Barclays to Cut 5K Jobs, AI Trade Stumbles After Tech Earnings

Author: Bloomberg Television · Watch on YouTube

Video authored by the channel shown, not by IANIA; all rights belong to the creator. Transcript and summary generated automatically; the original-language content is preserved.

Original language: English

Original video: Barclays to Cut 5K Jobs, AI Trade Stumbles After Tech Earnings · Channel: Bloomberg Television · 1:34:32 · Watch on YouTube

Topics: Markets and economy

Summary

Bloomberg’s morning program covers a difficult session for European markets, as rising oil prices, geopolitical risk and mixed technology earnings weigh on investor sentiment. Meta’s increased AI investment and strong outlook contrast with Tesla’s reduced capital-expenditure plans, while SAP reports robust cloud growth and Roche discusses its pipeline and concerns about Europe’s support for innovation. Barclays’ results show strength in equities trading but weakness in fixed income, alongside plans to cut 5,000 jobs. The program also examines French bond-market pressure, weak luxury sales in Asia, and uncertainty around copper and other commodities.

Key points

European and U.S. equity futures are lower as investors react to technology earnings, higher oil prices and geopolitical tensions.
Meta reports its first quarter of negative free cash flow since its 2012 IPO, while continuing to raise its AI investment and capacity plans.
Tesla’s lower capital-expenditure plans unsettle investors concerned about its ambitions in AI, robotics and autonomous driving.
Barclays reports a 37% rise in equities trading revenue but a 19% decline in fixed-income revenue, and announces plans to cut 5,000 jobs.
Roche beats estimates and discusses its drug pipeline, while its CEO argues that Europe needs to do more to reward pharmaceutical innovation.
SAP reports 25% cloud revenue growth and says customer demand for AI transformation is supporting its performance.
French bond yields and spreads rise amid concerns about the country’s fiscal position, political outlook and potential economic headwinds.
Hermès shares fall after sales in Asia-Pacific miss expectations; the company also says its looted Marseille store will not reopen soon.
Copper market participants cite uncertainty over tariffs, supply disruptions, AI-related demand and the cost of financing inventories.
Deadly attacks in Saudi Arabia and the departure of non-emergency U.S. personnel contribute to concerns about regional escalation and oil supply.

Chapters

Start	Chapter	Summary
00:03	Markets, tech earnings and rising oil	The hosts preview a tense market open, with oil higher after attacks in Saudi Arabia and mixed reactions to Meta and Tesla earnings.
07:25	Roche on results and European innovation	Roche CEO Thomas Schinecker discusses quarterly growth, the company’s global sources of innovation and the need for Europe to invest in growth.
16:41	French bonds and the AI financing debate	A fixed-income guest assesses French debt pressures, elevated oil prices, safe-haven flows and competition for capital from AI-related borrowing.
24:13	SAP’s cloud growth and AI outlook	SAP’s CFO attributes strong cloud and operating growth to customer demand for transformation, while discussing AI metrics, costs and regulation.
33:03	Meta and Tesla earnings compared	Market analysis contrasts optimism about Meta’s AI strategy and monetization prospects with concern over Tesla’s lower planned spending.
38:41	Asia selloff and European stocks to watch	Commentators discuss falling Asian markets, rising oil, safety-seeking bond flows and European earnings from Barclays, Nokia and Roche.
45:52	European market open	European shares open lower, with technology and luxury stocks under pressure while consumer staples and energy show relative resilience.
53:03	Barclays earnings and 5,000 job cuts	The discussion focuses on Barclays’ disappointing results, contrasting strength in equities with weak fixed income, and its plans to cut 5,000 jobs.
1:01:56	European outlook and earnings quality	Goldman Sachs strategist Sharon Bell discusses earnings growth, company quality, currency effects and the differing makeup of European and U.S. markets.
1:10:45	Copper, metals and the AI trade	Morgan Stanley’s Amy Gower outlines copper’s links to AI infrastructure, tariff uncertainty, supply risks, Indonesia and higher financing costs.
1:20:56	Attacks in Saudi Arabia and regional risk	A Bloomberg correspondent explains the significance of attacks on a Saudi airport and oilfield and discusses signs of possible escalation.
1:24:40	Hermès sales and luxury-sector pressure	The program examines Hermès’ missed sales expectations, weak Asia-Pacific demand, the looted Marseille store and the outlook for Kering.
1:29:08	What is driving market nervousness?	Market guests weigh the impact of oil, AI earnings, upcoming political events and central-bank decisions on risk sentiment and fixed income.
1:33:59	Closing remarks and next program	The hosts recap a pressured equity session and preview further live coverage from Berlin and a discussion with Jensen Huang.

Quotes

THEY REALLY PLAY TO WIN AND EUROPE IS MORE PLAYING NOT TO LOSE. — 10:03

THE CORE HERE IS THE CONVICTION OF OUR CUSTOMERS THAT SAP IS AN INGREDIENT IN THE AI TRANSFORMATION JOURNEY — 26:29

WHAT IS A PROBLEM IN EUROPE IS THE OVER BOARDING REGULATION — 31:26

WHEN THE CAPEX FOR A GREEN COMPANY COMES OFF, THE STATE STARTS GETTING WORRIED — 35:15

COPPER HAS BEEN EXTREMELY WELL CORRELATED TO AI STOCKS THIS YEAR. — 1:15:01

Concepts and entities

Meta, Tesla, Barclays, Roche, SAP, NVIDIA, Hermes, Goldman Sachs, Morgan Stanley, Jensen Huang, Mark Zuckerberg, IA, tokens, cobre, petróleo Brent

Full transcript (original language)

00:03 GUY: GOOD MORNING, IT IS A TOUGH TAPE THIS MORNING. META AND TESLA REPORTING, CRUDE GAINING AFTER MORE ATTACKS ON SAUDI ARABIA. A BUSY DAY FOR EUROPEAN EARNINGS. ANNA: LET’S GET SOME NUMBERS, STARTING WITH THE OIL PRICE. $111 ON THE BRENT PRICE. WE WILL TALK ABOUT OIL.

00:34 NASDAQ FUTURES, THERE ARE WAYS OF TAKING THE NEWS OVERNIGHT AS MIXED BUT THE MARKET IS LOOKING ON THE DOWNSIDE AND THE FUTURES ARE DOWN. EURO STOCKS – EURO STOXX 50 FUTURES ARE DOWN. LOTS MORE STILL TO COME IN EUROPE. THE COUNTDOWN TO “THE OPENING TRADE” STARTS RIGHT NOW.

01:10 GUY: THURSDAY MORNING, I HAVE A FEELING IT WILL BE BUSY. THAT’S TALK TECH BEFORE WE DIG INTO EARNINGS, THEY ARE ALREADY COMING THROUGH. META IPO’D IN 2012 AND SINCE THEN IT HAS NEVER HAD A QUARTER WHEN IT HAS BEEN FREE CASH FLOW NEGATIVE BUT WE JUST HAD ONE. JOINS THE GROWING RANK OF HYPERSCALERS. THE TOP LINE LOOKED GOOD BUT THIS IS A COMPANY SPENDING A LOT OF MONEY RIGHT NOW.

01:48 WHAT WE GOT OUT OF TESLA WAS A DOWNGRADING OF CAPEX AND THE MARKET DIDN’T LIKE THAT. HI CAPEX IS A PROBLEM, LOW CAPEX IS A PROBLEM – YOU CAN’T WIN. ANNA: IT’S A COMPLICATED STORY. IT DEPENDS ON COMPANY SPECIFICS BUT YOU ARE RIGHT, THEY HAVE POLARIZED THE TECH TRADE OVERNIGHT GIVEN THE DIFFERENT READING. LET’S DIVE INTO OTHER NAMES.

02:22 TEXAS INSTRUMENTS, BETTER-THAN-EXPECTED GUIDANCE. THIS IS THE ESSENTIAL CHIP SIDE, NOT TO DO WITH THE DATA CENTERS SO MUCH BUT A NICE READ ON THE ECONOMY MORE BROADLY. IBM LOOKING BETTER IN TERMS OF THE DATA. THE STOCK SOLD OFF DESPITE THAT. THAT WAS INTERESTING. IN THE EUROPEAN DIMENSION, SAP HIGHER, AND NOKIA WITH MARGINS MUCH BETTER THAN ANTICIPATED AND THAT’S INCREASINGLY A DATA CENTER AND TECH STORY. GUY: NASDAQ FUTURES ARE DOWN A LOT

02:59 AND I WONDER HOW THAT WILL MAKE THE EUROPEAN TRADE WORK. WITH NASDAQ FUTURES DOWN THIS MUCH, CAN IT MAINTAIN THAT? I CAN’T WAIT TO TALK TO THE CFO. ANNA: LOTS TO COME ON THE EUROPEAN EARNINGS STORIES AND WE WILL GET MORE ON THAT SHORTLY. LET’S TALK ABOUT ENERGY MARKETS. 111 IS THE HANDLE ON THE BRENT PRICE THIS MORNING, UP BY ANOTHER 2.4% COMPARED TO YESTERDAY’S CLOSE. INTERESTING DYNAMICS IN THE MARKET YESTERDAY, DEADLY

03:33 ATTACKS IN SAUDI ARABIA AND AN AIRPORT IN THE EAST OF THE COUNTRY, IT LED TO REPORTING ABOUT WHETHER THE U.S. WAS GOING TO WHOLESALE BRING THAT BACK TO THE REGION. IT WAS OVERBLOWN. WE HAD SOME NERVOUSNESS IN THE MARKET THAT WAS DIALED BACK BUT WE SEEM TO BE ESCALATING ON THE OIL PRICE. TOM: THE FRONT PAGE OF THE NEW YORK – GUY: THE FRONT PAGE OF THE NEW YORK TIMES SAYS THE U.S. HAS A PLAN TO SIGNIFICANTLY

04:06 ESCALATE BOMBING OF IRAN AND IT SEEMS LIKE THAT IS WHAT IS BEING PRICED IN. THE SAUDI’S ARE BEING PUSHED HARD IN THEM WONDERING IF THE MARKET IS INCREASINGLY NERVOUS ABOUT THAT NARRATIVE. ANNA: WE MAY DELVE INTO THAT BECAUSE WE’VE SEEN A BIT OF A TICK UP BUT NOT THAT MUCH. WHEN WE LOOK AT THE REALIZED VOLATILITY, THE SECOND WAVE OF THE OIL INCREASE WHICH IS WHAT WE ARE SEEING RIGHT NOW HAS NOT

04:39 BEEN ACCOMPANIED WITH THE SAME REALIZED VOLATILITY THE FIRST TIME AROUND. WE ARE HIGHER ON OIL PRICES, IT HASN’T BEEN SO VOLATILE AS IF THE MARKET IS SIMPLY ADJUSTING TO A HIGHER FOR LONGER OIL PICTURE, PERHAPS THAT’S WHAT WE HAVE REASON TO EXPECT. GUY: MORE AND MORE OIL IS POURING OUT OF THE GULF AND THE STRAIT OF HORMUZ IS LARGELY OPEN IF YOU ARE WILLING TO PAY FOR THE SECURITY AROUND IT. BUT THE PRICE LOOKS STUBBORNLY HIGH. ANNA:

05:11 LET’S LOOK AT SOME EARNINGS THIS MORNING. ON BARCLAYS, THIRD-QUARTER INVESTMENT BANKING REVENUE, 3.1 3 BILLION POUNDS, BELOW THE ESTIMATE SO THAT’S JUST ONE NUMBER BUT IT DOESN’T LOOK TO BE A NUMBER THE MARKET WAS LOOKING FOR. IN TERMS OF EQUITY REVENUE, THIS IS EQUITY TRADING, THAT ARE THAN EXPECTED. THEY ARE IN GOOD COMPANY BECAUSE THIS WAS AN AREA CHALLENGED ON WALL STREET, PLENTY OF NAMES STRUGGLED.

05:48 THE NET INTEREST INCOME AT 3.9 ONE, ENTIRELY IN-LINE, WILL IT BE ON THE BREAD-AND-BUTTER SIDE OF THE BUSINESS? THAT’S ONE OF THE COMPANIES WE WILL BE WATCHING AT THE START OF TRADE. GUY: BANKS HAVE BEEN ROLLING OVER AS A SECTOR QUITE A LOT.

06:19 HERMES IS SAYING ONE OF ITS STORES WILL NOT REOPEN SOON, THAT IT WAS TOTALLY LOOTED BECAUSE OF THE RECENT DEMONSTRATIONS ACROSS FRANCE. THE MACRO ENVIRONMENT IN CHINA IS DIFFICULT, THAT’S THE OTHER HEADWIND THEY FACE. THERE’S AN ASIA-PACIFIC REVENUE LINE THAT’S COME THROUGH. THE MARKET WAS EXPECTING 1.5 PERCENT GROWTH AND THAT’S A WEEK NUMBER. IT LOOKS LIKE WE ARE SEEING A

06:52 PROBLEM IN FRANCE WHICH THEY WILL PROBABLY RECOVER FROM BUT THEY WON’T REOPEN SOON, SO MAYBE THEY ARE RETHINKING STORE ARCHITECTURE. ANNA: INTERESTING UPDATE FROM THE LUXURY SECTOR IN THE CROSSHAIRS. LET’S STICK WITH THE EARNINGS STORIES, SWISS DRUG MAKER ROCHE BEAT ANALYST ESTIMATES. LET’S SPEAK TO THE CEO.

07:25 THANK YOU FOR SPEAKING WITH US. LET’S TALK ABOUT POSITIVE SIDE EFFECTS. THE NUMBERS LOOK BETTER THAN EXPECTED AND SOME ANALYSTS, TALKING ABOUT THE PROSPECT OF YOU UPGRADING GUIDANCE YOU ARE NOT UPGRADING GUIDANCE BIT WHAT STOPPED YOU FROM UPGRADING GUIDANCE? THOMAS: WE’VE HAD A GREAT THIRD-QUARTER, WE’VE GROWN 7% IN CURRENCIES. WE ALSO SEE WE WILL HAVE A VERY

07:56 GOOD FOURTH QUARTER. WITH YEAR-TO-DATE GROWTH WE ARE WELL WITHIN THE GUIDANCE. WE ARE NOT REPORTING EARNINGS IN Q3 AND YOU CAN SEE OPERATING PROFIT WAS DOUBLE DIGITS. WE NEED DOUBLE DIGIT PROFIT GROWTH AND I THINK IT WOULD BE A GOOD RESULT, THREE YEARS AND A ROW WITH DOUBLE DIGIT GROWTH.

08:28 THIS IS A GOOD RESULT FOR OUR COMPANY. ANNA: LET ME ASK ABOUT INNOVATION. THE MARKET SEEMS TO BE BUYING INTO THE INNOVATION STORY. YOU SAID TODAY EUROPE IS FALLING BEHIND IN PHARMA INNOVATION AND I KNOW THIS IS A COMMENT ABOUT THE SECTOR BUT WHAT DO YOU PUT THAT DOWN TO, WE HEARD ABOUT THE NEED FOR END USERS OF AI TO BE ADOPTING AI. IS THAT NOT MOVING FAST ENOUGH

09:01 IN EUROPE? THOMAS: IT GOES FAR BEYOND THAT. IF WE LOOK AT THE INNOVATION WE ARE TAPPING INTO, WE TAP INTO INNOVATION WHEREVER IT HAPPENS. OVER THE LAST FOUR YEARS, 50% OF THE INNOVATION WE TAPPED INTO WAS IN THE U.S. AND ABOUT 50% WAS IN ASIA, INCLUDING CHINA. YOU CAN SEE IS JUST NOT AS MUCH INNOVATION GOING ON IN EUROPE AT THIS STAGE.

09:32 LUCKILY WE HAVE ACCESS INNOVATION ACROSS THE WORLD. GUY: GOOD MORNING. WHY IS EUROPE NOT DELIVERING THE SAME KIND OF RETURNS IN TERMS OF INNOVATION IN THE U.S. AND CHINA? THOMAS: I THINK EUROPE AND SPECIFICALLY GERMANY AND OTHER COUNTRIES JUST HAVE A DIFFERENT SITUATION, THEY DON’T HAVE A LOT OF GROWTH SO THEY ARE NOT REALLY INVESTING IN GROWTH AT THIS STAGE AND YOU SEE THAT THE

10:03 U.S. AND ASIA VERY DIFFERENTLY. THEY REALLY PLAY TO WIN AND EUROPE IS MORE PLAYING NOT TO LOSE. A DEFENSIVE GAME IS NOT THE WAY TO GO. YOU HAVE TO INVEST IN GROWTH SECTORS AND GERMANY AS AN EXAMPLE HAS CALLED OUT FOUR SECTORS AS GROWTH SECTORS INCLUDING PHARMA AND BIOTECH. WHAT IS ON PAPER IS VERY DIFFERENT TO HOW THEY ACT. I THINK THIS IS A BIG DISCREPANCY IN EUROPE. IT’S NOT SOMETHING WE DO AS A

10:34 COMPANY, WE WOULD NOT SURVIVE IF WE ACTED LIKE THAT. GUY: IF THE INNOVATION IS NOT COMING FROM EUROPE, WILL YOU BE BUYING MORE EARLY-STAGE OUT OF PLACES LIKE CHINA? THOMAS: ABOUT 50% OF OUR PIPELINE IS INTERNAL RESEARCH.

11:04 WE HAVE 50% R&D IN THE U.S. AND 50% IS OUTSIDE. WHEN WE LOOK AT DIFFERENT COMPANIES WE DON’T SEE MUCH INNOVATION OUT OF EUROPE. WE WILL CONTINUE TO TAP INTO INNOVATION WHEREVER IT COMES FROM. YOU ALSO MENTIONED, THIS YEAR WE HAD 88% SUCCESS RATE. OUR PIPELINE IS A RECORD HIGH IN TERMS OF VALUE SO WE ARE VERY WELL POSITIONED. AS A GLOBAL COMPANY WE CAN ACCESS INNOVATION WHEREVER IT COMES FROM. ANNA:

11:36 CAN I ASK YOU ABOUT CANCER DRUGS? THIS IS AN AREA OF FOCUS OVER A LONG PERIOD. YOU HAVE AN INTERESTING OFFERING. YOU’VE SAID IN THE PAST IT COULD BE THE BIGGEST DRUG EVER FOR ROC HE. THERE IS A REALLY WIDE RANGE OF EXPECTATIONS AROUND THAT DRUG. THOMAS: WE ARE LOOKING FORWARD TO BRINGING IT TO PATIENTS BECAUSE IF YOU LOOK AT THE DATA, IT’S

12:08 SIGNIFICANT IMPROVEMENT, 30% IMPROVEMENT OVER THE STANDARD OF CARE CURRENTLY AND WE ARE PREPARING FOR LAUNCH. COMPARING IT, AT PEAK SALES, ONE HAD ABOUT 7 BILLION SWISS FRANCS, AND IT WORKS IN BREAST CANCER,

12:41 ABOUT 70% OF ALL BREAST CANCERS. IT’S OFTEN DETECTED EARLY. YOU CAN SEE IT’S VERY LIKELY IT’S GOING TO EXCEED THE NUMBERS WE HAD SEEN BEFORE. ANNA: WHAT SIGNALS ARE YOU GETTING FROM EUROPEAN GOVERNMENTS ABOUT WHETHER THEY ARE WILLING TO PAY FOR THIS AND AN AMOUNT THAT WILL LEAVE YOU COMPLIANT WITH MOST FAVORED NATION REGULATIONS WITH REGARDS TO THE UNITED STATES?

13:12 DOES THAT COME BACK TO WHAT YOU WERE SAYING ABOUT INNOVATION AND EUROPE NOT REWARDING INNOVATION? THOMAS: LET ME ALSO EXPLAIN AGAIN HOW THE MOST FAVORED NATION PRICING WORKS WITH THE U.S.. THE U.S. HAS SAID THEY ARE WILLING TO HAVE A CORRECTION FACTOR BETWEEN THE COUNTRIES. IF A COUNTRY IN EUROPE HAS A GDP PER CAPITA 50% LOWER THAN THE U.S. THEY ARE WILLING TO PAY TWICE

13:44 THE PRICE AND THEY SEE IT AS COMPARABLE. WE WILL BE LAUNCHING FIRST IN THE U.S. AND THE NEXT YEAR WE WILL HAVE DISCUSSIONS WITH EUROPEAN REIMBURSEMENT AGENCIES AND WE WILL SEE WHERE WE STAND COME UP ITS VERY CLEAR. I ALSO MENTIONED IT THIS MORNING IN THE WIRE CALLS THAT WE WILL ONLY INVEST IN COUNTRIES IN THE FUTURE THAT WILL REWARD INNOVATION. AS ONE OF THE FEW REMAINING INDUSTRIES IN EUROPE THAT IS INCREASING JOBS, IF THEY WANT OUR INVESTMENT IN EUROPE WE

14:16 WILL ONLY DO THAT IF THEY REWARD INNOVATION. GUY: WHAT ARE THE METRICS ON THAT? IF I AM A EUROPEAN HEALTH CARE MINISTER RIGHT NOW, WHAT IS THE MESSAGE I NEED TO BE TAKING FROM WHAT YOU JUST SAID? DO I NEED TO BE RAISING PRICES, DO I NEED TO GIVE MORE TAX BREAK SURROUND INNOVATION? WHAT ARE YOU LOOKING FOR FROM EUROPE THAT WILL ALLOW YOU TO CONTINUE TO INVEST HERE?

14:50 THOMAS: LET ME PUT IT THIS WAY – ALREADY TODAY EUROPEAN PATIENTS DON’T HAVE ACCESS TO THE MEDICINES OF PEOPLE HAVE IN OTHER COUNTRIES AROUND THE WORLD. IT’S ONLY A COST WAY AND NOT SOCIETAL BENEFIT OR PRODUCTIVITY BENEFIT. IF YOU INVEST IN THE HEALTH OF PATIENTS, YOU WILL HAVE A RETURN IN GDP GROWTH. TO BRING THAT ALSO INTO PERSPECTIVE, EVEN IN A COUNTRY LIKE SWITZERLAND IF YOU LOOK AT HOW MUCH IS SPENT ON MEDICINES

15:24 IN TOTAL, INCLUDING GENERICS, IT IS 70 SWISS FRANCS PER MONTH. IS THAT REALLY A LOT OF INVESTMENT? I DON’T THINK SO. GUY: I THOUGHT THIS CONVERSATION WAS GONNA BE ABOUT INDIVIDUAL DRUGS BUT THAT WAS A REALLY INTERESTING MACRO CONVERSATION. THOMAS, THANK YOU. COMING UP WE WILL DIG INTO STOCKS TO WATCH AHEAD OF THE

15:56 EUROPEAN OPEN. NESTLÉ IS OUT WITH EARNINGS. AND WE WILL TALK WITH S.A.P. AND, WE WILL DISCUSS THE OUTLOOK FOR RATES AND YES WE WILL TALK ABOUT FRANCE. IF YOU WANT TO JOIN THE CONVERSATION, IT’S ON YOUR TERMINAL. THIS IS BLOOMBERG.

16:41 GUY: 19 MINUTES PAST THE HOUR. WELCOME BACK. LET’S TALK ABOUT THE BONDS. YESTERDAY, THE FRENCH AT 10 YEAR, 5%, THE FIRST TIME IT’S HIT THAT SINCE 2002. SPREADS GETTING CLOSER. WE ARE JOINED BY THE FIXED INCOME CHIEF OPERATING OFFICER. ANY SINCE PEOPLE ARE WILLING TO BUY? HAVE HAD THIS CONVERSATION ALL WEEK AND THEY ARE GOING MAYBE, BUT THE YIELD IS TICKING HIGHER. >> I WILL SAY MAYBE AS WELL.

17:16 UNFORTUNATELY YOU ARE MISSING THESE SHORT-TERM TRIGGERS TO GET THE MARKET COMFORTABLE. LEVELS ARE INTERESTING, IT DRAWS NOTICE BUT WE’VE GOT THE HURDLE OF THE ELECTIONS NEXT YEAR AND THAT’S STILL A FEW MONTHS AWAY. THINK IF YOU ARE LOOKING MORE CLOSELY, IT WILL BE INTERESTING TO SEE WHAT HAPPENS THIS WEEKEND BUT WE’VE HAD EXAMPLES WITH FRANCE A FEW YEARS BACK WHERE IT BECAME A BIT OF A

17:48 WEEKLY EVENT AND WE NEED TO SEE WHAT THE SITUATION TURNS OUT TO BE OVER THE COURSE OF THIS WEEKEND. GUY: HERMES IS SAYING IT’S MARSEILLE STORE WAS COMPLETELY LOOTED AND IT WON’T BE OPEN ANYTIME SOON. THIS IS A NEW FACTOR IN THE MIX. HOW DOES THE BOND MARKET THINK ABOUT THAT, THE ECONOMIC EFFECTS? BEFORE WE CAME ON WE WERE TALKING ABOUT THE TOURISM AFFECT. HOW DO WE THINK ABOUT THAT AND PLUG IT INTO THE BOND MARKET?

18:20 >> WE ARE IN A SITUATION WHERE THE DEFICIT AND FRANCE IS A PROBLEM AND WHY YOU HAVE SPREADS AND YIELD LEVELS. GROWTH IS IMPORTANT FOR THE FRENCH STORY. ANYTHING THAT’S GOING TO HIT GROWTH DOESN’T HELP. I THINK THE EXAMPLE YOU GAVE, THE POTENTIAL IMPACT ON TOURISM, IT’S NOT HELPFUL IN THIS CONTEXT. ANNA: AND THE OIL PRICE IS NOT HELPFUL.

18:53 WHETHER YOU LOOK AT IMPLIED OR REALIZED VOLATILITY IT SEEMS IT’S NOT SPIKING LIKE THE FIRST TIME WE SAW OIL GOING HIGHER. WHAT DOES THIS DO TO BOND MARKET ASSUMPTIONS? >> I THINK THIS IS WHY YOU’RE SEEING THIS MORE GLOBALLY. IT’S A TRICKY ONE.

19:25 IF YOU GO BACK A FEW MONTHS AGO WHEN THE CONFLICT KICKED OFF IN THE MIDDLE EAST, WE WERE TALKING TWO OR THREE MONTHS OF RESERVES BUT WE ARE A LOT OF FURTHER ON AND PRICES HAVE RISEN AND STAYED HIGH WE HAVEN’T HAD THE NASTY SPIKES YET. WE DON’T HAVE THE SAME RESERVES BUT THOSE HAVE BEEN MANAGED WITH CARE. ANNA: THERE’S NO DENYING FRANCE HAS SPECIFIC ISSUES BUT THE FLAREUP

20:00 IS ONGOING IS ONGOING THAT IT STARTED MOST RECENTLY AROUND THE SAME TIME AS A SPIKE IN U.S. YIELD AS WELL. IT’S COME BACK DOWN, ARE THEY STILL LINKED? >> THAT’S THE INTERESTING NUANCE WE’VE SEEN IN THE LAST FEW DAYS, SUDDENLY YES YOU HAD A BID FOR SAFETY AND IT’S GONE TO THE TREASURY MARKET.

20:34 I THINK THAT’S DRIVEN BY THE AI STORY AND HOW IT MIGHT FEED INTO GLOBAL GROWTH. IT’S BEEN A HUGE DRIVER. IT’S BEEN A BUFFER TO THE GROWTH STORY IN THE COURSE OF THE YEAR. I THINK THAT ANXIETY I SEE PLAYING MORE ON THE U.S. SIDE OF THE RATE STORY. GUY: HOW ARE YOU THINK ABOUT THE AI STORY? ONE WAY TO THINK ABOUT IT IS THE GROWTH NARRATIVE. THERE’S ALSO JUST THE HUGE AMOUNT OF DEBT AND WHAT’S HAPPENING IN TERMS OF ITS ARRIVAL IN THE MARKET.

21:09 META-LAST NIGHT FOR THE FIRST TIME EVER SINCE IT IPO’D WENT FREE CASH FLOW NEGATIVE. THAT’S A MONUMENTAL MOMENT IN TERMS OF THE TECH TRADE. THEY’VE GONE FOR BEING HUGE CASH DRIVERS TO GOING NEGATIVE. HOW ARE YOU THINKING ABOUT IT IN TERMS OF THIS MOVEMENT? >> I THINK TWO ELEMENTS ARE INTERESTING. OBVIOUSLY IT’S CREATING A HUGE COMPETITION FOR CAPITAL AND THAT HAS NOT HELPED THE TECHNICAL SIDE. THAT’S THE FAVORED AREA FOR ISSUANCE.

21:44 YOU HAVE THIS HUGE VOLUME OF FUNDING COMING TO THE MARKET. THEN I THINK WHAT WE ARE BEING CAREFUL ABOUT AT THE MOMENT IS YOU HAVE A BROAD MIX OF CREDIT QUALITY AMONG CREDIT ISSUERS. YOU HAVE THE FULL SPECTRUM INTO HIGH YIELD AS WELL. I THINK INVESTORS NEED TO PICK THEIR NAMES AND POSITIONS IN THAT SPACE. THERE’S A SECURITY ELEMENT TO

22:20 IT AND COMPETITION FOR CAPITAL THAT’S IMPACTING. ANNA: IT’S A DRAMATIC PICTURE, ONE COMPANY GOING FREE CASH FLOW NEGATIVE AND OTHERS IN THE SAME SPACE GUESS HAVE WARNED US THAT THEY SHOULD BE CAREFUL ABOUT CVS. IS THAT RIGHT? THEY ARE NOT VERY INDEBTED COMPANIES. >> THAT’S RIGHT. BALANCE SHEETS ARE CHANGING BECAUSE THEY ARE ADDING HARD ASSETS TO WHAT THEY DO AND

22:51 THAT’S A DEPARTURE FROM THE MODEL. MANY OF THEM ARE STARTING FROM A VERY SOLID BASE. CDS IS USEFUL TO LOOK AT BECAUSE IT GIVES YOU INSIGHT BUT IF YOU LOOK AT THE BONDS AS WELL, A LOT OF IT IS ISSUED ON THE LONG END AND THE PRICE SIGNAL IS A BIT POLLUTED BY MOVEMENTS ON THE INTEREST RATE SIDE. ANNA: THANK YOU FOR JOINING US. TAKING THE PULSE OF THE FRENCH DEBT AND DIGGING ABOUT THE BOND

23:32 MARKETS. WE WILL BE SPEAKING TO THE S.A.P. CEO AFTER CLOUD GROWTH BEAT FORECAST, POSITIVE PICTURE. WE WILL GET AN UPDATE FROM DOMINIC ON WHERE THAT CLOUD STORY GOES FROM HERE. THIS IS BLOOMBERG.

24:13 GUY: THURSDAY THE 22ND, 30 MINUTES TO GO INTO WE START TRADING HERE IN EUROPE. WE ARE VERY NEGATIVE ON THE FUTURES PICTURE RIGHT NOW. TAKE A LOOK AT THE TODAY CHART AND YOU WILL BASICALLY SEE WE HAVE COMPLETELY COME BACK TO FLAT, BUT THE PICTURE THIS MORNING DOES NOT LOOK RIGHT. STOXX 50 FUTURES ARE DOWN, NASDAQ FUTURES STATESIDE ARE DOWN BY 1.6%. S&P FUTURES DOWN BY 8/10 OF 1%. THE EQUITY OUTLOOK IS NOT A GREAT ONE THIS THURSDAY MORNING. ANNA: IT ISN’T, IS IT?

24:48 IN SOME CASES THE NEGATIVITY COMING THROUGH FROM THAT HIGHER OIL PRICE, ALSO THE TECH EARNINGS. HIGHER BOND YIELDS MIGHT NOT HELP AS WELL. HIGHER BOND YIELDS HERE IN EUROPE THIS MORNING. IT IS JUST THEY AFTER DAY SEEING THIS MOVE HIGHER IN THESE FIELDS, PARTICULARLY IN FRANCE AND INCREASING IT IN – INCREASINGLY IN ITALY AS WELL. THAT IS LIFTING SPREAD BECAUSE GERMANY IS NOT REALLY MOVING AND THE SPREAD OF FRANCE OVER GERMANY IS NOW AT 1.62. GUY: 5% FOR THE FIRST TIME SINCE

25:20 2002. LET’S TALK ABOUT THE SOFTWARE STORE YEAR IN EUROPE. SAP LAST NIGHT REPORTED HIGHER CLOUD GROWTH THAN ANALYSTS HAD BEEN LOOKING FOR WITH CLOUD REVENUE FROM 25% IN THE THIRD QUARTER. WE ARE JOINED BY THE CFO. DOMINIC, GOOD MORNING. THANKS FOR SPENDING SOME TIME WITH US THIS MORNING. I THINK THE CLOUD GROWTH SURPRISED A LOT OF PEOPLE LAST NIGHT. I THINK A MARKET WAS LOOKING FOR SOMETHING FAIRLY FLAT. YOU BARELY BEAT ON THE UPSIDE.

25:54 WHERE DID THAT MOMENTUM COME FROM? DOMINIK: AS YOU MENTIONED, THE CLOUD GROWTH COMING IN VERY STRONG AND EVEN MORE IMPORTANTLY, THE 12 MONTH FORWARD LOCKED IN CLOUD REVENUES WHICH ARE CONTRACTUALLY SET UP, CONTINUED STRONG GROWTH MOMENTUM. TOTAL REVENUES AS A RESULT GREW BY 12% IN THE FIRST OPERATING PROFIT BY 18%. THE CORE HERE IS THE CONVICTION

26:29 OF OUR CUSTOMERS THAT SAP IS AN INGREDIENT IN THE AI TRANSFORMATION JOURNEY AND I THINK THAT IS BEHIND THAT EXTREMELY STRONG PERFORMANCE. GUY: DOES IT CARRY ON INTO THE FOURTH QUARTER? THE FOURTH QUARTER IS TRADITIONALLY A VERY BIG CORRIDOR, AND YOU FLAGGED OVER THE LAST 24 HOURS SOME PRETTY BIG MACRO HEADWINDS THAT WE ARE NOW FACING. DOES MACRO HEADWINDS START TO MANIFEST THEMSELVES OR MAYBE SLOW DOWN WHAT YOU WOULD NORMALLY SEE IN THE FOURTH QUARTER? DOMINIK: ABSOLUTELY. I THINK THE MACRO BACKDROP IS

27:01 QUITE CHALLENGING. YOU SEE COMMODITY PRICES SPIKING, INTEREST RATES SPIKING. NOT A PROBLEM FOR S.A.P. ITSELF. WE HAD A NET CASH POSITION, SO NO WORRIES ON THAT FRONT BUT OBVIOUSLY SOME OF THE CUSTOMERS ARE AFFECTED, SO WE HAVE A LITTLE BIT OF A HEADWIND AGAINST THE GREAT STRUCTURAL AI TRANSFORMATION TREND ON THE MACRO ENVIRONMENT AND AS YOU MENTIONED, THE Q4 IS ALWAYS A VERY, VERY STRONG QUARTER.

27:33 THAT IS WHY I’M ALWAYS SAYING WE HAVE TO BE PRUDENT AFTER WHAT HAPPENS IN Q4. BUT STILL WE CONFIRM THAT WE THINK WE WILL HAVE ENOUGH UNDER OUR BELT TO DRIVE ACCELERATION AND TOTAL REVENUE GROWTH IN 2027. ANNA: YOU ARE CLEARLY QUITE POSITIVE ABOUT WHAT WE’VE SEEN AND WHAT IS STILL TO COME. IS THERE A SENSE THAT PERHAPS YOU COULD SHARE A LITTLE BIT MORE INFORMATION WITH THE MARKET ON A REGULAR BASIS ABOUT THE UPTAKE OF AI PRODUCTS AT

28:08 SAP?> POST THIS SAS-POCALYPSE, INVESTORS ARE VERY FOCUSED ON THIS. IS THERE ROOM FOR ANOTHER METRIC, SOMETHING THAT GIVES US A BIT MORE GRANULAR INSIGHT INTO CUSTOMER APPETITE FOR YOUR AI PRODUCT? DOMINIK: WE HEAR OUR INVESTORS LOUD AND CLEAR. WE DON’T WANT TO REALLY INTRODUCE THIS TYPE OF METRICS WITHIN THE YEAR, BUT NOW THAT THIS BUSINESS IS BECOMING VERY SIZABLE, IT WOULD CERTAINLY COMMENT ON THAT WHEN WE COME TO OUR FOR YOUR RESULTS IN JANUARY. WE THINK THAT THE TREND IS HIGHLY INTACT. WE HAVE LAUNCHED A SPREE OF

28:46 PRODUCT INNOVATIONS WHICH ARE SUMMARIZED BY THE ENTERPRISE LABELED AND THAT GIVES US THE CONFIDENCE THAT WE WILL CONTINUE TO THRIVE AND THAT WE HAVE SOME GOOD NUMBERS TO SHOW ON THAT FRONT. FOR THE TIME BEING, YOU SEE HOW THAT TREND IS FUELING OUR GROWTH. ANNA: SO WE WILL LOOK FOR MORE DETAIL MAYBE WITH THE FOR YOUR NUMBERS, A BIT MORE GRANULARITY IS THAT PART OF THE BUSINESS GROWS. HOW ARE YOU MANAGING TO KEEP A LID ON YOUR OWN COSTS? WE HAVE AN INJURY STORY THIS MORNING ABOUT HOW IN ANOTHER

29:17 SECTOR, BANKING GIANTS ARE TRYING TO KEEP A LID ON AI SPENDING, TOKEN COSTS. WHAT ARE YOU DOING TO TRY TO DO THE SAME? >> THE FIRST THING YOU HAVE TO DO IS TO CREATE FULL TRANSPARENCY ABOUT WHAT TOKENS ARE USED IN WHICH PART OF THE ENTERPRISE AND THEN CORRELATE THE TOKEN CONSUMPTION WITH THE OUTCOMES. SAP AND ALL OUR CUSTOMERS VERBALLY ON THIS QUESTION ABOUT WHAT IS THE RETURN ON INVESTMENT? YOU’RE HAPPY TO SPEND THE TOKENS WHEN YOU CAN SEE A GOOD MATERNAL ON INVESTMENT AND I THINK SAP HAS ALL THE INGREDIENTS TO THE FUEL THAT RETURN ON INVESTMENT.

29:49 SO FROM THAT PERSPECTIVE IT IS SOMETHING THAT NEEDS TO BE GOVERNED MORE. IN OUR ENTERPRISE LEASING COST GO UP, BUT AS YOU CAN SEE IN THE STRONG EXPANSION OF THEIR OPERATING PROFIT, WE ARE STILL OPERATED WITH A HIGH OPERATING LEVERAGE THAT MEANS WE COULD CREATE SPACE TO FUND THAT AI TRANSFORMATION AND ALSO NOT ONLY ORGANICALLY, BUT ALSO BY ACQUISITIONS. WE’VE DONE SEVERAL ACQUISITIONS OVER THE LAST COUPLE OF QUARTERS.

30:22 GUY: DOMINIC, CAN I GET YOUR TAKE ON A CONVERSATION THAT IS ALREADY EMERGING THIS MORNING? THAT IS WHETHER OR NOT EUROPE NEEDS TO BE MORE INNOVATIVE. WE’VE JUST BEEN SPEAKING TO THE CEO OF ROCHE HE DEFINITELY THINKS THAT EUROPE NEEDS TO GET ITS ACT TOGETHER. JENSEN HUANG SAINT EUROPE NEEDS TO JOIN THE AI POLICY, THAT IT IS NOT DOING ENOUGH. YOU ARE RIGHT AT THE COAL FACE ON THIS STORY. HOW FAR BEHIND HIS EUROPE ON INNOVATION, WHAT DOES IT NEED TO DO NEXT? CAN IT CATCH UP? DOMINIK:

30:53 HONESTLY, I DON’T THINK THAT THE INNOVATION ITSELF AS THE PROBLEM. IF YOU LOOK AT THE ACQUISITIONS WE’VE DONE MORE RECENTLY, A LION’S SHARE OF THEM HAVE BEEN IN EUROPE WHICH IS IN CONTRAST TO WHAT HAPPENED WHEN WE DID THE TRANSFORMATION WHERE WE GET A LOT OF ACQUISITIONS IN THE U.S. AND WE WOULD SAY WE ARE ACTUALLY LEADING THE CHARGE ON DRIVING ENTERPRISE-GREAT AI THAT DELIVERS RETURN ON INVESTMENT. THERE ARE CERTAIN PRECONDITIONS. YOU FIRST NEED TRUSTED DATA, YOU NEED THE PROCESS LOGIC.

31:26 YOU NEED PROPER INTEGRATION OF ALL THAT AND LAST BUT NOT LEAST, EXCELLENT GOVERNANCE. SO THAT IS ABOUT ACCURACY, AUTHORIZATION AND ACCOUNTABILITY. SO IN OUR BUSINESS, THAT IS WHAT MATTERS. I WOULD NOT SEE THAT THERE IS ANY KIND OF INNOVATION GAP. WHAT IS A PROBLEM IN EUROPE IS THE OVER BOARDING REGULATION THAT IS MAKING US SLOW IN OUR TRANSFORMATION EFFORTS IN THE PRESSURE IS INDEED VERY HIGH TO TRANSFORM. ANNA: AND WHERE WOULD YOU LIKE TO SEE MOVEMENT ON THAT FRONT, ON THE REGULATIONS SIDE?

32:01 >> THERE IS OF COURSE PART OF THE DIGITAL BUSINESS WERE ACCESS TO CERTAIN DATA IS MADE MORE DIFFICULT. THERE IS A VERY STRICT GOVERNANCE ABOUT DATA PRIVACY. WE THINK DATA PRIVACY IS A VERY IMPORTANT TOPIC. AI GOVERNANCE IS A VERY IMPORTANT TOPIC BUT WE HAVE TO ALSO BE CLEAR ABOUT HOW CAN WE MAKE IT BUSINESS-READY, AND THESE ARE AREAS WITH ALSO THE FLEXIBLY AND WORKFORCE TRANSFORMATION, WE BELIEVE THAT AI WILL INDUCE MASSIVE

32:31 WORKFORCE TRANSFORMATION. THIS IS WHY WE ANNOUNCED THE ACQUISITION. THESE TOOLS WILL GIVE US POWERFUL TOOLS TO HELP OUR CUSTOMERS TO MANAGE THAT MASSIVE TRANSFORMATION. >> WE DO APPRECIATE IT. STICKING WITH TECH EARNINGS, SHARES GAINED AFTER THE COMPANY BOOSTED ITS CAPEX PLANS FOR THE YEAR, SIGNALING AN EVEN MORE AGGRESSIVE THAT ON AI. SPEAKING ON THE COMPANY’S

33:03 EARNINGS CALL THE CEO MARK ZUCKERBERG POINTING TO THE SUCCESS OF NEW AI AGENTS AS A REASON TO CONTINUE INVESTING IN AI. >> WE ARE BUILDING OUT THE CAPACITY TO SERVE MORE THAN ONE BILLION PEOPLE OVER THE NEXT FEW YEARS. IN THE NEAR TERM, MUYSE IS VERY COMPUTE-INTENSIVE TO RUN BUT WE EXPECT TO IMPROVE ITS COST EFFICIENCY BY MORE THAN 10X IN THE NEXT YEAR WHICH WILL ENABLE IT TO BE PROFITABLE ONCE THE REVENUE LINES ARE AT SCALE. ANNA: LET’S TALK THROUGH SOME OF THESE OTHER TECH THINGS. WE ARE JOINED BY ANTHONY

33:34 STEPHENS TO GET SOME ANALYSIS. LET’S START WITH THE POSITIVE SIDE OF THE LEDGER, THE META-EARNINGS. THERE WAS A POSITIVE TAKE FROM THE MARKETS, BUT IT WAS IN THE END POSITIVE, WHICH IS DIFFERENT TO TESLA. WHAT DID YOU TAKE AWAY FROM THE STORY AROUND META-, AND BIT OF A VICTORY LAP AROUND THE LAUNCH OF NEWS, PERHAPS? >> ABSOLUTELY. WE’VE BEEN TALKING ON THE PHENOMENON AND IT WAS A VINDICATION OF THE STRATEGY OF

34:07 PUTTING TOGETHER THEIR CUSTOMERS , ITS ENGINEERING AND NOW THIS NEW AI VERTICAL, AND THIS CLEAR PATH AI MONETIZATION. THAT IS WHAT EVERYBODY ELSE IS CHASING AND IT IS INTERESTING FROM A STOCK IF MARK – STOCKMARKET PERSPECTIVE THAT META-HAS LAGGED TO THE NASDAQ YEAR TODAY. SO MAYBE THERE IS GOING TO BE SOME CATCH UP HERE. GUIDANCE WAS VERY STRONG, THE VISION WAS VERY STRONG. IT FINALLY FOUND ITS FEET AS FAR AS THE AI STRATEGY IS CONCERNED. THE CONSUMER SIDE ALSO PUTS A LITTLE BIT APART.

34:44 WHICH MAKES MONEY FROM ENTERPRISE AI, AND YOUR PREVIOUS GUEST THAT HAS BEEN A REALLY GOOD LETTER, BUT NOW SOMEBODY SAYING THAT YOU CAN MAKE MONEY FROM CONSUMER AI AND THAT IS WHAT IS DRIVING OPTIMISM HERE. GUY: WHAT ABOUT TESLA? FELT LIKE IT WAS THE ONLY ONE AROUND. ANTHONY: ANY OTHER COMPANY IN THE WORLD, YOU MAKE MONEY AND THE STATE WILL BE HAPPY, BUT TESLA IS NOT A CAR COMPANY, IT IS A GREEN COMPANY. WHEN THE CAPEX FOR A GREEN

35:15 COMPANY COMES OFF, THE STATE STARTS GETTING WORRIED ON THE BIBLE HE OF THOSE NEW PRODUCT LINES, ESPECIALLY THAT OF THE ECONOMIST DRIVING AND THE ROBOTICS SECTOR. WE ARE SEEING STEEP LOSSES IN THE ROBOTICS SECTOR AND THE PASSIVE COMPONENTS SECTOR IN ASIA AS WE START TO REPRESS THE FACT THAT THEY NOT ONLY CUT THEIR GOING FORWARD BY AROUND $5 BILLION, THEY ALSO MISSED MOST ON THIS SPENDING, SO THEY ARE NOT PUTTING THIS MONEY TO WORK, ONLY TECHNOLOGY THEY SAY THEY ARE CHASING. AND THAT IS IMPORTANT BECAUSE THIS SPENDING THIS KIND FOR GENESIS BEHIND THIS IDEA OF

35:46 MERGING SPACEX AND TESLA. IF THEY ARE NOT GOING TO SPEND AS AGGRESSIVELY, THERE’S THE COMBINED ELON MUSK EMPIRE CONTINUING TO BACK AI IN QUITE THE SAME AGGRESSIVE MANNER. THAT IS WHAT THE STREET IS REACTING TO ON THOSE NUMBERS. ANNA: I DID WONDER WHETHER THE ASIAN MARKET NEGATIVITY WAS PARTLY DRIVEN BY TESLA BEING SO BIG IN PHYSICAL AI AND ASIAN EQUITIES BEING SO FOCUSED ON PHYSICAL AI, WHETHER THERE WAS MORE OF A READ ACROSS THERE.

36:18 AFTER THE U.S. WE GOT IBM AND TEXAS INSTRUMENT EARNINGS. DID THAT TELL US ANYTHING ABOUT DATA CENTERS, OR IS THIS A BROADER TAKE ON THE U.S. OR GLOBAL ECONOMY? WHAT WAS THE TAKE AWAY THERE? ANTHONY: I FOUND THE IBM NUMBERS INTERESTING. THE PREVIOUS GUEST, A LOT OF THE LEGACY SOFTWARE COMPANIES ARE REALLY PIVOTING QUITE NICELY HERE INTO AI TRANSFORMATION AND THAT IS STARTING TO SHOW UP IN EARNINGS.

36:48 MAYBE THE DEPTH OF THESE COMPANIES WAS GREATLY EXAGGERATED. THEY FOUND THEIR FEET, THEY ARE LEVERAGING CUSTOMER RELATIONSHIPS TO MAKE MONEY OFF AI AND AI TRANSFORMATION. TEXAS INSTRUMENTS IS A VERY INTERESTING CASE. THEY MAKE THESE COMPONENTS THAT ARE NOT SUPER COMPLEX BUT ARE IN SHORT SUPPLY, AND THAT SPACE HAS BEEN RED HOT AND IT WAS NICE TO SEE SOME OF THAT VALIDATION THAT THIS GROWTH CONTINUES IN THAT SET OF RESULTS. BUT IT’S BEEN REALLY INTERESTING TO WATCH THE PEER GROUP IN ASIA. MOSTLY THE GAINS ARE DRIVEN BY JENSEN HUANG’S COMMENTS WHERE

37:22 YOU ARE RATHER THAN THE TEXAS INSTRUMENTS RESULTS. IT LOOKS LIKE THE FIRST REACTION FUNCTION IS GREAT RESULTS, LET’S MOVE ON TO ANOTHER TEAM. GUY: ANTHONY, THANK YOU VERY MUCH. JENSEN HUANG, AS WE’VE HEARD IN EUROPE, IN BERLIN, AND HE’S GOT A MESSAGE FOR EUROPE. IT IS TIME TO JOIN THE PARTY. >> FOR EUROPE TO BENEFIT FROM AI , YOU NEED ALL OF THE END

37:54 MARKETS, THE END INDUSTRIES TO ADOPT AI AND TO SUCCEED WITH AI. WHETHER IT IS THE AUTOMOTIVE INDUSTRY BECAUSE WE ARE BUILDING CARS, THE WAY YOU MANUFACTURED WITH ROBOTICS, WILL YOU DISCOVER NEW DRUGS AND HEALTH CARE. YOUR FINANCIAL SERVICES INDUSTRY. ALL OF THESE DIFFERENT INDUSTRIES HAVE TO BECOME AI COMPANIES. GUY: WE ARE GOING TO HAVE MORE ON THE TEXT TRADE NEXT. THIS IS BLOOMBERG. – TECH TRADE NEXT. THIS IS BLOOMBERG.

38:41 ANNA: WELCOME BACK, THIS IS “THE OPENING TRADE.” THE EUROPEAN EQUITY MARKET PICTURE LOOKS PRETTY NEGATIVE, DOWN BY 1.2%. LET’S TALK ABOUT WHERE WE ARE ON THESE MARKETS IN THREE MINUTES ON THE OPENING TRADE. PAUL DOBSON JOINS US. WHAT DO YOU MAKE OF THE OVERNIGHT PRICE ACTION? IF YOUR MAIN FOCUS IS TESLA AND YOU CARE A LOT ABOUT PHYSICAL AI , MAYBE THERE IS MORE FOCUS ON THAT SIDE OF THE AI TRADE, MAYBE THERE IS MORE NEGATIVITY.

39:15 FOR THE MOMENT, EUROPEAN FUTURES POINT LOWER, SO WHAT IS YOUR TAKE AWAY? >> QUITE A STRANGE FIVE IN MARKETS TODAY. IF YOU ARE LOOKING AT THOSE EARNINGS THAT WE HAVE FROM LAST NIGHT IN THE U.S., MOST PEOPLE WERE FOCUSED ON META-PROBABLY AS THE MOST IMPORTANT THING, AND YET META WAS PRETTY WELL- RECEIVE. PEOPLE LIKE THE PLANS, ALL LOOKING ROSY. AND LOOK AT THOSE MARKETS, LOOK AT THE REACTION IN ASIA, PRETTY

39:47 NASTY DAY ALL AROUND THE REGION. DOWN AT A THREE-MONTH LOW ON THE ASIA PACIFIC INDEX, GOING BACK FURTHER FOR KOREA AS ONE EXAMPLE. TESLA IS ONE NEGATIVE. NUMBER SURGED INTO WELL AFTER HOURS, BUT IT JUST FEELS LIKE MAYBE THERE’S OTHER THINGS OUT THERE THAT ARE ALSO SPOOKING PEOPLE. HAVING A LOOK AT THE OIL MARKET, THE PRICES ARE RISING. SOME REPORTED THAT U.S. DIPLOMATS GETTING TAKEN OUT OF

40:18 SAUDI ARABIA, SOME REPORTS ABOUT POSSIBLE MORE STRIKES ON IRAN. IT’S ALL CREATING THIS MOOD WHERE WE ARE ALREADY EXTREMELY ANXIOUS ABOUT AI AND IT IS BEING STRESSED WITH MORE SELLING TODAY. GUY: WHAT IS GOING ON WITH ALIBABA? A BIG DROP FLASHED ON MY SCREEN EARLIER. PAUL: CHINA HAS ITS OWN PROBLEMS ON TOP OF EVERYTHING ELSE, ON TOP OF THE AI. IT HAS FOR THE PUSHED THE ONSHORE MARKET TO THE BRINK OF

40:49 A BEAR MARKET TODAY IN THAT SORT OF E-COMMERCE PLATFORM SPACE. SOME BIG DROPS ALL AROUND. IT SOUNDS LIKE THEY’VE BEEN SUMMONED BY THE AUTHORITIES, LOOK AGAIN AT THE CUSTOMER PROTECTION, AND BEING SOLD – PRODUCTS BEING SOLD ON THEIR PLATFORMS. IT’S NOT THE FIRST TIME WE’VE HEARD THIS BUT IT IS A REPEATED PATTERN AT THE MOMENT AND E-COMMERCE COMPANIES AS A RESULT, ALIBABA IS FALLING. ANOTHER BAD DAY ON THE HONG KONG MARKET AS WELL AS MAINLAND

41:21 CHINA. ANNA: I WONDER WHAT THE HAVEN TRADE LOOKS LIKE RIGHT NOW AND WE ARE LEARNING QUITE A BIT ABOUT THE ROLE OF TREASURIES CAN PLAY HERE. WE TALKED TO A GUEST EARLIER ON WHO SAID THAT YES, IN THE MOST RECENT DAYS WE ARE SEEING SOME SELLING OF EUROPEAN GOVERNMENT BONDS, PARTICULARLY FRANCE, BUT ALSO INTO TREASURIES. INTERESTING THAT THE HAVEN TRADE DOES SEEM TO BE BACK. PAUL: IT IS VERY INTERESTING BECAUSE WE HADN’T SEEN THAT. IN RECENT MONTHS, HIGHER OIL

41:54 PRICES LED TO HIGHER BOND YIELD WE’VE GOT THE LONG BOND YIELD A ONE-MONTH LOW, PEOPLE SEEMING TO BE PUSHING THEIR WAY BACK INTO U.S. GOVERNMENT BONDS AS A HAVEN. AS WE GET MORE OF WHAT WAS IN THE CREDIT MARKET, MORE SERVICES IN THAT TEXT FACE. – TECH SPACE. EVEN THE YEN AND THE SWISS FRANC ARE PERFORMING AS HAVENS. PEOPLE REALLY SCURRYING FOR SAFETY. GUY: NOT IN EUROPEAN BONDS, THOUGH. GREAT STUFF.

42:30 WHICH STOCKS ARE REFOCUSING ON HERE IN EUROPE? STARTING WITH BARCLAYS. >> THERE IS SNAPPY QUOTE FROM THE CEO WHEN IT CAME TO THE SECOND QUARTER SAYING IF THIS IS A HOUSE BUILT BY FIXED INCOME, IT IS BEING INCREASINGLY SUPPORTED BY EQUITIES. THAT’S THE STORY REALLY FROM THIS THIRD QUARTER, 37% JUMP IN REVENUE FOR THE EQUITIES TRADE. FIXED INCOME RATHER LIKE WE SAW ON WALL STREET DOWN, AND THAT IS THIS SPLIT STORY HERE.

43:03 WE ALSO HAD A 500 MILLION NEW SHARE BUYBACK ANNOUNCED, SO EQUITIES REALLY BEING THE STANDOUT STORY. THE OVERALL STORY, THE BIGGER PICTURE BY FRIEND OF THE SEGMENT CHARLIE WELLS, U.K. LENDERS ARE BRACING FOR JOHN HEALEY’S BUDGET FOR AN INCREASE IN THE SURCHARGE ON BANKS, POTENTIALLY UP TO 8%, 3% TO 8%. THE QUESTION IS HOW MUCH OF THIS IS FACTORED IN? THERE MIGHT BE A MODEST

43:41 INCREASE HERE, IT COULD BE A HEADWIND TO PROFITS. OVERALL IT SHOULDN’T BE THROWING THINGS OFF TOO FAR IN TERMS OF THE BROADER TRAJECTORY. THE IDEA THAT ANALYSTS HAVE MAYBE ALREADY FACTOR THIS IN. WE KNOW THAT THE LEGACY TELCO HAS MADE THIS PUSH INTO THE AI BUILDOUT, IN THE DATA CENTERS AND EQUIPMENT. STOCK UP NEARLY 50% YEAR-TO-DATE, BENEFITING FROM THAT PARTNERSHIP WITH NVIDIA AS WELL. IN THE NEWS OUT THIS MORNING, THIRD QUARTER PROFIT BEATING

44:14 ESTIMATES, SO GETTING IN ON THE AI BUILDOUT VERY MUCH BENEFITING NOKIA. THE DRUGMAKER, WE HEARD SOME NEWS ABOUT A DAILY PILL THEY ARE DEVELOPING FOR BREAST CANCER. OVER THE LAST FIVE YEARS YOU CAN SEE THAT PICKING UP AFTER THAT POST-COVID SLUMP. INTERESTING, THEY HAD A BEAT ON THE LAST QUARTER, BUT THERE IS A SUGGESTION THAT ANALYSTS ARE SAYING MAYBE WAS FLAT OR SLIGHTLY BISON I.T. INTEGRATION, SO KEEP AN EYE ON THAT AS WELL THIS MORNING. ANNA: ALEX, THANKS VERY MUCH.

44:49 I WILL ADD TO THAT LIST LC – ELSIG, SO WE WILL CERTAINLY WATCH THAT. OIL PRICE UP ANOTHER 2%. THAT IS GOING TO DOMINATE THE THINKING IN THE TRADING DAY AHEAD. GUY: EARLY INDICATIONS ARE WE ARE LIKELY TO SEE THE SOFTWARE THIS MORNING. INTERESTING HAVE TECH TRADES. S&P DID WELL OVERNIGHT. WILL IT DO AS WELL THIS MORNING AND THE EUROPEAN MARKET? WILL NOKIA DO AS WELL? ANNA:

45:20 TECH DID OK YESTERDAY AND THE STATES, BUT THE THEMES HAVE EVOLVED, THE WIDER LANDSCAPE. WE WILL BRING THE OPENING TRADE WITH FUTURES POINTING LOWER. WE WILL BE BACK. THIS IS BLOOMBERG. GUY: GET READY, THE MARKET IS ABOUT TO OPEN AND IT IS GOING TO BE A REALLY INTERESTING OPEN I THINK.

45:52 LET’S TALK ABOUT THE LEGACY FIRST AND THEN WE WILL FOLD IT INTO THE NARRATIVE WE GOT IN EUROPE. THE U.S. WENT UP, SO IN THEORY WE GOT A TAILWIND COMING OUT OF THE UNITED STATES. THAT DOES NOT LOOK LIKE THE PICTURE WE ARE SEEING IN TERMS OF THE FUTURES. THIS IS HOW THEY ARE DEVELOPING RIGHT NOW. WE’VE BASICALLY KIND OF ROLLED OVER COMPLETELY, ALMOST BACK TO FLAT AND TERMS OF THE TODAY PICTURE ON THESE FUTURES. STOXX 50 FUTURES ARE DOWN OVER 1%. FTSE IS DOWN NEARLY FOUR TENS OF 1%. DAX FUTURES ARE DOWN BY NINE TENS OF 1%.

46:26 HOW WITH THE S&P GOING TO TRADE? I THINK THAT IS GOING TO BE INTERESTING. ANNA: WILL THERE BE JUST ONE TECH TRADE? AND WHAT THAT DID TO ADR OVERNIGHT. LOTS OF COMPLEXITY AROUND THE TECH TRADE AND HOW IT OPENS UP HERE IN EUROPE. LET’S ALSO TALK ABOUT LUXURY BECAUSE WE HAD A REALLY INTERESTING STATEMENT COMING

46:58 THROUGH. THE SALES MISSING FORECAST, CHINESE SHOPPERS CURBING SPENDING, ASIA ACTING AS A DRAG BUT ALSO SOME REAL COLOR ABOUT WHAT HAS BEEN GOING ON IN FRANCE AND WHAT IMPACT THAT IS HAVING ON THE LUXURY LANDSCAPE. WE WILL CERTAINLY WATCH AT THE OPEN TO GET MORE EARNINGS FROM THE LUXURY SECTOR COMING THROUGH THIS WEEK. AND WATCH BARCLAYS AS WELL BECAUSE WE SAW SOME WEAKNESS MAYBE IN THE INVESTMENT BANKING SIDE, BUT SOME STRENGTH IN EQUITIES. WE WILL CERTAINLY WATCH THAT STORY AS IT UNFOLDS. ANOTHER BUYBACK AS WELL, SO LOTS TO THINK ABOUT WHEN IT COMES TO THE START OF TRADE THIS MORNING. GUY:

47:31 LET’S GET YOU SOME DETAILS ON WHAT WE ARE SEEING IN TERMS OF THE NUMBERS. THE OPENING TRADE ABOUT TO HAPPEN. EXPECTING LONDON TO DO A LITTLE BIT BETTER. WHAT IS BARCLAYS GOING TO BE LOOKING LIKE THIS MORNING? WHAT IS LUXURY GOING TO BE LOOKING LIKE AROUND EUROPE? WE WILL TALK TO ANGELINE OUT OF PARIS. A LITTLE LATER IN THE SHOW TO GET HER TAKE ON THAT. FTSE IS DOWN BY HALF OF 1%. STOXX 600 DOWN BY 3/10 OF 1%. THE HEAVYWEIGHTS HERE GOING TO

48:04 DO MORE DAMAGE THAN THE MID-CAPS. THE CAC OPEN IS GOING TO BE REALLY INTERESTING. MAYBE THAT IS THE ANSWER. THE LUXURY TRADE IS TAKING IT ON THE CHIN. ARE THERE OTHER AREAS THAT WE NEED TO BE FOCUSING ON? AEX IS DOWN BY A TENS OF 1%. THE IBEX IS DOWN BY 1% THIS MORNING. SO WE ARE SEEING AS ANTICIPATED AS NEGATIVE OPEN BUT THE DETAILS I THINK ARE GOING TO BE REALLY IMPORTANT. WHAT ARE WE SEEING? ANNA: SOME REALLY INTERESTING

48:37 DYNAMICS AT PLAY. LET’S TRY TO GET SOME CLARITY. WE DO SEE MORE SECTORS IN NEGATIVE TERRITORY, THAT IS THE FIRST THING TO SAY AND PERHAPS NOT A SURPRISE. WE DO SEE PERSONAL CONSUMER DISCRETIONARY GROCERY STORES ACTING AS A BIT OF A HAVEN. WE’VE SEEN THAT BEFORE. WE HAD NUMBERS OUT OF NESTLE THIS MORNING, LOOKING TO SEE IF THAT HAS AN IMPACT ON THAT PARTICULAR BUSINESS. TELECOMS IS ALSO AN AREA I AM SURPRISED WE DIDN’T SEE THE EXPECTATIONS AROUND NOKIA STRONGER EARLIER ON, GIVEN WHAT

49:11 THEY REPORTED, BUT IT DOES SEEM AS IF THE MARKET HAS TAKEN A NEGATIVE VIEW ON THAT. OTHERS REALLY DOING WELL TODAY. THAT IS ALSO AN AREA OF STRENGTH AND NESTLE IS UP BY 2%. ENERGY STOCKS HIGHER, NO SURPRISE GIVEN A HIGHER OIL PRICE. THE DOWNSIDE, I’M LOOKING FOR TECHNOLOGY, DOWN BY 1.3%. WE DO HAVE SOME WEAKNESS, DOWN 5%. ASM DOWN 3.6. ASML DOWN BY THREE, SO WE DO HAVE SOME OF THE HEAVYWEIGHTS IN NEGATIVE TERRITORY IN THE TECH SPACE. GUY:

49:46 DOWN AS WELL BY NINE TENS OF 1%, KIND OF MARKET PRICE, YOU COULD ARGUE. WAS IT YESTERDAY OR THE DAY BEFORE? YOU JUST WONDER WHERE THERE IS A LITTLE BOUNCE BACK. NESTLE HAS GOT TO THINGS GOING FOR IT, ONE OF WHICH IS THE NUMBERS, THE OTHER OF WHICH IS WHAT WE ARE SEEING IN TERMS OF THE SAFETY TRADE, BUT SAP IS UP, JUST NOT AS MUCH AS YOU WOULD HAVE SUGGESTED COMING OUT OF THE U.S. SESSION YESTERDAY. SAPP IS UP 1% THIS MORNING. THAT IS A BIG ACHIEVEMENT

50:18 RELATIVE TO THE MARKET. ANNA: THAT IS, VERY REFLECTIVE OF WHAT IT DID DO LAST NIGHT. IN THE BANKING SECTOR, DOWN BY MORE THAN 2% ON A NUMBER OF BANKS THIS MORNING. JUST LOOKING FOR THE INDIVIDUAL NAMES ARE TRADING, THE POINTS NEGATIVITY DOES COME FROM ASML AND SOME OF THE BANKING NAMES. LET’S FOCUS ON THE BANKING SECTOR. BARCLAYS BE EXPECTATIONS WITH A 47% JUMP IN REVENUE.

50:53 FIXED INCOME FALLS SHORT, FALLING 19% FROM A YEAR AGO. LET’S BRING IN CHARLIE WELLS WHO HAS BEEN LOOKING AT THESE NUMBERS. BARCLAYS IS IN QUITE GOOD COMPANY THIS MORNING AND THE BANKING SPACE. WHAT STOOD OUT TO YOU? >> THE WORD THAT IS STICKING OUT IS DISAPPOINTING. WE ARE HEARING COMMENTARY COMING THROUGH ON THESE NUMBERS, SAYING THIS IS A DISAPPOINTING FRONT. THE CEO OF BARCLAYS SAYING THAT THE NUMBERS ARE SOMEWHAT DISAPPOINTING. SO THE THROUGH LINE HERE IS THE

51:25 WORD DISAPPOINTING AND THIS IS SETTING THE TONE FOR EUROPEAN BANK EARNINGS. AGAIN, THIS COMES IN LIGHT OF THAT EQUITIES TRADING STRENGTH BUT IT REALLY REFLECTS SOME OF THE CHALLENGES THAT BARCLAYS IS FACING AS THEY WOULD THEY TRY TO COMPETE WITH THEIR WALL STREET PEERS BUT ALSO SET OUT FOR A LOT OF THESE U.K. LENDERS AS WELL. GUY: COMING OUT OF WALL STREET, WE PROBABLY HAD A GUIDE ON THAT. WHICH HAS BEEN STRUGGLING BROADLY RECENTLY. >> IT’S REALLY TRICKY.

51:57 YOU SEE THE SIMILAR PATTERN EMERGING, YOU SEE WEAKNESS BUT OF COURSE, YOU GOT THIS EQUITY STRENGTH. I THINK THE ISSUE FOR BARCLAYS IS THE PATTERN IS SIMILAR, BUT THE MAGNITUDE IS DIFFERENT. IF YOU THINK ABOUT THE EQUITIES BUSINESS, BARCLAYS BROUGHT IN JUST NORTH OF ONE BILLION POUNDS OR $1.4 BILLION ON THE EQUITY SIDE. COMPARE THAT TO THE LIKES OF GOLDMAN SACHS WHERE IT WAS ABOUT OVER $6 BILLION, OR JP MORGAN WHERE IT WAS IN THE BALLPARK OF $5 MILLION.

52:31 NOW TURN TO THAT FIXED SIDE, WHAT WE ARE SEEING IS A DECLINE OF 19%. THAT IS AMONG THE STEEPEST DROPS OF ANY OTHER WALL STREET BANKS. BARCLAYS REALLY EXPOSED HERE, BUT LET’S FLIP TO END TALK ABOUT SOMETHING IDIOSYNCRATIC TO THE U.K. THAT WE ARE GOING TO BE HEARING A LOT ABOUT. THAT IS THE BANK TAX. WE’VE GOT THIS ISSUE OF THE PATTERN BEING SIMILAR TO THE WALL STREET BANKS BUT ALSO THE POTENTIAL FOR A BANK TAX WEIGHING ON BARCLAYS SENTIMENT. ANNA: INTERESTING. WE ARE ALSO SEEING IN TERMS OF OTHER NEWS AROUND BARCLAYS, WE ARE SEEING NEWS AROUND JOB

53:03 CUTS, 5000 JOBS TO GO. WE HAD THAT LINE SOME MINUTES AGO BUT MORE RECENTLY, AN EXPLANATION FROM THE CFO THAT AI STARTS CREATING EFFICIENCIES. YOU MUST THE STEEPED IN THANK TECH STORIES THAT FEATURE AI. >> THERE WERE TWO FEARS HERE. ONE IS THIS RECURRING FEAR ABOUT AI AND JOB LOSS WHICH CAN BRING EFFICIENCIES, BUT ALSO

53:36 HAS A NEGATIVE IMPACT ON JOBS. BUT THE OTHER FEAR WAS ABOUT THE EXPENSES. BECAUSE IN THE FIRST HALF, THEY MISSED EXPECTATIONS. THEY WERE SPENDING TOO MUCH. THIS WAS PART OF THE BROADER STRATEGY TO SPEND NOW IN ORDER TO SAVE LATER. BUT WE ARE SEEING THIS MORNING’S EXPENSES REALLY LOOKING LIKE THEY ARE UNDER CONTROL AND SEEMING LIKE THIS COST-CUTTING HAS A LOT TO DO WITH IT. GUY: LET’S TURN INTO WHAT ELSE WE ARE WATCHING IN EUROPE THIS MORNING, THE TECH TRADE IS

54:07 DEFINITELY UNDER PRESSURE. FADING A LITTLE BIT OF ITS EARLY MOVE, BUT STILL UP BY 8/10 OF 1%. WE SPOKE TO THE CFO A LITTLE BIT EARLIER ON. HE GAVE A PRE-POSITIVE OUTLOOK IN TERMS OF THE TRADE AND ITS RELEVANCE TO SAP GROWTH. >> WE THINK THAT THE AI TREND IS HIGHLY INTACT. WE HAVE LAUNCHED A SPREE OF PRODUCT INNOVATIONS WHICH ARE

54:39 SUMMARIZED BY THE ENTERPRISE LABEL AND THAT GIVES US THE CONFIDENCE THAT WE WILL CONTINUE TO THRIVE IN THAT WE HAVE SOME GOOD NUMBERS ON THAT FRONT. YOU SEE HOW THAT KIND OF TREND IS ALREADY FUELING THE GROWTH IN OUR CONSOLIDATED NUMBERS IN THE CLOUD REVENUE GROWTH. GUY: THE CFO DURING THE SHOW A LITTLE BIT EARLIER ON. TURNING US NOW, BLOOMBERG EQUITY STRATEGIST. GOOD MORNING. WHAT WE MAKE OF THE EUROPEAN NUMBERS THUS FAR? >> S&P NUMBERS A VERY STRONG. THE KEY NUMBER THE INVESTORS

55:12 WERE WATCHING, OBVIOUSLY THIS IS A COMPANY AND STOCK THAT HAS BEEN CAUGHT UP EARLIER THIS YEAR. THERE’S ALSO CONCERNS ABOUT WHETHER SOME OF THESE NEW TOOLS ARE GOING TO REPLACE OR POTENTIALLY TAKE OVER THEIR BUSINESS. IT DOES MOVE INVERSELY TO THE AI TRADE, SO THE PAST COUPLE OF MONTHS IT HAS BEEN DOING REALLY WELL. I THINK THAT IS PARTLY WHY THE REACTION IS MUTED, BECAUSE SOME OF THAT POSITIVITY HAD BEEN PRICED IN GOING INTO THE PRINT. IT FEELS A LITTLE BIT LIKE THE GOOD NEWS HAS ARRIVED AND THAT

55:43 IS WHY THE REACTION IS A BIT MUTED. ANNA: FOR A WHILE THAT TRADED WITH THE SAASPOCALYPSE TRADE. YOU WOULD HAVE ASSUMED THAT AI TRADES WELL WHEN OUR LIFE IS IN DOUBT AND YET THE STORY IS ONE WHERE THEY ARE ALSO EMPLOYING AI AND MAYBE THEY SHOULD NOT TREAT IT DIFFERENTLY TO EACH OTHER. IF WE LOOK AT THE U.S. AND THE EARNINGS STORIES WE HAD OUT THERE, DIVERGING SPENDING PLANS OR DIVERGING NARRATIVES,

56:14 WHAT DID YOU MAKE OF THAT? >> I THINK WITH TESLA IN PARTICULAR, THE EARNINGS IS INTERESTING. WE SAW THE SPACEX ANNOUNCEMENT A DAY BEFORE. I DON’T THINK THERE’S MUSKY LOT – MUCH ELON MUSK COULD HAVE SAID. THE STOCK HAD BEEN STRONGER, ABOUT 10% OVER THE PAST THREE DAYS. THEY’VE MADE A LOT OF PROGRESS ON AUTONOMY IN NORTH AMERICA,

56:48 BUT THERE WAS SOME CONCERN AROUND OPERATING EXPENSES WHICH CAME OUT AT THE CALL AND THAT IS WHEN YOU START TO SEE THE STOCK IN AFTER HOURS. GUY: THE MARKET FOCUSED ON THE AD LINE, AND THESE WERE GOOD NUMBERS, DEFINITELY. BUT THIS IS A COMPANY THAT IS SPENDING AN AWFUL LOT AT THE OPERATING LINES. WHY THE FOCUS ON THE AD LINE RATHER THAN CONCERNS AROUND CAPEX?

57:21 >> OBVIOUSLY THEIR FAMILY OF APPS IS A HUGE DRIVER OF GROWTH AND PROFITABILITY. THE INTERESTING THING FOR ME WAS THE MENTION THE ENGAGEMENT REMAINS STRONG. 10 MILLION DOWNLOADS FOR NEWS, THEY TRY TO POSITION AT THE LEADING CONSUMER AGENDA AI PLATFORM. THEY ALSO NOTED THAT AVERAGE REVENUE PER USER COULD POTENTIALLY EVEN THE HIGHER. AND IF THAT IS THE CASE AND

57:53 THEY ARE ABLE TO MONETIZE AT SCALE, THERE CAN BE HUGE GROWTH FOR THE START. ANNA: JENSEN HUANG WHO IS BUSY IN BERLIN THIS WEEK AS WE KNOW. THAT SPEAKS TO HIGH DEMAND, THAT NEWS NARRATIVE. HE WAS SAYING ALMOST EVERYTHING” WILL GET SOLD WITH HIGH DEMAND. AS EVIDENCED BY META, IF YOU DEMONSTRATE HIGH DEMAND, PEOPLE STILL HAVE QUESTIONS. GUY: AND WE GOT THAT INITIAL SURGE AND WE WILL BE ABLE TO MONETIZE

58:28 THIS. AND AGAIN, THERE’S GOING TO BE A KIND OF PROOF POINT AT SOME POINT, CAN YOU ACTUALLY DELIVER UPON THIS? IT WAS A FREE DOWNLOAD, REMEMBER. HOW DO YOU MONETIZE THAT? IT IS STILL A LOT OF QUESTIONS THAT CAME OUT LAST NIGHT. THAT ARE STILL TO BE ENTERED ON THIS. THE EARNINGS STORY LOOKS GOOD, BUT YOU ACTUALLY NEED TO MONETIZE IT. ANYWAY, NICE TO SEE YOU. THANK YOU VERY MUCH. JOINING US OUT OF EUROPE, THAT’S WHY THERE ARE SOME OF THE STOCKS WE NEED TO BE

59:00 TALKING ABOUT TODAY. A QUICK LOOK AT THE CORE SIX TO GIVE YOU AN IDEA WHAT IS HAPPENING WITH SOME OF THE HEAVYWEIGHTS BECAUSE THIS IS ACTUALLY WHERE THE ACTION IS THIS MORNING. ASML IS DOWN PRE-HARD. LVMH DOWNHEARTED. EVEN PHARMA IS NOT ESCAPING THE NESTLE, LOOKS LIKE NESTLE AND UNILEVER ARE HAVING A VERY GOOD DAY. >> YOU WERE SAYING IT IS A BUSY DAY AND THAT IS, THAT TICKING CLOCK YOU GOT AT THE BOTTOM, THERE ARE SO MANY NAMES ON THE

59:31 MOVE. WITH START IN THE LUXURY SPACE. THERE WAS OF COURSE THAT LINE THAT SHOPPERS ACROSS CHINA, THE ASIA-PACIFIC REGION EXCLUDING JAPAN REALLY NOT GIVING THEM ANY GROWTH AT ALL. FLAT ACROSS THAT REGION, AND THAT EQUATES ARE 42% OF THE REVENUE. SO YOU CAN SEE THAT IS PUTTING THEM RIGHT DOWN AROUND 7% THIS MORNING. ALSO PUTS PRESSURE AS WELL. THIS ALSO A LINE ABOUT THE LOOTING BE SEEN IN PARIS AND OTHER FRENCH CITIES FOLLOWING THE WEEKEND PROTESTS. PROTESTERS TARGETING SOME

1:00:02 LUXURY STORES. HERMES WILL BE LOOKING TO THE INVENTORIES TO PROTECT THAT GOING FORWARD. BUT I THINK REALLY THAT NEWS COMING OUT OF ASIA, THAT THEY RELY UPON IS REALLY ONE OF THE DRIVERS PUTTING THEM DOWN IN THE RED THIS MORNING. LUXURY DOWN IN THE RED. LET’S TURN IT OVER TO SOMETHING A LITTLE LIGHTER, PET FOOD AND SNACKS. REAL SALES GROWTH OF AROUND 2% ON THE BACK OF PRODUCTS FOR PEOPLE AND THEIR PETS.

1:00:34 NESTLE ONE OF THE NAMES IN THE GREEN THIS MORNING. LET’S TURN IT OVER TO THE DRUGMAKER ROCHE. WE’VE SEEN THEM BROADLY REWARDED BY INVESTORS FOR PUSHING TO NEW DRUGS INCLUDING THIS DEVELOPMENT OF A BREAST CANCER PILL. DOWN AROUND 1% THIS MORNING. THEY HAD SOME GOOD FIGURES FOR THE QUARTER, BUT THE IDEA THAT ANALYSTS WERE SAYING MAYBE SOME OF THAT IS FLATTER IS PUTTING THEM DOWN ROUGHLY 2%, 1% THIS MORNING FOR THE DRUGMAKER.

1:01:09 AND FINALLY, LET’S TURN OVER TO UCB, A NAME DOING SOME BUSINESS, UP AROUND 15% THIS MORNING AFTER A LIFT TO THE 26 GUIDANCE. A GOOD DAY FOR PET FOOD AND SNACKS. NOT A GOOD DAY WITH A LOT OF PRESSURE IN THE LUXURY SPACE. ANNA: A LOT OF DIFFERENT THINGS AND FOCUS, GOOD DATA CHECK IN WITH SHARON BELL. WE WILL DO THAT NEXT FROM GOLDMAN SACHS. SHE WILL BE HERE TO GIVE US HER TAKE ON EUROPEAN MARKETS AND BEYOND. THIS IS BLOOMBERG.

1:01:56 ANNA: WELCOME BACK, 70 MINUTES INTO A SESSION THAT LOOKS LIKE THIS. NEGATIVE THE EUROPEAN STOCKS. SOME OF THE WORST LOSSES COMING THROUGH FROM THE CAC, NEGATIVITY AROUND THE LUXURY SPACE WHICH PERHAPS IS NOT HELPING. LET US GET THE WIDER THOUGHTS ON THE MARKET WITH OUR SENIOR EUROPEAN EQUITY STRATEGIST AT GOLDMAN SACHS. REALLY NICE TO HAVE YOU ON OUR PROGRAM TODAY. LET’S START WITH THINGS TO DO WITH TECHNOLOGY BECAUSE IT IS A BIG THEME OF THE WEEK.

1:02:29 IT SEEMS TO BE TELLING US A LOT OF DIFFERENT STORIES ABOUT WERE THE TECH TRADE GOES. DEPENDING ON WHERE YOU ARE, WHAT YOU WANT TO SEE, WHAT IS YOUR TOP-DOWN THINKING WHEN IT COMES TO THE TECH TRADE AT THIS POINT? >> IT IS TRICKY AT THE MOMENT, THE MARKET IS VERY DIFFICULT TO SATISFY. DO YOU WANT HIGHER SPEND, IN WHICH CASE THAT MEANS MORE DEBT HAS TO BE ISSUED, YOUR BALANCE SHEET BECOME MORE VULNERABLE, BUT ON THE OTHER HAND IF YOU DON’T GET THAT SPEND, SOME OF THE SEMICONDUCTOR COMPANIES WOULD NOT DO SO WELL. THERE WOULDN’T BE SO MUCH

1:03:01 DEMAND. I THINK ALL THE EARNINGS AND REVENUE FIGURES AT THE MOMENT SUGGEST LAMONT – THE DEMAND IS STILL THERE. THE DEMAND IS STILL VERY MUCH THERE. REALLY THE BLOCK IS PROBABLY MORE THE CAPITAL MARKET ABILITY TO GIVE THE LIQUIDITY, TO GIVE THE SUPPLY TO THE SECTOR. ANNA: SO THAT IS THE TECH TRADE AND MORE BROADLY IN THIS EARNINGS SEASON, THE RATE OF CHANGE AND PROFITABILITY HAS BEEN SOMETHING THAT HAS BEEN SO IMPRESSIVE IN RECENT ORDERS. WHAT DOES IT TELL US AS IT COMES DOWN?

1:03:32 >> THIS QUARTER PROBABLY STILL VERY GOOD. THE FIRST COUPLE OF QUARTERS WERE VERY STRONG ON BOTH SIDES OF THE ATLANTIC. IN THE U.S. CASE, 30% PLUS EARNINGS GROWTH. IN EUROPE YOU HAD ABOUT 15%. WE THINK WE WILL PROBABLY SEE SIMILAR IF NOT SLIGHTLY HIGHER. I DO THINK IT IS A BIT DISTORTED BY ENERGY STOCKS. ENERGY STOCKS OVER EARNING, I GUESS YOU COULD SAY. BUT EVEN IF YOU EXCLUDE ENERGY STOCKS YOU ARE STILL GROWING HIGH SINGLE DIGIT FOR THE EUROPEAN MARKET. I DO THINK IT WILL SLOW IN

1:04:05 LITTLE BIT NEXT YEAR LARGELY BECAUSE THOSE ENERGY STOCKS, YOU WON’T SEE SUCH STRONG EARNINGS GROWTH IN THE ENERGY SECTOR, SO THAT WILL DETRACT. BUT FOR THE REST OF THE MARKET, WE FORECAST MORE GDP GROWTH, SOME INFLATION. THE EURO COMING DOWN IS HELPFUL FOR EUROPEAN COMPANIES. I DON’T THINK A VERY SHARP SLOWDOWN. GUY: BUT A SLOWDOWN. WHAT DO I BUY IN A SLOWDOWN? SHARON: WHAT THE MARKET HAS BEEN DOING

1:04:36 WITH THAT QUESTION IS NOT BUYING OR QUALITY STOCKS, WEAK COMPANIES, YOU DON’T WANT THOSE. GUY: BECAUSE OF THE DEBT LOADS. SHARON: BECAUSE WE SUDDENLY HAVE A LOAD OF GOVERNMENTS AND TECH COMPANIES WANTING TO ISSUE MORE INTO THAT MARKET PUSHING OF CREDIT SPREADS AS WELL. BUT IF THERE IS A BIT OF A SLOWDOWN, WEAK BALANCE SHE COMPLETES HAVE BEEN UNDERPERFORMING. AND HIGHER QUALITY COMPANIES, COMPANIES WITH STRONG MARGINS,

1:05:08 GOOD EARNINGS PROFITABILITY, GOOD MARKET SHARES AND GOOD BALANCE SHEETS AS WELL. WE’VE SEEN IN RECENT WEEKS THE SMR DOING RELATIVELY WELL. THIS IS QUITE A BIG DOLLAR EARNER AS WELL AS AN INDEX AND IT HAS GOTTEN MORE COMPANIES WITH THE BALANCE SHEETS. GUY:GUY: WE WERE HEARING A LITTLE BIT EARLIER ON, THAT CURRENCY FACTOR IS CERTAINLY SIGNIFICANT. DOES THAT FAVOR THE FTSE? SHARON:

1:05:43 I HAVE LOTS OF QUESTIONS ABOUT THE FTSE 100. ON BALANCE, IT DOES. IF YOU EVENTUALLY WE SEE A SOLUTION TO THE WAR WITH IRAN, AND WE SEE ENERGY PRICES COME BACK DOWN, THERE’S ALWAYS A RISK. BUT PUTTING THAT RISK TO ONE SIDE, YES, LOTS OF COMMODITY NAMES IN IT AND WE ARE UNDER RESOURCED GLOBALLY. IF YOU THINK RATES ARE GOING TO BE HIGHER FOR LONGER, IT’S GOT LOTS OF INSURANCE. IT ALSO HAVE LOTS OF CONSUMER STAPLES AND LOTS OF DOLLAR

1:06:18 EARNERS. BANKS IN THE U.K., MUCH MORE LIKELY YOU ARE GOING TO SEE HIGHER TAX RATE IN THIS NEXT BUDGET. THAT IS A CONCERN, BUT ALSO BANKS COME DOWN WHEN THERE IS MORE CREDIT RISK, MORE SOVEREIGN RISK. EVEN IF THE RISK ISN’T SPECIFIC TO THE U.K., THAT IS ALSO A CONCERN FOR BANKS. ANNA: WHAT ARE WE SEEING ARENT BRETT AT THE MOMENT? S&P 500, THAT SEEMS TO BE WAKING UP, IN THE WORDS OF ONE OF MY COLLEAGUES. HOW DOES THAT STORY LOOKING

1:06:48 EUROPE? >> WE’VE BEEN WORRIED IN SOME WAYS. IT IS ONE OF THE SORT OF FACTORS WHICH MAKES THE S&P 500 RESILIENT IS THAT YES, SOMETIMES YOU GET THE TOP DOING WELL AND SOMETIMES FROM THE TRADE BROADENS OUT AS IT HAS DONE IN THE LAST MONTH OR TWO, IF YOU LOOK AT THE S&P 500 OVERALL, IT IS ONLY DOWN ABOUT 2% FROM ITS HIGH. IN EUROPE, WE NEVER HAD A CONCENTRATED MARKET THE SAME WAY.

1:07:23 THE BIGGEST SECTORS IN EUROPE ARE FINANCIALS. A LITTLE BIT OF WORRIES ABOUT FINANCIALS. NOT FROM THE INTEREST RATE LEVEL, BUT FROM THE CREDIT SOVEREIGN SPREAD. FINANCIALS ARE BIG, ENERGY IS BIG AND TECH IS QUITE BIG. BUT IT HAS A BROADER RANGE OF SECTORS. I WOULD ALSO SAY THIS QUITE A LOT OF CONSUMER STAPLES AND HEALTH CARE COMPANIES OF THE TOP OF THE INDEX. AGAIN, IT’S NOT JUST CONCENTRATED IN THREE OR FOUR STOCKS ALL RELATED TO THE AI THEME. ANNA: YOU SUGGESTED THAT OIL HAS BEEN

1:07:54 FLUTTERING EUROPE, THE ENERGY SECTOR HAS BEEN FLATTERING EURO A LITTLE BIT. ARE YOU INCREASINGLY THINKING THAT THIS IS A SITUATION THAT PERSISTS BECAUSE ENERGY PRICES ARE PERSISTENTLY ABOVE $100 A BARREL? >> I THINK IT IS A NICE HEDGE FOR EUROPEAN EQUITIES TO HAVE. THAT HELPS THE COMPANIES WHICH ARE MORE DOMESTIC, BUT ENERGY PRICES STAY HIGHER, YOU GOT A LOT OF COMMODITY EXPOSURE AS WELL. I THINK THERE’S A LITTLE BIT OF HEDGE. I THINK THE ENERGY STOCKS HAVE PERFORMED VERY WELL THIS YEAR

1:08:26 ENTIRELY ON THE EARNINGS BECAUSE THE MARKET IS CONCERNED WITH PERHAPS OVER EARNING AT THE MOMENT, BUT I DO THINK IT PROVIDES A NICE HEDGE AND THIS THEME THAT EUROPE IS A BROADER TRADE THAN SOME OF THE OTHER MARKETS GLOBALLY. GUY: TAKING THAT POINT, IF WE GET A SOVEREIGN CRISIS, I’M NOT IN ANYWAY SUGGESTING THAT IT IS, BUT LET’S SAY THE SITUATION GETS WORSE FROM HERE. HOW DO EUROPEAN EQUITIES TRADE THROUGH THAT?

1:09:03 IS IT A CONCERN AROUND THE OVERALL SECTOR OF THE BANKS? >> JUST BEEN DISCUSSING A FALL IN THE EURO BEING GOOD FOR EUROPEAN EARNINGS BECAUSE SO MANY COMPANIES ARE EARNING DOLLARS. UNFORTUNATELY IT’S NOT ONLY GOOD FOR EUROPEAN STOCK PRICES. WHAT WE TEND TO SEE HIS EARNINGS TO WELL IN THE EURO COMES DOWN, BUT STOCK PRICES DO BADLY BECAUSE GLOBAL INVESTORS DON’T WANT TO INVEST IN EUROPE. IF THEY DON’T CURRENCY HEDGE, AND MANY OF THEM DON’T, AND

1:09:38 ALSO NORMALLY THE EURO IS WEAK BECAUSE THERE IS A CRISIS GOING ON. THAT’S NORMALLY THE REASON. ALL OF THIS WEAK ECONOMIC GROWTH IS NORMALLY THE REASON. ANOTHER REASON WHY YOU TEND TO SEEK WEAK EURO, WEAK STOCK PRICES AS WELL. DOMESTIC COMPANIES, THEY ONLY EARN EUROS BY DEFINITION AND SMALL CAPS AS WELL, THEY TEND TO PERFORM VERY POORLY. ANNA: WHY DON’T THEY JUST HEDGE THE CURRENCY? SHARON:

1:10:14 MAYBE THE COST OF HEDGING. IT’S NOT ZERO, EQUITIES ARE QUITE VOLATILE. YOU’VE GOT PLENTY OF OPPORTUNITIES CLOSER TO HOME. GUY: SHARON, NICE TO SEE YOU, ALWAYS A PLEASURE. COMING UP, GOING TO TURN TO THE METALS MARKET. COPPER DECLINING AT THE AI SELLOFF IS ALSO A TARIFF FACTOR.

1:10:45 MORGAN STANLEY JOINING US NEXT. 26 MINUTES PAST THE HOUR, EUROPEAN STOCKS UNDER A BIT OF PRESSURE THIS MORNING. THIS IS BLOOMBERG. ANNA: GOOD MORNING. WELCOME BACK.

1:11:18 THIS IS “THE OPENING TRADE.” 30 MINUTES INTO TODAY’S SESSION. LOOKS PRETTY NEGATIVE. IT’S NOT JUST THE TECH THEME. NASDAQ FUTURES NEGATIVE AROUND WHAT WE HEARD FROM TESLA, AROUND THEIR CAPEX. THE STOXX EUROPE 600 A BIT MORE COMPLICATED THAN THAT BUT WE ARE DOWN, GETTING SOME SUPPORT FROM ENERGY NAMES. THE ENERGY PRICES, OIL PRICES STRONGER TODAY. LUXURY AN AREA OF WEAKNESS. THAT WEIGHS ON THE FRENCH MARKET. GUY:

1:11:51 DEFINITELY SOME ROTATION, YOU ARE SAYING THAT. VOLUME HIGHER. TODAY IT COMES BACK. 137 UP, 452 DOWN. LET’S SHOW YOU SOME OF THE LEADERS THAT ARE OUT THERE BECAUSE THERE ARE A FEW AND THEY ARE WORTH PAYING ATTENTION TO. NESTLÉ. THE MARKET IS UP BY 2% ON ITS STOCK. SNACKING DOING QUITE WELL, PET FOOD DOING QUITE WELL, WHICH IS QUITE INTERESTING AS WELL.

1:12:22 VERISURE, WE’VE HAD THEM ON THE SHOW A FEW TIMES, THIS TAKEOVER, MARKET LIKES THAT STORY. UP BY NEARLY 5% THIS MORNING, MISSING SALES GUIDANCE, THE SECOND TIME IT’S DONE THAT THIS YEAR. MOMENTUM AND THAT STUCK. HERMES, WE GET KERING LATER. THE ASIAN AREA WEAKNESS WHICH INCLUDES CHINA A KEY SOURCE OF CONCERN THIS MORNING ON THE STOCK IS DOWN BY 7% ON THE BACK OF THAT.

1:12:54 THEY HAVE TAKEN A BIG HIT AS A RESULT DUE TO THE RECENT FRENCH WRITING – RIOTING. ROCHE ALSO DOWN. THE NUMBERS WERE OK BUT THE MARKET IS BLOCKING THAT ONE DOWN THIS MORNING. NOKIA SOFTER AS WELL THIS MORNING. THE WIDER MACRO STORY, WHAT IS HAPPENING WITH THE TECH TRADE OUT OF ASIA, PROFIT ESTIMATES BEAT OUT OF NOKIA BUT THE STOCK

1:13:25 IS DOWN ON THE BACK OF THAT. ANNA: THE U.S. STATE DEPARTMENT HAS ORDERED THE DEPARTURE OF NON-EMERGENCY PERSONNEL AND THEIR FAMILIES FROM SAUDI ARABIA AMID ESCALATING HOUTHIS ATTACKS ON THE KINGDOM. THE LATEST DEADLY STRIKES KILLED THREE PEOPLE IN TWO ATTACKS ON UN-AROUND COAL OIL FIELD AND AIRPORT. THE EU HAS REACHED A PROVISIONAL AGREEMENT OVER RULES GOVERNING THE BLOC’S SECURITIZATION MARKETS.

1:13:56 THE MOVE COULD UNLOCK BILLIONS OF EUROS TO FUND KEY INITIATIVES. META CEO MARK ZUCKERBERG HAS TOLD INVESTORS THAT BET ON A I IS PAYING OFF, AND ANNOUNCED A NEW CLASS OF NONVOTING STOCK. GUY: LET’S GET ANOTHER TAKE ON THE AI TRADE. INVESTORS INCREASINGLY USING COPPER AS A PROXY FOR THE AI TRADE BUT THE UPSIDE MOMENTUM SHOWING SIGNS OF STRUGGLING.

1:14:31 THIS COMES AS THE GLOBAL METALS COMMUNITY GATHERS IN LONDON. IT IS LMPD WEEKEND HERE TO TALK ABOUT IT ALL IS AMY GOWER, METALS AND MINING COMMODITY STRATEGIST AT MORGAN STANLEY. GOOD MORNING. WHAT ARE YOU HEARING? WHAT IS THE CHATTER FROM WHAT YOU’RE GETTING FROM OUT AND EAT – LME WEEK? AMY: THE LACK OF CONVICTION. YOU TALK ABOUT COPPER, PEOPLE SAY I COULD SEE A SCENARIO WHERE IT GOES UP, BUT ALSO A SCENARIO WHERE GOES DOWN.

1:15:01 WE HAVE GOT THE AI STORY. COPPER HAS BEEN EXTREMELY WELL CORRELATED TO AI STOCKS THIS YEAR. IT IS A SMALL PART OF DEMAND BUT A BIG PART OF DEMAND GROWTH. WE’VE GOT THE TARIFF STORY WHERE WE ARE WAITING TO HEAR IF THERE WILL BE TARIFFS ON IMPORTS OF COPPER. IS THAT STEALING COPPER FROM THE REST OF THE WORLD OR MAKING EVERYONE ELSE TRY TO COMPETE TO GET THAT MATERIAL? GUY: IF WE DON’T GET TARIFFS, I ASSUME COPPER GOES DOWN. WHAT GETS IT UP? WHAT ARE PEOPLE SAYING ARE THE

1:15:34 DRIVERS TO LIFT COPPER PRICES TO THE UPSIDE? IS IT JUST A SUPPLY STORY. AMY: THE SUPPLY STORY IS SADLY DEVELOPING QUITE DRAMATICALLY. WE WILL PROBABLY HAVE SUPPLY DOWN YOUR OVER YOUR. I DON’T THINK MANY PEOPLE – YEAR-OVER-YEAR. I DON’T THINK MANY PEOPLE WOULD HAVE HAD THAT EXPECTATION A YEAR OR TWO AGO. WE ARE QUITE RELIANT ON RECOVERY PROJECTS. HIGH PRICES BRINGING MORE STRIKE RISKS. WE’VE HAD A FEW SHORT STRIKES IN CHILE. WE HAVE THREATS OF STRIKES IN THE U.S. AS WELL SO QUITE A LOT GOING ON. WE COULD SEE IF THE TARIFF

1:16:07 STORY KEEPS BEING PUSHED INTO THE FUTURE, YOU KEEP BRINGING METAL IN JUST IN CASE. OF COURSE, AI, CHINA. CHINA HAS ARGUABLY BEEN A LID ON THE WEAK SIDE AND A LOT OF THE ENERGY SECTORS FOR COMFORT SO IF THERE WERE TO BE MORE STIMULUS, THAT CAN HELP. ANNA: CHINA IS MANY THINGS. IT IS MAY BE AI BUT ALSO CONSTRUCTION AND PROPERTY AND THAT HAS BEEN TROUBLED FOR A WHILE. WHAT ABOUT THE AI TRADE GLOBAL? WHAT IS THE LINK BETWEEN THE PRODUCTION OF CHIPS, THE ONES FOR DATA CENTERS OR OTHER TECHNOLOGY, AND THE COPPER TRADE? HOW DIRECT IS THE LINK?

1:16:42 AMY: COPPER IS YOUR MAIN ELECTRICITY CONDUCTING METAL. THE REASON WE GIVE DATA CENTER CAPACITY IN TERMS OF POWER TERMS, IT IS ALL ABOUT GETTING THE PART. COPPER IS USED IN THE CONSTRUCTION OF DATA CENTERS BUT ALSO WHEN WE THINK ABOUT BUILDING THAT INFRASTRUCTURE AROUND. WE ARE SEEING GOVERNMENTS AROUND THE WORLD STARTING TO LOOK AT GRID INVESTMENTS AS WELL. COPPER DEMAND GROWING QUITE VASTLY FOR THIS YEAR. IT IS A VERY IMPORTANT PART OF THE STORY, ALTHOUGH I WOULD SAY

1:17:13 THE U.S. STOCKPILING IS ABOUT 3% OF DEMAND AT THE MOMENT, SO ACTUALLY EVEN SLIGHTLY A BIGGER CONTRIBUTOR. ANNA: INTERESTING PUTTING THOSE UP AGAINST EACH OTHER. I AM LOOKING AT THE HOST OF METALS YOU COVER AND INDONESIA GETS MENTIONED A LOT. CHANGING EXPECTATIONS AROUND THE STATUS OF INDONESIA AS AN INVESTMENT DESTINATION FOR SOME AGENCIES. IN TERMS OF THE FUNDAMENTALS OF THE MINING STORY, WHAT IS THE NARRATIVE OUT OF INDONESIA? WHETHER IT IS ALUMINUM, NICKEL, WHAT DO THINGS LOOK LIKE? AMY: IN ALUMINUM, INDONESIA IS THE

1:17:47 BIG SOURCE OF SUPPLY GROWTH. SENTIMENT ON ALUMINUM HAS BEEN CAUTIOUS THIS WEEK. ALUMINUM EXPORTS HAVE TRIPLED FROM 2025 LEVELS AND THERE IS MORE TO COME SO HUGE INVESTMENTS TO BUILDING UP, PROFIT MARGINS GET IN OF THEM. IT IS QUITE QUICK TO BUILD AN ALUMINUM SMELTER. NICKEL, INDONESIA HAS BEEN A BIG PART OF THE NICKEL PRICE WEAKNESS OVER THE LAST YEARS, ADDING HUGE VOLUMES OF SUPPLY BUT IT IS FACING MORE CHALLENGES.

1:18:19 WE HAVE HAD NICKEL ORE SHORTAGES, SO FOR SHORTAGES, WATER SHORTAGES – SO FOR – SO ULPHUR SHORTAGES, WATER SHORTAGES. GUY: WHAT IS HAPPENING IN TERMS OF THE COST OF PRODUCTION RIGHT NOW? DIESEL PRICES ARE UP MASSIVELY. MOST INPUTS SEEM TO BE RISING SIGNIFICANTLY. IS THAT FULLY REFLECTIVE YET? DO WE UNDERSTAND THE IMPACT THAT IS GOING TO HAVE IN TERMS

1:18:50 OF THE COST OF PRODUCTION, WHAT THAT IS GOING TO DO? AMY: I’LL WOULD SAY IT HAS BEEN A STEADY MARCH HIGHER FOR MANY OF THOSE INPUTS. IF WE LOOK AT IRON ORE, THE PRICE WE ALL LOOK AT INCLUDES FREIGHT. IF YOU ARE SHIPPING FROM AUSTRALIA TO CHINA, THAT IS OK. IF YOU ARE SHIPPING FROM BRAZIL TO CHINA, YOU ARE GETTING THE SAME PRICE BUT YOUR FREIGHT IS MUCH MORE EXPENSIVE. WE ALSO SHOULD THINK ABOUT BYPRODUCT. WE ARE MAKING COMFORT, HE OFTEN

1:19:21 GET GOLD ALONGSIDE THAT – MAKING COPPER, YOU OFTEN GET GOLD ALONGSIDE THAT. SULFURIC ACID HAS BEEN QUITE STRONG SO IF YOUR SMELTING COPPER OR ZINC, THAT HAS ACTUALLY HELPED OFFSET SOME OF THE OTHER COST PRESSURES. ANNA: WHAT ABOUT THE MACRO PICTURE? I GUESS I AM TALKING ABOUT RATES. WHAT IS THE READ ACROSS? WHAT IS THAT DURING TO EXPECTATIONS THIS LME WEEK AROUND WHERE METALS GO? BECAUSE WE ARE EXPECTING RATE HIKES IN A NUMBER OF JUNKIES. AMY:

1:19:52 WHEN INTEREST RATES GO UP, THEY ARE LESS COMPETITIVE. FOR METALS SPECIFICALLY, WE ARE EXPOSED TO CONSTRUCTION, AUTOS. MOST OF THAT IS DONE ARE FINANCE SO GETS MORE EXPENSIVE. IF WE THINK ABOUT HOLDING INVENTORY, EVERYONE IS WORRIED ABOUT SUPPLY CHAINS. YOU MIGHT SEE JUST IN TIME TO JUST IN CASE BUT YOU GOT TO FINANCE THAT AND THAT GETS MORE EXPENSIVE SO TENSED – TENDS TO BE A HEADWIND. IF YOU LOOK AT THE POSITIONED, IT’S BEEN RUNNING OVER ACROSS ALL OF THE METALS AND I THINK SOME OF THAT HAS TO DO WITH AI BUT ALSO TO DO WITH THESE INTEREST RATE MOVES. GUY:

1:20:25 TREASURIES ARE STARTING TO LOOK LIKE THEY MAY BE A SAFE HAVEN. WHAT ARE THE METALS? AMY: I WOULD NORMALLY SAY GOLD. GOLD HAS STRUGGLED A BIT AS A SAFE HAVEN THIS. OIL IS UP, GOLD IS DOWN. AT THE MOMENT, IT IS STILL ABOUT THAT INTEREST RATE STORY. WHEN WE TALK TO PEOPLE ABOUT A 12 MONTH VIEW ON GOLD, IT SHOULD BE HIGHER, GOLD SHOULD BE A SAFE PLACE TO PARK OUR MONEY. CENTRAL BANKS ARE BUYING IT, INVESTORS ARE BUYING IT. ANNA:

1:20:56 AND MAKE OUR, METALS AND MINE – AMY GOWER, METALS AND MINING COMMODITY STRATEGIST AT MORGAN STANLEY. OIL PRICES CLIMBING AFTER DEADLY ATTACKS IN SAUDI ARABIA, HEIGHTENED CONCERNS THAT ESCALATING HOSTILITIES COULD HIT SUPPLY FOR THE. LET’S GET MORE FROM BLOOMBERG – FURTHER. LET’S GET MORE FROM STUART LIVINGSTONE-WALLACE JOINING US NOW. GOOD MORNING. TALK US THROUGH THE LATEST ON THESE ATTACKS ON SAUDI ARABIA. >> GOOD MORNING. THERE IS REALLY THREE KEY THINGS. THEY HITS ANOTHER AIRPORT.

1:21:28 THAT IS PART OF THIS ONGOING CAMPAIGN THAT HOUTHIS HAVE BEEN WAGING AGAINST MANY AIRPORTS WITHIN SAUDI ARABIA. THE POINT THERE I THINK IS TO TRY TO CRIPPLE THE ECONOMY. SECONDLY, THEY HAD THAT OILFIELD, WHICH IS SORT OF THIS ENGINEERING MARVEL AND ENERGY QUARTER OF SAUDI ARABIA. THAT IS SORT OF A DIRECT THREAT TO SUPPLY. IT IS A WARNING TO THE OIL MARKET THAT THEY CAN DO THIS. THIRDLY, THE OTHER KEY ELEMENT HERE IS THAT WE HAVE HAD CONFIRMATION THAT THE U.S. HAS BEEN MOVING NON-ESSENTIAL

1:22:01 DIPLOMATIC PERSONNEL OUT OF SAUDI ARABIA. THAT SUGGESTS THEY ARE NOT EXPECTING AN END TO THIS ANYTIME SOON AND THERE’S BEEN REPORTS FROM THIRD PARTIES ABOUT ADMINISTRATIVE PERSONNEL MOVED OUT OF SOME BASES. WE HAVE NOT CONFIRMED THAT. IF THAT IS TRUE, THAT IS AGAIN A SIGN OF AN ESCALATORY LADDER SHOULD WE SAY IN TERMS OF WHAT COMES NEXT. GUY: WHAT ARE YOU HEARING ON THAT FRONT? IF YOU ARE MOVING NON-ESSENTIAL’S, MILITARY PERSONNEL AS WELL

1:22:33 , IS A LOT OF TALK IN THE U.S. PAPERS ABOUT THE IDEA WE WILL SEE ESCALATION AFTER THE MIDTERMS, THAT THE ISRAELIS AND U.S. ARE PLANNING FOR THAT. IS THAT WHAT THIS FEELS LIKE? IS THAT WHAT PEOPLE ARE TALKING ABOUT IN THE REGION? >> YES, THAT IS WHAT PEOPLE ARE TALKING ABOUT. THERE’S A COUPLE OF THINGS TO BE SAID. REPORTS DO SAY THERE ARE PLANS AFOOT, TARGET LISTS HAVE BEEN DRAWN UP. SOMETIMES THEY ARE TRUE, MANY TIMES THEY ARE NOT. SIMILARLY IN TERMS OF THE RHETORIC THAT COMES UP, NOTABLY FROM THE WHITE HOUSE BUT ALSO

1:23:04 ELSEWHERE, AGAIN, AS YOU KNOW FROM THE LAST A MONTH, THAT SWITCHES DAY TO DAY. IS VERY HARD TO PREDICT EXACTLY WHAT IS GOING TO HAPPEN, WITH THE CALCULUS IS. IN TERMS OF THE – IT IS VERY HARD TO PREDICT WHAT IS GOING TO HAPPEN, WHAT THE CALCULUS IS. WE KNOW HEADWAY IS BEING MADE OF SORTS. KIND OF WHERE WE ARE ON THE, HARD TO TELL. WE GOT A REPORT THERE WERE CLOSE TO A BREAKTHROUGH AND CONFIRMATION THAT WE WERE NOT

1:23:36 QUITE THERE YET. THE FACT THAT IS GOING ON OFFER SOME COMFORT, BUT CERTAINLY IN TERMS OF MOOD MUSIC, I THINK PEOPLE ARE FOCUSED ON TWO THINGS. NUMBER ONE IS THE ISRAELI ELECTIONS COMING UP AND THE U.S. MIDTERMS. THAT IS NO GUARANTEE REALLY OF A PREDICTION OF WHAT MIGHT COME IN THE FUTURE. WHAT YOU CAN SAY IS THAT IS ESCALATION GOING ENORMOUS, ESCALATION – GOING IN HORMUZ, ESCALATION COMING FROM THE HOUTHIS. NONE OF THAT IS GOOD IN TERMS OF HOW PEOPLE FEEL IN THE REGION. GUY: THANK YOU VERY MUCH INDEED. STUART LIVINGSTONE-WALLACE

1:24:08 JOINING US WITH THE SITUATION IN THE GULF. WE ARE GOING TO TURN OUR ATTENTION BACK TO THE MARKET THIS MORNING. HERMES SHARES UNDER SIGNIFICANT PRESSURE THIS MORNING, SALES IN THE ASIA-PACIFIC REGION MISSING ESTIMATES, PROBLEMS IN FRANCE. WE WILL BREAK DOWN THE NUMBERS, NEXT. THIS IS BLOOMBERG.

1:24:40 GUY: THURSDAY MORNING. I HATE TO BE THE BEARER OF BAD NEWS. ECK TREASURIES HAVING A REALLY BAD MORNING. BEAR IN THAT IN MIND. DOWN 1.5%. THE FTSE IS SLIGHTLY BETTER. WHAT I’M DRAWING YOUR ATTENTION TO IS NASDAQ. DOWN 1.7%. THAT IS A CHUNKY DOWNSIZE MOVE STATESIDE. NOT A PRETTY START. ANNA: YEAH, IT IS NOT A PRETTY START

1:25:14 AND SOMETHING THAT IS ADDING TO THE DOWNSIDE IS LUXURY. HERMES WEIGHING ON THE STOXX 600 THIS MORNING. THIRD QUARTER REVENUE FELL SHORT OF ESTIMATES. THE MARSEILLE STORE WON’T REOPEN SOON AFTER IT WAS LOOTED OVER THE WEEKEND. LET’S GET THE STORY. BLOOMBERG’S LUXURY REPORTER IN PARIS. FOCUS ON THE NUMBERS. THERE WERE OTHER NEGATIVE ANGLES ON THE NUMBERS ASIDE

1:25:45 FROM THE RIOTING STORY. >> YES. HIGH, ANNA. ANN HI, ANNA.WE SPOKE TO THE CFO AND HE SAID THE MARSEILLE STORE WAS COMPLETELY RANSACKED AND WILL NOT BE OPENED ANY TIME SOON AND THE ONE THAT HAD THEIR WINDOWS BROKEN. HE SAID WE HAVE YET TO SEE HOW THIS WILL IMPACT TOURISM FLOWS

1:26:17 TO PARIS AND FRANCE IN GENERAL. FRANCE REPRESENTS ABOUT 9% OF TOTAL REVENUE AT HERMES. YOU HAVE A BIGGER FLAGSHIP STORES THAT DRAW A LOT OF TOURISTS SO THAT IS A NEGATIVE FOR SURE. GUY: WHAT ABOUT CHINA? THE DATA OUT OF CHINA DOESN’T LOOK PARTICULARLY GOOD OR THE DATA OUT OF ASIA DOESN’T LOOK PARTICULARLY GOOD. >> YES, INDEED. THE REASON THAT INCLUDES

1:26:48 CHAINS, IT REPRESENT ABOUT 42% OF REVENUE. IN THE THIRD QUARTER, SALES WERE FLAT. THE MARKET WAS EXPECTING FEE 1.6% GROWTH AND SO BASICALLY THE CFO SITED THE MACRO BACKDROP THAT IS DIFFICULT. THE PROPERTY CRISIS AND FINANCIAL MARKETS THAT ARE NOT DOING WELL. ALL OF THIS IS WEIGHING ON DEMAND BUT ESPECIALLY A MEASURE THAT WAS TAKEN RECENTLY TO TAX OFFSHORE WEALTH REVENUE. THAT IS REALLY CURBING THE

1:27:22 APPETITE ESPECIALLY FROM THE WEALTHIEST COMMERCE. AGAIN, NOT GREAT AND WE’RE SEEING THE IMPACT ON THE SHARES FOR HERMES YEAR TO DATE, DOWN ABOUT 40%. THERE IS A BIGGER QUESTION WHETHER IT CAN KEEP ITS EXCLUSIVE STATUS BECAUSE HIS BERKEN AND KELLY BAGS ARE MORE EASILY AVAILABLE IT SEEMS. ANNA: NOT EVERYTHING IS NEGATIVE AROUND THE LUXURY SPACE. MONTCLAIR IS UP 2% TODAY. WE’RE LOOKING AHEAD TO OTHERS FROM THE LUXURY SPACE.

1:28:00 KERING WILL BE OUT LATER TODAY. WHAT SHOUGH SHOULD WE WATCH OUT FOR? >> IT IS A DIFFICULT SPACING. SHARES ARE DOWN 30% YEAR TO DATE. THE BIG QUESTION IS WHETHER THEY CAN HELP GUCCI RECOVER. IN THE FIRST TWO QUARTERS OVER THE YEAR, THERE WAS A SEQUENTIAL IMPROVEMENT. SALES WERE DOWN. IN THE SECOND QUARTER, IT IMPROVED THE FIRST QUARTER. EARLIER THIS MONTH IN OCTOBER

1:28:34 THEY GAVE A PRECLOSE CALL WARNING OF A WORSENING BACKDROP, EVEN IN THE U.S. WHICH HAD BEEN A BRIGHT SPOT. SHARES ARE DOWN 4%. THAT PRETTY MUCH TELLS YOU TO LEVEL OF CONFIDENCE. ANNA: YEAH. NOT GREAT. THE LUXURY SPACE UNDER PRESSURE TODAY. THANK YOU VERY MUCH. BLOOMBERG’S LUXURY REPORTER. AS WE WERE SAYING, MORE ON THE LUXURY SPACE OVER THE NEXT 24 HOURS. HERE IS A LIST OF OTHER THINGS WE’RE WATCHING OUT FOR.

1:29:08 AN INFORMAL TRADE MINISTERS MEET. U.S. INITIAL JOBLESS CLAIMS. IT IS THURSDAY. HAS THE DATA WE GET. WE GET THE KERING NUMBERS AND SALES NUMBERS OUT OF L’OREAL AND OUT OF THE U.S. WHERE WE HAVE BEEN TALKING ABOUT TECH. WE GET A DIFFERENT TAKEN TO U.S. ECONOMY LATER TODAY. SPOTIFY, BLACKSTONE, AMERICAN AIRLINES. GUY: GOING TO BE INTERESTING. FUEL COSTS GOING UP. THIS IS A MARKET THAT FEELS NERVOUS THIS MORNING. OF BEING PRICED IN HERE IN

1:29:40 EUROPE. WHAT IS DRIVING THE NERVOUSNESS? WHAT IS IT SPECIFICALLY? OIL PRICES? AI? WHAT’S GOING ON? SKYLAR IS HERE TO TELL US. >> CAME IN THIS MORNING. I READ THE BLOG. WHAT DO MY ASIAN COLLEAGUES OVERNIGHT? ONLY THE THING THAT CHANGED THE RISK TONE IS THAT CHINA CAME IN. THERE IS NOT REALLY A CATALYST. THE CATALYSTS HAVE BEEN MORE POSITIVE OVER THE LAST 24 HOURS. YES, OIL PRICES ARE A LITTLE BIT HIGHER BUT NOT REALLY SPIKING. YOU HAVE SQUIRTS AROUND

1:30:14 FINANCING BUT THAT HASN’T GOTTEN WORSE. WHAT YOU HAVE GOTTEN IS POSITIVE EARNINGS FROM MICRO. META OVERNIGHT, THE DESCRIPTION I KEEP SEEING OVERAND OVER AGAIN IS THIS GOLDILOCKS CAPEX NUMBER. MAYBE TESLA IS GOOD. I THINK IT IS GOING FADE OR YOU NEED A CATALYST. PEOPLE DON’T WANT TO GO INTO THE TRADE KNOWING THAT MID-TERMS ARE AHEAD AND YOU HAVE A FED MEETING NEXT WEEK AND ALL OF THIS OTHER STUFF IS GOING ON. ANNA:

1:30:47 WHERE DOES THAT LEAVE US ON THE FIXED INCOME SIDE OF THINGS? BRENT IS UP. WHERE DOES THAT LEAVE FIXED INCOMES? WE HAVE SEEN YIELDS. >> IT IS INTERESTING. WE HAVE THIS CHANGING RELATIONSHIP YIELDS ARE NOT RISING AS MUCH AS WHEN YOU GET – CONSISTENTLY THE LAST COUPLE OF WEEKS, A SAFE HAVEN BID FROM AI TRADE AND DOLLAR DOWNSIDE. I THINK THE IDEA IS THAT YOU’RE GOING TO GET THE HIKES ON THE BACK OF INMAKES THE BUT MARKETS

1:31:19 ARE THINKING WHAT HAPPENS AFTER THOSE HIKES? IN EUROPE AND THE U.K., YOU HAVE MORE IMPULSES THAT ARE WORRYING. YOU DON’T HAVE THE GROWTH BACKDROP COMING FROM AI. THEY MAY EXPECT DEEPER CUTS ON THE OTHER SIDE. HOW DO YOU HEDGE AI? IT IS EVERYWHERE. IT IS IN YOUR EQUITY MARKETS NOT ONLY THE U.S. BUT IT IS IN FIXED INCOME AND CREDIT MARKETS. WHERE DO YOU HIDE BECAUSE IT IS SO MUCH PART OF THE GROWTH STORY AND RISK MANAGEMENT

1:31:50 STORY, YOU EXPECT WHEN IT TURNS OVER – ANNA: LUXURY HANDBAGS ONCE A UPON A TIME WERE PART OF – GUY: FRANCE. TAKING MY EYE OFF THE BALL THIS MORNING. FRANCE IS TRADING 167 OVER GERMANY. WOW. THIS IS HAPPENING REALLY FAST. HOW MUCH MOMENTUM – I’M ASSUMING 170 LOOKS POSSIBLE AT THIS POINT. >> YEAH, ABSOLUTELY. YOU CAN GO MUCH, MUCH HIGHER

1:32:23 FROM HERE, I WOULD SAY. YES, YOU LOOK BACK AT PREVIOUS CRISIS. UP WE’RE NOT NEARLY NEAR THOSE HIGHS. FRANCE IS A CLEAR LOSE WE ARE FIXED INCOME. QUITE A LOT OF THE TRADE SEEMS STUCK. GERMAN YIELD IS STUCK BETWEEN INFLATION AND GROWTH. THE ONE CLEAR TRADE YOU’RE SEEING IS IN FRANCE. PEOPLE ARE GOING I WANT TO BE SHORT OR FOREIGN INVESTORS IN PARTICULAR MORE THAN 50% OF THE MARKET ARE GOING I DON’T WANT TO BE THERE AND YOU’RE SEEING MORE ATTRACTIVE YIELDS IN JAPAN AND THE U.K.

1:32:55 THERE IS SO MUCH ROOM FROM A HIKING PERSPECTIVE IN THOSE PLACES WHEREAS IN FRANCE THE HIKES MAKE THE SITUATION WORSE. ANNA: WHAT ABOUT THE CONTAGIONS IN OTHER PLACES? IT IS LIFTING ITALY AND OTHER PARTS OF THE EUROPEAN MARKET. WE HEAR A LOT FROM OUR GUESTS, THE ECB WON’T STEP IN. THE SPREAD HERE, WE’RE TALKING ABOUT FOR FRANCE IS NOT 240 BASIS POINTS WE SAW FOR ITALY IN 2022 AND THE ECB DIDN’T STEP IN THERE SO THEY WON’T STEP IN NOW. HAS THE BASE CASE ASSUMPTION.

1:33:26 >> ABSOLUTELY. THERE IS NOT AN IMMEDIATE RISK TO FUNDING IN TERMS OVER THE SPREAD BLOWING OUT. YOU ALSO DON’T HAVE THE STRESS YOU HAD PREVIOUSLY. YOU HAVE TO RECOGNIZE IN SOME OF THE PREVIOUS INSTANCES, IT OPPORTUNITY WITH ECB STEPPING IN. IT WAS ITALY DIALING BACK THEIR FISCAL PLAN OF LARGE EASES. THERE IS STILL A HIGH BAR TO GET THERE. WE’RE NOT THERE YET. ANNA: THIS IS THE FISCAL PRESSURE

1:33:59 THAT IS SUPPOSED TO HAPPEN. FRANKLIN TEMPLETON BEGINNING TO RING LOUDER AND LOUDER. WHAT DEFINES A CRISIS? ANNA: WE’LL BRING BACK SKYLAR TO DEFINE A CRISIS NEXT. “THE PULSE” IS UP NEXT. ANOTHER DAY OF LIVE PROGRAMMING FROM BERLIN. THE BERLIN GLOBAL DIALOGUE CONTINUING. WE’LL HEAR FROM JENSEN HUANG. GUY: HE HAS LOTS OF THINGS TO SAY IN TERMS OF AI TRADE. EQUITIES ARE UNDER PRESSURE. A TOUGH MORNING. 567 MINUTES PAST THE HOUR.

1:34:32 THIS IS BLOOMBERG.