned about
the one thing that could happen, and
that's the the man on the white horse,
the the person who is somehow able
um to pursue his own individual goals,
to pursue his own power, to somehow
appeal to enough people to get control
of the country. That's what they were
worried about. And we've never had that
happen here before. And we're having it
happen now.
>> That's what this is.
>> That's what this is. That is absolutely
what this is. And all you got to do is
put together all the stories that you
and all the other media report on to go
back over six months and and look at
what each one is. Each one is an effort
somehow or other by this president to
assert his independent control free of
the limitations that are built into our
system um so that he can do whatever he
wants. That's what we are dealing with
and that's what people need to know
about and that's what I think I will say
especially I think the people most
susceptible to understanding this and
and recognizing it are a lot of your
viewers. I think the viewers of
Bloomberg are the kind of people who
think seriously about stuff and and
thinking seriously about this means not
just thinking about it on the isolated
level. think about it in the big
picture.
>> We've got about a minute left. I I'm
struck by your tone and and your words
today and I've been lucky to be talking
to you for a few years.
>> Mhm.
>> You're worried.
>> I'm very worried. I'm I'm I'm very
worried and I think I know lots of
people who are very worried and I think
it's very easy to Well, it's it's it's
natural. I don't want to I don't I'm not
I'm not here to criticize people. I I I
think it's very natural for people to
want to get on with their lives. It's
very natural to want to think about
um so far I'm okay. Things are going
along. It's very strange,
>> but I'm okay. And I'm hoping things will
keep being okay and the stock market's
still doing pretty well and and and
people want to want it to be okay. It's
not okay is the is the issue. It's not
okay because the president of the United
States is dismantling our fundamental
system. Donald,
many thanks for your insights and
joining us today on Bloomberg TV and
radio. This is Bloomberg. The press
briefing is underway at the White House
right now. Press Secretary Caroline
Levitt holding forth with reporters and
we just got a bit of news. President
Trump will be addressing the UN General
Assembly on September 23rd. That's a
Tuesday. Donald Trump back to ANGA as uh
we understand from the press secretary.
We're going to be listening for
questions about the firing of Lisa Cook
about the firing of the CDC director,
which is actually something they're
talking about right now as well. Peter
Navaro's comment to us right here on
Bloomberg TV and radio last evening that
Russia's war in Ukraine is quote unquote
Mod's war. Making that point the day the
50% tariffs landed on India. It is a
beautiful day in Lacrosse, Wisconsin.
Mostly sunny, 77. Perfect time for Vice
President J. D. Vance to touch down. And
he is in Lacrosse today to t the big
beautiful bill, but we're not calling it
that, I think, any longer. He's actually
at a steel fabricating facility to talk
about the big bill's benefits for
manufacturing. Go figure. Of course, JD
Vance grew up in the rust belt. is
talking to the folks who brought him to
the dance here. But as we heard from
Donald Trump just two days ago in the
cabinet meeting, the branding issue is
what needs to be addressed on the
Republican side of the aisle. Sure,
you've got the road trip and it's not
just JD Vance. Any number of cabinet
secretaries are fanning out across the
country to deliver speeches to try to
close the deal to try to sell what has
already been passed. And a lot of
lawmakers are trying to do that too
during the August recess. But as Donald
Trump said himself, the branding of the
bill, the BBB, the big beautiful bill we
heard about a hundred times a day
through the whole debate might be making
the job a little more difficult. Here's
what he said.
>> So the bill that uh I'm not going to use
the term great, big, beautiful. That was
good for getting it approved, but but
it's not good for explaining to people
what it's all about. It's a massive tax
cut for the middle class. It's a massive
tax cut for jobs. And uh and it's I
mean, think of it. No tax on tips, no
tax on social security. So seniors, I
don't know how you can vote for anybody
else.
There you have it. So what do we call
it? I guess we're selling a whole bunch
of different components of what we used
to call the big beautiful bill. Let's
assemble our political panel. Both
experts in messaging. Jeannie Shanzeno
was with us. Bloomberg politics
contributor, democracy visiting fellow
at Harvard Kennedy School's Ash Center,
Republican strategist Lisa Kamuso
Miller, former RNC communications
director, host of the Friday Reporter
podcast, and a veteran of a former
Republican speaker's office.
Lisa, let's get into this here because
this is a pretty interesting situation
uh that we're talking about. a bill
that's already passed that the
administration is still trying to sell,
bumping into a branding issue because
nobody knows exactly what a big
beautiful bill is. You've experienced
this before after you pass a major
legislative accomplishment. How do you
sell it to the people who don't
understand it?
>> I think you talk about it in plain
English, just like the president said. I
mean, certainly the president himself is
a marketing person. No one would def
ever take that away from him. And he's
he's right in trying to illustrate and
demonstrate what he and the Republicans
on Capitol Hill believe to be a bill
that was designed specifically to help
the economy, specifically the middle
class, in a way that will make a bigger
difference for them. And so that I think
is what is happening. They're going to
continue to call it the one big
beautiful bill because that's what the
president called it when he arrived on
Capitol Hill about a six months ago and
told the Congress that he wanted it to
be done all at one time. And so now
they're going to take that messaging and
they're going to turn it into sound
bites over and over and over again to
make that message clear that they've
done what they were asked to do.
Well, you know, Jeanie, he also said
when he went to Capitol Hill behind
closed doors, uh, reportedly he told
Republican members, "Don't blank with
Medicare. Don't blank with Medicaid."
And of course, there are changes to
these programs, specifically Medicaid,
in this legislation that has upset a lot
of voters of Democratic and Republican
stripes. We just heard Abigail
Spanberger's new ad attacking this bill
the other day. What's the Democratic
answer to this branding change?
>> Well, this has nothing to do with
branding, and that's where the president
is dead wrong. Um, you have JD Vance out
in Wisconsin today. We know that this
will cost Wisconsin voters this bill
almost $300 million. It will strip
276,000
Wisconsinites
from health coverage from those
Wisconsinites. It will remove food via
snap from tens of thousands of
Wisconsinites and children most
specifically. So the president can try
to dress this up any way he wants. He
can try to send JD Vance and these other
surrogates out to sell it. But there is
a reason that members of Congress on the
Republican side have been avoiding going
out into forums with their own
constituents and talking about it
because it doesn't matter whether
they're Republican or Democrat. Voters
know that this bill is a bill that is
going to cost them dearly in terms of
things that matter to them. Their health
and the food supply and their ability to
pay for both. So, Democrats are going to
be talking about the reality of this
bill, and I guess the president's going
to continue to try to pretend that a
bill that is favoring the wealthy and
taking from the needy is something other
than it is. But you can't continue to
make that case when people see their
health care and their food being
stripped from them. They will know that
regardless of what any of these folks
say.
>> How important or how effective are these
road trips? Anyway, Lisa, I remember
President Obama lamenting the fact that
they didn't take a more concerted
effort, make a more concerted effort to
travel the country and tell them what
was in the Affordable Care Act, that it
it remained confusing and elusive to a
lot of people. Does does putting JD
Vance on a plane to Lacrosse actually
help?
Well, the reason why they the reason why
it works, Joe, is because local media
will cover when the vice president comes
to town and when he talks about the
issues and what his speech addressed.
And that's, I think, where the real
value is, is that people will start to
hear about those issues as they relate
to the local community in their own
local news coverage. And so as much as
Jeanie is not wrong about what she said
about the specific particulars, it's
going to be a game of messaging, a game
of telling what it is they believe to be
the highlights of this particular piece
of legislation. And then it's incumbent
on the Democratic side of the aisle to
talk about the types of points that Jeie
made in order to make it more clear to
the voters about what it is uh that's
included in this bill. So having the
vice president with a with a very strong
voice in the community definitely helps
with the news coverage and helping the
Republicans sell their point of view on
the legislation.
>> Pew research poll genie uh the pollster
in you I'm sure is eager to dig into
this uh with approval ratings on the tax
legislation. You can call it whatever
you want here but the numbers are the
numbers. 32% approve according to Pew
Research. 46% disapprove and 23% are not
sure. Uh guess they'll be listening to
JD Vance today. But when you see numbers
like this and you consider some of the
town hall meetings that the likes of
Mike Flood and Brian Style had to
endure,
what kind of work do Republicans have
ahead?
>> They have an uphill battle. And you were
right to reference prior Barack Obama.
He had and the Democrats had an uphill
battle. We've seen this repeatedly
throughout modern American history. When
you pass these big bills and then you go
to try to sell them in advance of a
midterm, it is very difficult to do. And
we've been talking here about the impact
on healthcare and food assistance. But
let's just look at other things. 3.3
plus trillion dollars added to an
already enormous debt which is very
concerning to voters and on top of that
a voter base even on the Republican side
that is frustrated by what they describe
as endless wars and you have for the
first time a military budget of over $1
trillion and in order to pay for that
you've taken away people's health care
and their food. So those facts will
matter and J Vance will go out and try
to talk about this as a tax cut for
working families. But that is going to
be a very difficult cell for
Republicans. But we have to see if
Democrats can be united and stay on
message and make this case. This is why
the president is not talking about this
this much. He's talking about a lot of
other things like crime and safety and
immigration that he thinks are much more
within his baywick and will gain him
support. He doesn't want to talk about
the impact on people's pocketbooks
because what he's done is so widely
unpopular according to the polls.
Boy, we're certainly being reminded of
the bad blood that lawmakers left town
with after passing said
big beautiful bill, but also the
recisions package that followed. And
boy, that seemed to be the backb
breakaker here, Lisa, with Democrats
telling us on the air. They didn't see
how we could avoid a government shutdown
at this point because there's so little
trust between D's and Rs to make a deal
on funding the government. We've got a
little bit less than a minute. Are we
going to shut down the end of September?
Yeah, you know, it looks Joe like that's
really the Dem that's where we're
headed. Uh you have to believe that the
president's not going to want that to
happen. And so there's going to be I
think that the Congress continues to
surprise us in the way that they get
they're getting their work done. So that
is a threat. I think government is very
much at threat, but I think ultimately
what we'll see is that they'll pull it
out and that the government will not
shut down because that's not the kind of
message that they want to be spreading
across the country.
>> Fascinating. Lisa Kamuso Miller, Jeannie
Shanzeno. Many thanks to both of you for
the insights. A great panel today as we
drive our way through the Thursday
session here on Balance of Power. I'm
Joe Matthew in Washington. Coming up,
we're going to turn to Nvidia earnings,
the aftermath today, a conversation with
Caroline Hyde, and much more on the AI
race with China when we talk to Anna
Ashton. It's all ahead on Bloomberg. the
day after Nvidia earnings with a lot of
questions about what really we should
take away from this earnings report and
the call that followed, not to mention
some of the headlines that have emerged
since then with Nvidia uh talking about
selling a version of Blackwell to China.
It was a chance to watch two masters at
work last evening after 4:00 when the
report dropped. Roma Bostic was with us.
So was Caroline Hyde as they dropped the
breaking news and the stock movement
before our eyes. And I'm delighted to
say that Caroline Hyde is back this day
after. Now that we've had a chance to
sleep on this and consider what matters.
The host of Bloomberg Tech, the co-host,
Caroline, great to see you.
>> It's always a treat to have you with us
here on Balance of Power. I want to know
what's real here. I'm seeing a lot of
headlines throughout the space. Nvidia
disappointed. Nvidia fell short.
Concerns about the forecast. warning on
AI spend. What's actually true here?
Because Jetson Wong showed up with a
pretty good story to tell last night.
>> He did. And I think this is a story of a
company that's already worth more than
$4 trillion and 1% off of its record
high. And it had to smash expectations.
And that was very hard to do when the
narrative is complex. And so are the
numbers of analysts as to whether they
baked in Chinese revenue or not. And so
yes, if you were looking at the
consensus of what analysts on the street
thought forward-looking guidance would
be like, well, half of them had included
in China and half of them hadn't. And so
when Nvidia itself stripped out those
numbers, $54 billion was slightly shy of
the average consensus, but it wasn't
including China. And that's a massive
upside if you think that he can convince
the current administration to allow him
to sell what we're colloquially calling
B30s, these these reorientated Blackwell
architecture chips into China. He's
saying there's a $50 billion opportunity
in one year alone in China. A growth of
50% in terms of how much the demand for
semiconductors is growing there at the
moment. He is desperately trying to
convince the administration that it is
worth taking on that IP risk that
national security risk with caveats and
with ensuring that he does it safely to
the right end use case and maybe they do
take a 15% revenue share as they do with
H20s. I thought was really interesting
and real true facts came through to our
Ed Lo and our Ian King who did that
incredible interview with Colette Crest
who is the CFO. They asked her, "Look,
give us the nuance on how you're able to
access the H20 demand." She said, "Look,
it's $2 to5 billion in this current
fiscal quarter, but at the moment, I
haven't got the exact codified
regulation that perhaps I need to be
able to give that 15% to the US
government. Perhaps I don't need that.
I've already got the licenses. Let me go
sell." So, there's still some
geopolitical lines that need to be
ironed, I think, for Nvidia to be able
to get ahead of this. But they're
setting out the demand, the sheer demand
that there is in China, the sheer demand
that there is from capital expenditure
of $600 billion coming from the
hyperscalers here in the United States.
The sheer AI sovereign demand that was
$20 billion in the previous quarter. For
most people, I think this was a good set
of numbers. It's just digestion because
people around the edges like the hedge
funds and day traders, they want
smashing of records rather than
long-term growth.
>> Of course. Well, just perfect context,
Caroline. I'm still a little confused
about this 15% deal. And it wasn't just
Nvidia, it was AMD. You guys found the
filing in the earnings report last
evening that made it clear that this
deal the White House was touting has not
been fully baked.
>> You're pointing out that we're looking
ahead to B30. Is that what we call these
lower end black wells now?
>> What about the H20? Do they have the
licenses or not? Well, that's what Klet
Crest was saying and telling Ed and Ian
was that they do a few, but that ramp up
of license giving isn't happening
perhaps at the pace that they would like
to see to access that $5 billion of
Chinese demand in this current fiscal
quarter, the third quarter. That's why
they haven't baked it into the numbers.
And actually, you're so right in
referencing AMD because Lisa Sue, too,
hadn't given any forecast for China and
her stock got beaten up on the day. even
though she meet and she beat, she was
also trying to say, "Look, I'm not
confident enough yet to be able to put
them into my numbers." But look, we've
had analysts and investors on our show
earlier today. I'm just thinking of Sans
Capital that came on earlier and he was
trying to say, "Look, get rid of China.
Even if you strip out China entirely,
this is a company that is delivering and
is unstoppable in terms of the sheer
pace of compute that it can deliver. The
cadence of which they're able to bring
you yet more and more sophisticated
underlying technology that allows you to
do more with less when it comes to less
energy needed for more sophisticated
compute. Most long-term holders of this
stock thinks it's a good thing, but
you're right. For me, the big cloud is
geopolitics. It's your world, Joe, that
is the big cloud. the intersection of
politics and technology and trying to
understand how much they're going to be
allowed to access China in the future.
Get this. I think what's really
interesting for your audience is on the
day go and check out what Camcon is
doing. This is a Chinese AI accelerator
maker. Its market valuation has doubled
in the last month. Why? Because of this
limitation on AMD and Nvidia. because
his idea that China is leaning ever more
heavily on helping its own domestic chip
makers grow rather than accessing the
future of Nvidia.
>> Perfect analysis as ever from Caroline
Hi, the co-host of Bloomberg Tech
>> and I'd love to keep talking with you
about this Caroline because it does
appear our worlds are colliding. Many
thanks as always for the insights and
much more to learn about this earnings
report, the stock movement going
forward. What will be the deal that the
White House cuts with Nvidia and AMD for
that matter when it comes to China?
Because it does look like, as Caroline
said, it's going to need to come from
here. That's why we want to talk to Anna
Ashton, our China expert, former Ashton
Analytics uh founder, I should say, a
specialist in US China trade uh and had
spent time as a former China analyst uh
Department of Defense. Anna, it's great
to have you. Sorry, as I make my way
through your business card here, I'm
deeply curious to know what you're
thinking about this because there were
questions about whether we were
mortgaging our national security to help
Nvidia sell some of these chips, whether
it's H20 or B30, uh, if we up the ante
here in China. Now that we understand
from these companies that the deal is in
fact not completely in place, what are
we talking about and how does that jive
with what the White House said?
What are we talking about? Indeed. You
know, I think uh that
the Trump administration is uh very
practiced at dangling uh potential deals
and then withholding
um follow through until they are
satisfied with with the counter offer
from the other party. And that right now
um a lot of what's in play is the
uncertainty around some sort of trade
deal. There are things that the Trump
administration wants from China in
exchange for um you know loosening the
the gates and allowing these chips to
flow into China um more more
aggressively than they can with the
licenses that Nvidia has in hand. Um and
we'll just have to see if there is
progress made or how soon there is
progress made on some of those asks.
>> Yeah. Well, you also wonder what the
appetite will be in China uh because
when the White House first announced
this arrangement that appears to not be
fully uh codified, China was reportedly
telling buyers uh in the tech space
there to stay away from Nvidia, to avoid
these chips, to buy Huawei and not take
the American route to the point where
Nvidia actually told some of its
manufacturers, the H20, to slow their
roll while they figured out exactly what
the demand case would be. Should we
assume that China has a thirst for more
American technology?
>> Not in the long run, Joe. Uh in the
short run, they may not have a choice
about um procuring technology if it's
made available. Uh but certainly the
Chinese government is working very hard
to um develop and butress its own
domestic industry because it doesn't
want to have to rely on um on deals like
this or or potential promises. uh in
order to be able to access the chips
that it needs to develop AI
capabilities. Um I think that I think
that there is a lot of potential for
sales, but ultimately that is a narrow
window. Uh and it's part of the reason
why Nvidia is so eager to get sales
going as soon as possible.
>> Yeah. spent some time last evening uh
Anna with Peter Navaro and we were
talking about a couple of different
things uh including India and the new
tariffs that have been uh put up on
India now 50% including that additional
25% as punishment for buying Russian
oil. I bring this up because you're a
China expert and the criticism in
Washington and in many cases around the
world has been that the United States is
actually pushing India further into
China's arms and in maybe eliminating
the alternative that that we could seek
with another major world trading partner
uh as the White House considers warming
relations with China. I asked Peter
Navaro about this and he ended up making
news this morning in India as he
referred to Russia's war in Ukraine as
Modi's war. I asked him about the China
effect as well. Listen to what he said.
Anna,
>> everybody in America loses because of
what India is doing. The con consumers
and businesses and everything lose and
workers lose because India's high
tariffs cost us jobs and factories and
income and higher wages. and then the
taxpayers lose because we got to fund
Mod's war.
>> What's your thought on this and what
does it mean for India's relationship
with China?
Well, I think it is indisputable that uh
the Trump administration's retaliatory
tariffs on on India are um you know
encouraging the Indian government to
consider some sort of day tant more
significant day tant with Beijing. uh
you know the the foreign minister was in
India last week early in the week for
talks that were build as being about the
the border dispute that's been ongoing
for a long time but clearly the talks
were were covering other things based on
statements from uh the ambassador to
India who you know basically asserted
that the US was bullying India by
putting these tariffs on Russian oil. uh
India and China have a lot of
differences that won't be easy to to
smooth out but they um have some
significant common ground when it comes
to their desire and need to continue
buying Russian oil. Uh and China
definitely sees India as as a country
they want to stay in that game so that
it it protects the flow of Russian oil.
It ensures that Russian oil continues to
flow out of Russia.
There's Bloomberg reporting that Beijing
in fact began a quiet outreach to India
back in March when the president started
beating the drum on tariffs. Uh
President Xiinping wrote a letter to
India to test the waters on improving
ties. We've got a little more than a
minute. Anna Ashton, what will that
letter lead to?
Well, you know, I think that the the
effort at De Chant from the Beijing side
actually started even earlier, though
definitely a letter from Xiinping to
Modi is an inflection point that can't
be ignored. Um,
>> yeah,
>> and at the end of the month, Modi is
traveling to China for the first time
since 2018 in order to participate in
the Shanghai Cooperation Organization's
meeting of heads of state. I think that
speaks volumes about the prospects for a
warming trend in response to the US
moves.
>> Wow. A warming trend, says Anna Ashton,
Ashton Analytics,
former China analyst with the Department
of Defense. Anna, thank you as always
for the insights and helping us better
understand what's going on. We're going
to continue this conversation, by the
way, on the late edition of Balance of
Power with another voice of experience.
Uh, Ambassador Nick Burns is going to be
with us. the former US ambassador to
China to try to get a better sense of
what these talks could lead to, what the
tariffs against India could bring about
with regard to US China relations. So,
we'll meet you back here 5:00 p.m.
Eastern time. Big thanks to our panel
and all of our guests today, including
Donald for quite a conversation this
hour. We have a lot more to cover here.
We'll keep tabs on the rest of the White
House press briefing. Caroline Levit is
talking to reporters as we speak, and
we'll have much more straight ahead
here. Bloomberg Business Week Daily is
on the way.