US Stock Selloff Extends to Asia as Chip Rout Deepens

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: US Stock Selloff Extends to Asia as Chip Rout Deepens · Channel: Bloomberg Television · 1:34:24 · Watch on YouTube

Topics: AI governance and regulation, AI infrastructure and hardware, Markets and economy

Summary

Asian markets sell off as hotter-than-expected U.S. inflation prompts traders to price in further Federal Reserve rate hikes, while chip stocks extend a steep decline. Analysts debate whether the AI trade is undergoing a fundamental shift or a correction, with TSMC earnings seen as a key test of demand and valuations. The program also covers Anthropic’s reported revenue and IPO plans, CoreWeave’s market setbacks, and mixed results from Morgan Stanley and Bank of America. Nvidia CEO Jensen Huang argues that AI safety must be built into the technology, while central bankers stress data dependence amid uncertain inflation and market conditions.

Key points

U.S. September inflation came in hotter than expected at 3.7%, with price increases across categories including airfares, medical care, used cars and toys.
Markets raised expectations of further Fed tightening, while the Treasury yield curve flattened as investors weighed inflation risks against the danger of slowing the economy.
Asian chipmakers came under heavy pressure, extending a global selloff; investors looked to TSMC results and its capital-spending outlook for evidence that AI demand remains durable.
Market strategists disagreed on the AI trade: some warned that high valuations and funding needs were driving risk, while others argued that chip demand and supply constraints remained strong.
Anthropic reportedly generated $16.8 billion in third-quarter revenue and achieved adjusted profitability as it prepared for a possible IPO.
CoreWeave CEO described the market reaction to the company as irrational, while its shares and bonds faced substantial selling pressure.
Morgan Stanley reported strong wealth-management inflows, supported in part by IPO-related activity; Bank of America’s results were overshadowed by a $1.2 billion regulatory fine.
Jensen Huang said AI capability and safety should be treated as one issue and said Nvidia could consider cutting off a customer if its use of the technology caused harm.
A Slovenian central banker said policymakers had not yet seen second-round inflation effects and would remain vigilant and data-dependent.
Australia reported a loss of more than 39,000 jobs, mostly part-time, while Japan’s machine-order figures beat expectations.

Chapters

Start	Chapter	Summary
00:15	Asian markets brace for hotter U.S. inflation	The program opens with falling Asian equities, a deepening chip rout and concern that hot U.S. inflation could prompt more Fed rate hikes.
02:30	Inflation data and the Fed’s next move	Bloomberg guests explain the broad sources of price pressure and discuss how the data may affect the Fed’s rate path and Kevin Warsh’s remarks.
05:10	Bond yields, the dollar and recession risk	A market strategist links the Treasury curve’s flattening to concerns about excessive tightening, recession risk and a possible shift in portfolios.
08:52	Chip selloff and the TSMC test	The discussion turns to heavy losses in semiconductor shares and whether TSMC results can meet elevated expectations.
10:02	Anthropic and CoreWeave face investor scrutiny	Bloomberg reports on Anthropic’s revenue and IPO preparations as CoreWeave’s CEO challenges the market’s negative reaction.
13:22	Bank earnings: Morgan Stanley and Bank of America	The program reviews Morgan Stanley’s strong wealth-management inflows and Bank of America’s results amid a major regulatory fine.
20:58	Jensen Huang on AI safety	Nvidia’s CEO says safety and containment should be integrated into AI systems and discusses whether the company could stop supplying an unsafe user.
23:53	What is driving inflation?	An economist discusses energy prices, tariffs, AI investment, higher business costs and the challenges of reducing the U.S. budget deficit.
34:54	Asia’s tech selloff and investment outlook	Market reporters describe the pressure on Asian technology stocks as investors assess AI spending, valuations and the prospect of further U.S. rate hikes.
39:07	India’s infrastructure investment plans	India’s National Investment and Infrastructure Fund chief discusses investment plans spanning transportation, digital infrastructure and data centers.
44:01	Market update and Korean chip losses	The broadcast tracks weakening Asian markets, sharp declines in Korean chip stocks and the reaction to U.S. inflation and geopolitical risks.
49:50	Strategists debate the AI supply chain	A Goldman Sachs strategist argues that demand and supply constraints could support the AI supply chain over the longer term, while advising caution amid volatile trading.
1:00:15	CoreWeave, Anthropic and TSMC	The discussion examines CoreWeave’s debt and business model, Anthropic’s IPO prospects and the high expectations for TSMC earnings.
1:06:20	Bank of America fine and Morgan Stanley outlook	Bloomberg reporters discuss unanswered questions about Bank of America’s compliance settlement and the potential benefits of IPO activity for Morgan Stanley.
1:11:27	Jobs data and central-bank policy	The program reports a decline in Australian employment and interviews a Slovenian central banker on inflation, rates and data-dependent policy.
1:21:17	AI sovereignty, safety and India’s education reforms	Jensen Huang discusses AI sovereignty, safety and growth before the program turns to India’s education reforms and the final market check.

Quotes

it was not a good number for the Fed. — 03:33

It is one conversation. — 22:34

about half of this number in my view can be attributed to energy costs. — 29:55

the market is unwilling to embrace right now — 52:30

We should not commit or pre-commit to any interest rate path — 1:16:27

Concepts and entities

Federal Reserve, CPI, Treasury yield curve, Anthropic, CoreWeave, NVIDIA, Jensen Huang, TSMC, Bank of America

Full transcript (original language)

00:15 >> THIS IS THE ASIA TRADE. HAIDI: THE TOP STORIES THIS HOUR. >> ASIAN STOCKS EXCEPT FOR LOSSES AS HOT U.S. INFLATION RE-IGNITES RATE HIKES THIS YEAR. CHIP GIANTS EXTENDING A SIX DAY DROP THAT HAS WIPED OUT $1.6 TRILLION IN VALUE. HAIDI: ADDING TO THE AI ANGST, COREWEAVE CEO SAYS THE MARKET IS ACTING IRRATIONALLY. PAUL: AND ANTHROPIC TELLS INVESTORS THE THIRD QUARTER REVENUE HIT ALMOST $17 BILLION AS IT PUSHES

00:46 TOWARDS AN IPO AS SOON AS NEXT MONTH. HAIDI: NVIDIA’S CEO SAYS AI SAFETY NEEDS TO BE BUILT INTO THE TECHNOLOGY. WE HEAR EXCLUSIVELY FROM JENSEN HUANG. LET’S GET YOU STRAIGHT INTO THE START OF TRADING. TAKE A LOOK AT WHAT LIES AHEAD. IT COULD BE A CHALLENGING SESSION. TRACKING THE TECH-LED WALL STREET SET OFF AND THE HOTTER CPI FUELING INCREASED BETS. WE GET MORE AGGRESSIVE FED RATE HIKES.

01:21 SETTING OFF THIS ACTION AMONGST TRADERS TO RAMP UP AMID FURTHER TIGHTENING FROM THE FED. ADDITIONAL RATE HIKES EVEN IF POLICYMAKERS PAUSE IN OCTOBER IS WHAT WE ARE TALKING ABOUT AT THE MOMENT. AUSSIE STOCKS COMING ONLINE, HAVE A PERCENT LOWER THERE. NIKKEI FUTURES WITH DECLINES AT THE OPEN ANSI PLUS IS EXPECTED WHEN IT COMES TO TECH AND AI TRADED GAUGES. KOSPI, DOWN BY ALMOST 3% IN THAT FUTURE STRAIGHT. FUTURES IN THE U.S. CONTINUING TO EXTENDED LINES. TAKE A LOOK AT WHAT WE ARE SEEING. INTERESTING TRAJECTORY IN

01:55 TREASURIES. WE SAW EARLY LOSSES BUT MOST OF THOSE HAVE BEEN RECOVERED AS A A RESPONSE TO THE HEART THAN EXPECTED INFLATION DATA. MOSTLY LOW ON THE DAY. CERTAINLY OFF THE BEAT SURGE AFTER THE INDEX DATA WAS RELEASED. AN INCREASE IN WAGES – AS MANY AS FOUR MORE FED RATE HIKES BY THE END OF NEXT YEAR AND AFFECTED THE COURSE OF THE SESSION AS WELL. WHAT HAS NOT SEEN MUCH OF A FADE, THE BLOOMBERG DOLLAR INDEX, HOLDING ONTO MOST GAINS AFTER THE DOLLAR STRENGTH INTO THE HIGHEST LEVEL IN OVER A YEAR.

02:30 LET’S GET MORE AHEAD OF CHAIR WASH’S – WARSH’S APPEARANCE IN BANGKOK. UNDER CURRENT IS IN WASHINGTON AS WELL AS MARK RENFIELD IS WITH US. TALK US THROUGH THESE NUMBERS AND WHAT WE SAW IN THE MARKETS WAS WARRANTED IN TERMS OF HOW MUCH THIS WILL SEISMICALLY IMPACT THE FED’S PATH GOING FORWARD. ENDA: HEADLINE INFLATION ROSE 3.7%. OK. THAT’S THE ENERGY STORY ON THE

03:02 BACK OF THE IRAN WAR. . THAT IS WELL UNDERSTOOD. BUT CORE INFLATION COME UP TO .6% – CORE INFLATION, UP TO .6% – 2.6%. IT IS THE COST OF AIRFARE, MEDICAL CARE, USED CARS. TOYS ARE THE BIGGEST JUMP ON RECORD.

03:33 THE NUMBERS TODAY REFLECTED A SUPPLY SHUT GOING ON AT THE MOMENT. THAT IS OF COURSE THE ENERGY STORY. LINKED TO THE MIDDLE EAST. THAT IS ALSO OF COURSE THE AI BOOM AND LINGERING EFFECT ON TARIFFS ON IMPORTED GOODS. YOU CAN SLICE AND DICE THE DATA DIFFERENT WAYS BUT IT WAS NOT A GOOD NUMBER FOR THE FED. AND THAT’S WHY TRADERS RESPONDED BY BETTING – INCREASING BEST IT WILL HAVE TO

04:04 RAISE RATES NOT NECESSARILY IN OCTOBER BUT DECEMBER FOR SHORT. PAUL: WE WILL BE HEARING FROM KEVIN WARSH LATER ON TODAY IN A FIRESIDE CHAT IN BANGKOK. IS ON THE BUSINESS OF FORWARD GUIDANCE BUT IT WILL BE DIFFICULT TO AVOID THAT. ONE IMAGINE EVEN THE WAY HE SITS TODAY WILL BE ANALYZED. ENDA: ANYTHING HE SAYS AT THE IMF WILL CERTAINLY BE SCRUTINIZED. THE FED OFFICIALS COMING UP OR BASICALLY HOSING DOWN EXCITATIONS THAT THEY WOULD MOVE IN OCTOBER. MAKING THE CASE THEY HAVE TIME TO WAIT AND SEE.

04:39 THERE ARE PLENTY OF ECONOMISTS WOULD AGREE WITH THAT VIEW AND DON’T THINK NUMBERS TIPPED OVER THE EDGE FOR OCTOBER BUT THEY DID NOT TAKE MUCH SOLACE FROM THESE NUMBERS AND THAT’S WHY AT THE VERY LEAST IT WILL BE A LIVELY DISCUSSION GOING FROM 20% CHARGES OF A RATE HIKE THAT ROSE TO 55% AND SETTLED BACK DOWN. KEVIN WARSH WILL BE SPEAKING GOING INTO A BLACKOUT PERIOD,

05:10 WHEN THEY ARE NOT ALLOWED TO TALK ABOUT MONETARY POLICY. DIRECT SIGNALS ARE NOT HIS STYLE BUT ANYTHING HE SAYS ON THE ECONOMY WILL BE CLOSELY SCRUTINIZED AND CERTAINLY INTERPRETED BY MARKETS WHATEVER WITH A WANT TO READ IT – WHATEVER WAY THEY WANT TO READ IT. PAUL: LET’S GET TO MARK FOR THE MARKET IMPLICATIONS OF THIS HOT CPI PRINT. WAS ARE PRETTY BIG MOVES ON THE S&P. WHAT ELSE DO WE SEE IN TERMS OF MARKET REACTION, WHAT ARE WE ANTICIPATE HEADING INTO THE ASIAN SESSION TODAY? MARK: THE MOST SIGNIFICANT THING IN

05:46 THE MARKETS WAS A HUGE FLATTENING IN THE TREASURY YIELD CURVE, THAT IS A VERY WORRYING SIGNAL FOR ALL ASSET CLASSES. WHAT YOU SAW DURING THE DAY – THE INITIAL REACTION ONCE CPI NUMBERS CAME OUT, YIELDS WENT UP BUT THEY COMPLETELY REVERSE DURING THE DAY WITH THE LONG END YIELDS FLATTENING A LOT IN RELATION TO THE SHORT-TERM YIELDS. THAT TELLS YOU INVESTORS ARE CONCERNED ABOUT THE POSITIONING FOR THE FED. AS ENDA WAS EXPLAINING, AND THE SHORT-TERM TERM THOSE INFLATION

06:17 NUMBERS ARE VERY WORRYING. THE FED ALMOST CERTAINLY NEEDS TO RAISE INTEREST RATES IN DECEMBER AND IN THE FIRST QUARTER OF NEXT YEAR AS WELL. THE PROBLEM IS WE ARE REACHING THE INFLECTION POINT WHERE TOO MUCH TIGHTENING COULD ACTUALLY DAMAGE THE ECONOMY IN THE MEDIUM TO LONG AND THAT’S WHAT BOND INVESTORS ARE STARTING TO FEAR. THAT THE FED IS TOO LATE AND THEY WILL BE TIGHTENING INTO A PERIOD WHEN THE ECONOMY IS STARTING TO TURN, WE HAVE SEEN WEAKNESS IN JOBS NUMBERS AS WELL RECENTLY. SO YOU ARE GOING TO GET THAT RISK HERE. THE FED IS THE ONE THAT TRIGGERS THE NEXT RECESSION IN

06:48 THE U.S.. AND THAT IS SPREAD ACROSS THE BOARD. DOESN’T MATTER WHETHER YOU ARE IN A.I. OR ANY OTHER PART OF THE TECH MARKET, A RECESSION – A BIG SLOW DOWN IN THE U.S. ECONOMY WILL NOT BE GOOD ANYWHERE. THAT’S WHY YOU ARE GETTING A FLATTENING IN THE TREASURY CURVE. WE HAVE BEEN TALKING ABOUT THE RISK OF INVERSION, THAT WILL BE COMING INTO THE CONVERSATION AGAIN QUICKLY BECAUSE THAT IS THE SIGNAL THAT MARKETS TAKE – RISKS OF A BIG SLOWDOWN ARE

07:19 COMING FASTER, SO EVERYONE WILL BE WATCHING WHAT HAPPENS WITH LONG END YIELDS EVEN AS THE PRESSURE ON THE SHORT END IS FOR THE FED TO MOVE AGAIN. HAIDI: WHAT IF YOU ARE IN THE FX SPACE? WE HAVE SEEN THE DOLLAR RALLY GOING INTO THE FIFTH WEEK, WILL IT CONTINUE TO BE TILTED TO THE UPSIDE? MARK: LOOKS AS THOUGH WE COULD BE IN A TIPPING POINT AS WELL, THIS ENDS UP BEING NEGATIVE FOR THE U.S. DOLLAR, IN FACT, WE MIGHT BE IN

07:49 A SITUATION WHERE WE START TO THINK ABOUT THE SELL AMERICA THEMES AGAIN WHERE SHORT-TERM BONDS ARE VERY WEAK AND U.S. DOLLAR IS WEAK AND EQUITIES ARE WEAK, THEY START FEEDING INTO ONE ANOTHER. EMERGING-MARKET CURRENCIES ARE NOT GOING TO COME OUT OF THIS WILL. IF THERE’S GOING TO BE SHORT-TERM YIELDS SAYING HI, THAT’S BAD ACROSS THE EM SPACE BUT CERTAINLY THE U.S. DOLLAR WILL START TO SOFTEN TO SOME EXTENT. BONDS AGAINST EQUITIES, WE

08:21 MIGHT EVEN START TO GET BACK INTO A SITUATION WHERE BONDS ACT AS A PROPER HAVEN AGAINST THE EQUITY MARKET. PARTICULARLY LONG-TERM BONDS. THAT IS SOMETHING WE HAVE NOT SEEN FOR A LONG TIME. A BIG BREAKDOWN IN THE 60-40 PORTFOLIOS – SOME EVEN SHIFTING TO 80-20. ALL OF THAT WILL BE UP IN THE AIR. PEOPLE OVERWEIGHT EQUITIES IN RELATION TO FIXED INCOME NEED TO DO A BIG RE-THINK. AND IF THAT PLAYS OUT, YOU WILL

08:52 SEE ENORMOUS PORTFOLIO SHIFTS OUT OF EQUITIES AND INTO MEDIUM LONG-TERM TREASURY BONDS. PAUL: THE SEMI CONDUCTOR INDEX DOWN 12% OVER THE LAST SIX WEEKS, AND FREE TRADE FOR KOREA AT THE MOMENT SHOWS SAMSUNG AND SK HYNIX FOLLOWED BY MORE THAN 6% ON NEXT TRADE. IS THIS A HEALTHY CORRECTION OR SOMETHING ELSE GOING ON? MARK: IT IS A SITUATION WHERE PEOPLE ARE VERY OVER INVESTED IN THESE THINGS. THE PROBABILITY IS STILL GOOD.

09:26 A BIG TEST TODAY, THE TAIWAN SEMICONDUCTOR. EXPECTATIONS ARE VERY HIGH. THE REVIEW NUMBERS HAVE BEEN STRONG. WE SAW IT WITH SML YESTERDAY. BUT CAN THEY MEET FORECASTS AND JUSTIFY VALUATIONS? IF TSMC COMES OUT WITH STRONG EARNINGS AND A POSITIVE OUTLOOK AND THE STOCK DOES NOT PERFORM, THAT IS A REAL WARNING INDICATOR THAT PEOPLE SEE A DISCONNECT BETWEEN WHERE THE ECONOMIES ARE GOING AND WHERE THE DEMAND FOR A.I. PRODUCTS IS. IF THEY DON’T MATCH, STOCKS

10:02 HAVE TO GO LOWER SO TSMC IS A BEJEWELED FOR THE MARKETS TODAY. HOW IT PERFORMS IN THE U.S. WILL BE SIGNIFICANT NOT JUST FOR ASIA BUT FOR THE WHOLE U.S. TECH SPACE AS WELL. HAIDI: MARK CRANFIELD, CERTAINLY INTERESTING TIMES WHEN IT COMES TO THESE FRONTIER AI LABS. ANTHROPIC TOLD INVESTORS REVENUE HIT 1.6 TRILLION DOLLARS, SAME NUMBERS WERE REVEALED IN THE PRESENTATION IS ANTHROPIC PREPARES TO IPO AS SOON AS NEXT MONTH.

10:35 WE ARE JOINED FOR MORE FROM SAN FRANCISCO. WE UNDERSTAND THE IPO WILL HAPPEN NO LATER THAN THE END OF THIS YEAR POTENTIALLY, WHAT DO WE KNOW IN TERMS OF WHAT WAS THAT I WON’T STAND HOW INVESTORS ARE GOING TO REACT? LYNN: THAT’S EXACTLY RIGHT. THANK YOU FOR HAVING ME. THIS IS CLEARLY A BIG PRESENTATION AHEAD OF THE FORMER MARKETING – FORMAL MARKETING FOR THE IPO THAT WILL HAPPEN AS SOON AS THE WEEK OF NOVEMBER 9.

11:09 ON TOP OF THE $16.8 BILLION THIRD-QUARTER REVENUE YOU HIGHLIGHTED AND THE FACT THAT THEY ACHIEVED PROFITABILITY ON AN ADJUSTED BASIS IN TE – THE QUARTER, WE HAVE ALSO REPORTED SOME OTHER NUMBER AND DETAILS TRICKLING OUT OF THE MEETING TODAY WHICH IS THEY ARE GENERATING POSITIVE FREE CASH FLOW AND ANOTHER IS ADJUSTED – ITS ADJUSTED GROSS MARGIN WAS 85%. AND OVER 11% IN POSITIVE

11:40 ADJUSTED OPERATING MARGIN IS WHAT THEY REACHED IN THE THIRD QUARTER. THERE ARE OTHER FIGURES OF SLOWLY TRICKLING OUT OF THIS MEETING. OUR REPORTERS ARE VERY HARD AT WORK TO GET THOSE ASSOCIATES ON MORE INFORMATION OUT OF THAT. HAIDI: – PAUL: WE NEED TO TALK ABOUT COREWEAVE AS WELL. DOWN 15% AS IT IS AMID THE STRENGTH BUT THE CEO SAYS THE MOVES ARE IRRATIONAL, WHO IS RIGHT IN

12:14 THIS DEBATE? LYNN: YES, HUGE MOVE INDEED. NOT JUST IN THE DEBT MARKET WHICH IS WHAT EVERYBODY IS FOCUSED ON BUT ALSO IN SHARES WHICH MARKED THE BIGGEST SINGLE DAY DECLINE SINCE FEBRUARY ON THE NEW YORK EXCHANGE. IN TERMS OF WHO IS RIGHT, IF I KNEW, I PROBABLY WOULD NOT BE ON TV TALKING ABOUT IT BUT I WILL SAY THE COREWEAVE CEO IS STRIKING UP PRETTY HARD AGAINST THE WAY THE MARKET IS REACTING, CALLING IT IRRATIONAL.

12:48 HE IS LASHING OUT AT RIVALS WHO ARE SEEKING IPO’S AND IN SOME CASES HAVE DELAYED IPO’S . HE’S MAKING THE CASE THAT THE CONCERN OVER THESE DELAYED IPO’S AND MASSIVE FINANCINGS ARE “LEADING INTO THE NARRATIVE OF COREWEAVE” WHERE THEY SHOULDN’T. SAYING THEY DON’T HAVE WHAT WE HAVE BUILT AT COREWEAVE. HE IS CERTAINLY CHALLENGING THAT AND SIGNALING THE COMPANY IS GOING TO WANT TO FURTHER ADDRESS THAT MARKET REACTION DURING THE NEXT EARNINGS CALL. THAT WILL PROBABLY BE THE NEXT BEAT ON THIS AND THAT HAS NOT

13:22 BEEN SCHEDULED SO WE WILL BE CHASING EXACTLY WHEN THAT’S GOING TO HAPPEN. PAUL: LYNN DOANE, THANK YOU. STILL TO COME, MORGAN STANLEY REAPING THE REWARDS OF THE IPO BOOM WHILE BANK OF AMERICA EARNINGS ARE CLOUDED BY A REGULATORY CHARGE. THE DETAILS OF THE THIRD QUARTER RESULTS ARE COMING UP NEXT. HAIDI: PLUS THE BLOOMBERG NEW ECONOMY FORUM CONTINUES IN NEW DELHI TODAY WITH VIEWS ON THE AI SAFETY, ENERGY TRANSITION, AND THE LONG-DELAYED U.S. INDIA TRADE DEAL. PAUL: AND THE FORMER ECB PRESIDENT AND FORMER ITALIAN PRIME

13:55 MINISTER WILL JOIN US IN CONVERSATION LATER IN THE DAY. MUCH MORE AHEAD. THIS IS BLOOMBERG. ♪ >> WE WERE, AS YOU KNOW, OVERWEIGHTED TO A.I.

14:27 FROM THE EARLY DAYS. WITH SOME OF THE WORK WE DID WITH OPENAI. WORKING WITH OTHER COMPLEXES. YOU KNOW WHO THEY ARE. IN TERMS OF BANKING COVERAGE AND USAGE IN OUR PLAN AND WEALTH RELATIONSHIPS, THINKING ABOUT WHAT IT’S LIKE TO GO PUBLIC, I WOULD SAY THAT WE WERE OVERWEIGHT. AND IN LIGHT OF IT BEING SOMETHING THAT MATTERS NOT JUST APPLIANCE BUT TO US, I WOULD SAY WE ARE NOW DOUBLE OVERWEIGHT.

14:58 THERE’S JUST NO QUESTION THAT THIS IS EXISTENTIALLY IMPORTANT THAT WE ARE VIEWED AS A TRUSTED ADVISOR IN THE MIDDLE OF THE ECOSYSTEM. PAUL: MORGAN STANLEY’S CEO THERE ON THE ANALYST CALL FOLLOWING THE BANK’S THIRD-QUARTER RESULTS. IT CLIMBED AS EQUITY TRADERS TROUNCED ANALYST ESTIMATES. AND THE WEALTH MANAGEMENT OPERATION BROUGHT IN A RECORD HAUL. BANK OF AMERICA REPORTED THIRD-QUARTER RESULTS, CONTENDING WITH WEAKER TRADING. THE $1.2 BILLION FINE FOR MONEY LAUNDERING AND SANCTIONS

15:29 BREACHES. LET’S GET TO OUR U.S. BANKING SECTOR ANALYST. LET’S START WITH MORGAN STANLEY. PRETTY SOLID SET OF NUMBERS. A RECORD WHOLE FROM THE IPO PIPELINE, WHAT IS COMING DOWN THE TRACK? HERMAN: THAT’S RIGHT. ON THE EQUITY TRADING FRONT, NOT QUITE AS ROBUST AS GOLDMAN SACHS WHICH LED THE GROUP IN THE THIRD QUARTER. THAT BEING SAID, THE REAL

16:04 HIGHLIGHT OF THE RESULTS WAS THE STRONG THAT NEW MONEY INFLOWS INTO THE WEALTH MANAGEMENT COMPLEX. OVER $200 BILLION IN NET NEW MONEY, HALF OF THAT RELATED TO IPO’S, ACCORDING TO THE COMPANY. AS MENTIONED EARLIER IN THE BROADCAST. THEY ARE JUST IN THE ECOSYSTEM. TO HELP MANAGE THE MONEY OF THE WEALTH CREATION FROM THE A.I. BUILD OUT. THAT IS REALLY REFLECTED IN THE WEALTH MANAGEMENT COMPLEX WHICH IS GREAT TO SEE. HAIDI:

16:38 WE ALSO HEARD FROM BRIAN MOYNIHAN COMMENTING ON SOME OF THESE FINES RELATED TO THE MONEY LAUNDERING AND SANCTIONS CONTROL ISSUES. TAKE A LISTEN. >> WE AN EXAMINATION A FEW YEARS AGO. – WE HAD AN EXAMINATION A FEW YEARS AGO. WE HAD A CEASE-AND-DESIST ORDER, WE HAD TO DO THAT WORK. THERE WAS A DEBATE A BIT ABOUT WHAT EXACTLY WE HAD TO DO. THAT IS RESOLVED AND BEHIND US. WE HAVE BEEN EXPANDING – EXPENDING THE MONEY IN THE RUN RATE ALREADY TO DO THE REMEDIATION. BECAUSE A FEW MONTHS AGO WE

17:09 STARTED TO PICK UP THE COST STRUCTURE AND PUTTING IT IN. HAIDI: SO, THIS IS ONE OF THE WORST EARNINGS DAYS AND MANY YEARS FOR THEM, IS THIS SOMETHING THAT BANK OF AMERICA CAN MOVE BEYOND LANGLEY OR COULD THERE BE MORE ISSUES HERE – CLEANLY OR COULD THERE BE MORE ISSUES HERE? HERMAN: THE REGULATORY FIND WAS A SURPRISE TO US. WE HAD NOT EXPECTED SOMETHING OF THIS MAGNITUDE. GIVEN THE FACT THAT – AND IT SEEMS LIKE THAT WAS REFLECTED

17:42 IN ISSUES REGARDING ANTI-MONEY LAUNDERING COMPLIANCE AND MONITORING. IT SEEMS LIKE THE RUN RATE OF EXPENSES IS ALREADY IS IN THE EXPENSE BASIS OF NOTHING NEW IN TERMS OF FUTURE COST IMPLICATIONS IS AT LEAST THE BASE CASE FROM HERE. THAT BEING SAID IT IS A BLEMISH FOR RESULTS AND COULD PUT THEM IN THE PENALTY BOX IN TERMS OF MARKET SENTIMENT FOR THE NEAR INTERMEDIATE TERM. HAIDI: I WANTED TO ASK ABOUT THE

18:15 IMPACT OF THE EVER-CHANGING MACROENVIRONMENT. WE SAW OVERNIGHT WITH THE INFLATION PRINT A REAL EXHILARATION IN FED EXPECTATIONS AND WHAT THE RATE ENVIRONMENT WILL LOOK LIKE. AT THE SAME TIME WE ARE SEEING THE SAME ENVIRONMENT BEING DISTORTED BY THE HUGE AMOUNT OF A.I. FINANCING AND INVESTMENT. HOW IS THIS GOING TO IMPACT THE BANKS? WHO WINS MORE, AND WHO MIGHT BE LESS BENEFITING? HERMAN: YEH – YEAH, WE HAVE AN EVOLVING OPERATING BACKDROP IN THE U.S. GIVEN INFLATION EXPECTATIONS,

18:50 IT DOES SEEM LIKE WE ARE GOING TO GET AT LEAST ONE RATE HIKE IN THE U.S. FOR THIS YEAR. AT LEAST THAT IS ACCORDING TO MARKET EXPECTATIONS CURRENTLY. THEN POTENTIALLY ADDITIONAL ONES NEXT YEAR AS WELL. OVERALL, IT IS GOING TO BE A MIXED TREND. NET INTEREST INCOME. MANY BANKS ARE RATE SENSITIVE SO THE HIGHER INTEREST RATES SHOULD HELP NET INTEREST INCOME. THAT BEING SAID, IF HIGHER

19:24 INTEREST RATES COOL THE ECONOMY, THAT COULD CREATE SOME WEAKER ASSET QUALITY RESULTS AND COULD RESULT IN HIGHER NET CHARGE-OFFS AND THAT PROVISIONING WHICH WOULD RESULT IN WEAKER EARNINGS FOR THE GROUP. SO THERE WILL BE SOME GIVES AND TAKES, WE WILL SEE HOW IT SHAKES OUT. IN TERMS OF THE AI INFRASTRUCTURE, A LOT OF THE BANKS – THE BIG BANKS ARE MORE ATTUNED TO THAT. WE TALKED ABOUT MORGAN STANLEY EARLIER. MORGAN STANLEY AND GOLDMAN

19:56 SACHS, SEEM TO BE THE BIGGEST ADVISORS FOR THE TECHNOLOGY COMPLES BELONGS AT J.P. MORGAN, THEY ARE VIEWED IN THE U.S. AS THE ONES THAT ARE CAPITALIZING ON SOME OF THE ACTIVITY. YOU SAW THAT MOST RECENTLY WITH THE SPACEX IPO. AS THEY WERE THE LEAD ADVISORS ON THAT MANDATE. THEY ARE ALSO UNDERWRITING SOME OF THE BONDS AND THE STRUCTURED FINANCE DEALS THAT ARE UNDERPINNING THE A.I.

20:27 HYPERSCALER BUILDOUT. SO THAT IS SOMETHING THAT WE CONTINUE TO MONITOR. IT’S BEEN A GREAT BUSINESS AND IT’S ONE OF THE THINGS THAT IS DRIVING THE RESULTS. HAIDI: OUR FINANCIAL SENIOR ANALYST AT BLOOMBERG INTELLIGENCE THERE WITH A LOOK AT THE BIG U.S. BANK EARNINGS THIS WEEK. MORE AHEAD HERE ON “THE ASIA TRADE.” THIS IS BLOOMBERG. ♪

20:58 HAIDI: NVIDIA’S CEO JENSEN HUANG SAYS SAFETY AND CONTAINMENT MUST BE INTEGRATED INTO AI SYSTEMS. SPEAKING EXCLUSIVELY WITH BLOOMBERG, HE SAYS HE WOULD CONSIDER CUTTING OFF ANY CUSTOMERS THAT BUILD UNSAFE A.I. >> THE COST OF A.I., THE COST OF A TOKEN IS REDUCING BY 30, 40 TIMES PER YEAR. THE COST OF TOKENS IS DECREASING. THE COST OF INTELLIGENCE IS ALSO DECREASING. SO THE BENEFITS CUSTOMERS ARE ACTUALLY GOING UP – FOR

21:30 CUSTOMERS ARE GOING UP ITS FINANCIAL. >> THAT SAID, AI IS DEEPLY UNPOPULAR AND PEOPLE ARE SCARED. SAM ALTMAN, DARI MADEA AND ELON MUSK SAY WE SHOULD SLOW DOWN. YOU HAVE BEEN CONSISTENT IN YOUR OPTIMISM, WHAT DO YOU SEE THAT THEY DON’T AND HOW CAN THEY BE SO WRONG? >> FIRST OF ALL SAFETY IS PARAMOUNT AND IN ORDER FOR US TO REALIZE THE INCREDIBLE POTENTIALS AND THE OPTIMISTIC FUTURE THAT WE ALL HOPE FOR AND BELIEVE IN, WE HAVE TO DEVELOP

22:02 THE TECHNOLOGY SAFELY AND RESPONSIBLY. I BELIEVE WE HAVE AGENCY IN HOW THIS TECHNOLOGY ADVANCES. WE SHOULD ACCELERATE THE DEVELOPMENT AND THE INTEGRATION OF THIS CONTAINMENT TECHNOLOGY INTO A.I. SYSTEMS. WE SHOULD ACCELERATE THE DEVELOPMENT OF MONITOR A.I.’S. WE SHOULD ACCELERATE AI TECHNOLOGY. I THINK THERE’S A FALLACY, IT’S

22:34 IN FACT A MISTAKE TO SEPARATE A.I. CAPABILITY AND AI SAFETY AS IF IT IS TO CONVERSATIONS. IT IS ONE CONVERSATION. >> IF ONE OF THE LABS WAS DOING SOMETHING THAT WAS TOO DANGEROUS, WOULD NVIDIA STOP SELLING TO THEM? >> IT IS A HYPOTHETICAL, BUT OF COURSE. BEFORE YOU DO SO, WE WOULD HAVE A CONVERSATION, AND, YOU KNOW, WE DON’T RUN OTHER PEOPLE’S COMPANIES, AND THERE IS A LIMIT TO THE JUDGMENT BY WHICH WE APPLY TO OTHER COMPANIES’ USE

23:11 OF OUR TECHNOLOGY, THE PURPOSE. SO IMPOSING OUR VALUES ON SOME OTHER PEOPLE’S COMPANIES, INSTITUTIONS OR COUNTRIES, THAT IS REALLY LARGELY OUT OF BOUNDS. PAUL: NVIDIA’S CEO JENSEN HUANG SPEAKING EXCLUSIVELY TO BLOOMBERG ORIGINALS’ EMILY CHANG. WE HAVE MORE AHEAD ON “THE ASIA TRADE.” THIS IS BLOOMBERG. ♪

23:53 >> EVEN IF THEY DON’T MOVE THIS MONTH, THE BROADER DIRECTION IS UP. >> IRAN, IMMIGRATION, AND TARIFFS OF THE INFLATION PROBLEM. THIS IS NOT THE FEDERAL RESERVE’S PROBLEM. THEY DID NOT CAUSE IT AND CANNOT FIX IT. >> YOU SEE BRAUN-BASED INFLATIONARY PRESSURE ACROSS THE ECONOMY. SERVICES AND GOODS ARE UP, CONFIRMING THAT REAL WAGES ARE FOLLOWING – ARE FALLING.

24:25 >> AS RATES GRIND UP, WE WILL MAKE MORE MONEY. >> WHERE IS THE CHAIRMAN ON THIS? WE THINK CHAIRMAN WARSH WANTS TO HIKE AND WANTS TO HIKE QUICKLY. HAIDI: SOME OF OUR GUESTS TALKING ABOUT THE IMPLICATIONS OF THE ELEVATED SEPTEMBER INFLATION PRINT. WE ARE ALREADY SEEING DECLINES WHEN IT COMES TO AUSTRALIA, AND THAT IS NOT EVEN A TECH-HEAVY GAUGE. WE ARE SEEING THE STEEPEST BUSES IN PLACES LIKE KOREA AND JAPAN.

25:01 WE SEE SAMSUNG DOWN BY AROUND 6% OR MORE, SO THAT DECLINE AS WE GET HARDER THAN EXPECTED U.S. INFLATION BUT ALSO SUSTAIN PRESSURE ON THOSE TECH AND AI AND SHIP STOCKS. WE SAW THE SEMICONDUCTORS INDEX DOWN, THE SIXTH SUCCESSIVE LOSING SESSION, SO IT WILL BE AN UGLY SESSION SETTING UP FOR CHIPMAKERS IN PARTICULAR, BUT THAT INFLATION PRINT, A RECALIBRATION OF HOW HAWKISH THE FED WILL HAVE TO BE, IS FRONT AND CENTER. PAUL: IT WAS NOT JUST THE HEADLINE

25:32 NUMBER BUT THE BREADTH OF THE GAINS AS WELL. PRETTY MUCH EVERY SECTOR. AIRLINES, USED CARS, MEDICAL CARE. THE COST OF THAT ALL ROWS. COMPUTER AND SOFTWARE PRICES SAW NEAR RECORD ADVANCES. TOYS SAW THE BIGGEST INCREASE IN PRICES SINCE WAY BACK IN 1988. YOU CAN SAY AT THIS POINT ABOUT THREE WEEKS OUT FROM THE MIDTERMS, THE POLITICAL ATTACK ADS ARE PRETTY MUCH WRITING THEMSELVES. LET’S GET TO THE CHIEF

26:04 ECONOMIST ROBINSON STEPHENSON’S. THANKS FOR JOINING US TODAY. WE DO HAVE KEVIN WARSH SPEAKING TODAY IN JUST A FEW HOURS’ TIME IN BANGKOK. WHEN HE SAYS HE IS NOT IN THE BUSINESS OF GIVING FORWARD GUIDANCE, BUT HE’S GOING TO HAVE TO WORK PRETTY HARD AT NOT DOING SO TODAY, ISN’T HE? >> YEAH, THE TIMING ON THAT, YOU WONDER WHO HIS SCHEDULER WAS. I DON’T KNOW THAT THIS NUMBER

26:34 TODAY WAS THAT SURPRISING IN THE SENSE THAT THERE WERE A LOT OF SIGNALS, A LOT OF PEOPLE TALKING , BUSINESSES AND OTHERS TALKING ABOUT HOW THEY FELT THAT THERE WAS A LOT OF PRICE INCREASE IN THE PIPELINE, IF YOU WILL, STILL TO COME, BUT I THINK IT WAS DEFINITELY NOT THE NUMBER THE FED WAS HOPING FOR AND WOULD HAVE LIKED A LITTLE LOWER NUMBER TO SET THE DIRECTION IN THE RIGHT PLACE, WHICH WOULD HAVE GIVEN THEM TIME TO WAIT. I THINK THEY ACTUALLY DO WANT

27:06 TO WAIT, PERHAPS. I KNOW AT LEAST ONE PERSON NOT AT THE FED, BUT AN IMPORTANT PERSON WITH LIKE TO SEE THEM GO DOWN, RIGHT, NOT UP, THE INTEREST RATES. THIS WAS A BIG NUMBER TODAY. WRONG DIRECTION, UNEXPECTEDLY HIGH, AS YOU SAID, KIND OF ACROSS THE BOARD. PAUL: CAN THE FED AFFORD TO WAIT, THE? WE WERE HEARING FROM OUR MARKET STRATEGIST EARLIER. HE WAS SAYING SOME OF THE ACTION ON THE BOND MARKET

27:45 SUGGESTS THE FED MATE HAVE – THE FED MIGHT HAVE ALREADY WAITED TOO LONG. >> I FEAR THAT THERE WILL BE SOME IMPLICATIONS FOR CREDIBILITY OR THEY THINK THAT WILL BE IMPLICATIONS FOR THEIR CREDIBILITY IF THEY WAIT. NOBODY WANTS TO HAVE THAT HAPPEN, AND YET, YOU DID SEE IN THE LAST COUPLE OF DAYS A NUMBER OF MEMBERS OF THE BOARD CLEARLY SIGNALING THEY WOULD

28:16 LIKE TO WAIT, AND I THINK THAT HAS TO DO WITH THE UNCERTAINTY, PERHAPS, IF YOU WILL OF ECONOMIC IMPACT, BUT MAINLY, QUITE FRANKLY, THE UNCERTAINTY IN TAKING AN ACTION LIKE THIS SO CLOSE TO MIDTERM ELECTIONS IN THE UNITED STATES. GENERALLY, THE FED LIKES TO AVOID ANYTHING THAT LOOKS LIKE IT MIGHT HAVE A POLITICAL IMPLICATION, SO MAYBE THAT WAS WHAT WAS STAYING THEIR HAND, BUT I DON’T KNOW THAT THEY CAN WAIT WITH THIS NUMBER AND WITH

28:50 THE BOND MARKET SIGNALING, AS THEY WERE TODAY, WHAT THEY EXPECT TO HAVE HAPPEN. HAIDI: PAUL WENT THROUGH SOME OF THE COMPONENTS WHERE WE SAW ARISES – EVERYTHING FROM AIRFARES, USED CARS, HEALTH CARE , BIG SURGE IN ENERGY COSTS. TOYS, THE BIGGEST INCREASE SINCE 1988. IS THE UNDERLYING FACTOR OF ALL OF THIS ENERGY COSTS AND IMPORT COST OF PRODUCERS? IS IT STICKINESS FROM THE TRADE WAR? IS IT ALSO BEING IMPACTED BY

29:21 THE AI INVESTMENT WE ARE SEEING? IF THE WAR WERE TO END TOMORROW AND NORMAL ENERGY RESERVES RESUME, WOULD THAT REMOVE THE INFLATION PROBLEM FOR THE FED? >> IF THE WAR WOULD END TOMORROW AND EVERYTHING GO BACK TO JUST FINE IN THE STRAIT OF HORMUZ, AND THE UZIS – THE HOOPTY – THE HOUTHIS WOULD NOT SHOOT AT THE SAUDI’S ANYMORE, YES, THAT WOULD HELP SOME.

29:55 ABOUT HALF OF THIS NUMBER IN MY VIEW CAN BE ATTRIBUTED TO ENERGY COSTS. YOU MENTIONED TOYS. A LOT OF TOYS ARE PLASTIC. PLASTICS USED PETROCHEMICALS. WHEN YOU START TO LOOK FOR THE BROAD FOOTPRINT OF THESE ENERGY PRICE INCREASES, YOU KIND OF SEE IT EVERYWHERE. HAVING SAID THAT, THOUGH, THERE IS OTHER STUFF GOING ON, AND TARIFFS ARE WHAT WERE BEING SIGNALED EARLIER IN THE SUMMER

30:26 BY BUSINESSES, THAT IT WAS TARIFFS THAT WERE GET TO WORK THEIR WAY THROUGH THE SYSTEM, SO THEY SAID, AND THERE IS AI BUILDOUT. THE BOTTOM LINE IS BUSINESSES HAVE BEEN SEEING THEIR COSTS GO UP A LOT OVER THE LAST COUPLE OF MONTHS. THE PRODUCER PRICE INDEX HAS BEEN SURPRISING ON THE UPSIDE EVEN MORE THAN THE CPR FOR QUITE SOME TIME. – EVEN MORE THAN THE CPI FOR QUITE SOME TIME.

31:00 THEY WERE TRYING TO AVOID THAT, AND NOW THEY ARE PASSING IT ALONG. THE LONG-TERM IMPLICATIONS, AND I REALLY DON’T THINK IT’S JUST A COUPLE OF MONTHS. SOMETHING THAT WAS NOT MUCH NOTICED WAS THAT THE ECONOMISTS AT FANNIE MAE, THE LARGE QUASIGOVERNMENTAL MORTGAGE LENDER IN THE UNITED STATES, ECONOMISTS RAISED THEIR

31:31 FORECASTS OF MORTGAGE RATES IN 2020 72 7.5% FOR THE WHOLE YEAR. THEY ARE AT 7.4% RIGHT NOW. FOR THE WHOLE YEAR. IT WAS AN INTERESTING ACTION ON THEIR PART. I THINK THAT PEOPLE THINK INFLATION WILL STAY HIGH LONGER AND INTEREST RATES WILL STAY HIGH FOR LONGER. HAIDI: CAN YOU TALK ABOUT THE OTHER SIDE OF WHERE WE ARE SEEING THE OVERHEATING, WHICH IS THE INPUT OF AI INVESTMENT, ISSUANCE,

32:04 BORROWING THAT WE ARE SEEING? HOW MUCH THIS MATTER GOING FORWARD? FOR THE FED, HOW MUCH DOES THAT MATTER BECAUSE IT POTENTIALLY DISTORTS WHERE THE MOVING RATE REALLY SITS. >> THERE IS A BASIC CONSTRUCTION ELEMENT OF AI, JUST BUILDING THESE DATA CENTERS. ONE OF THE STRONGER AREAS OF EMPLOYMENT RIGHT NOW IS CONSTRUCTION, BUT THAT’S NOT RESIDENTIAL CONSTRUCTION. THAT’S CONSTRUCTION RELATED TO THE BUILDING OF THE DATA CENTERS, AND YOU HAVE A LOT OF DEMAND FOR MATERIALS THAT ARE

32:43 ALSO IN MANY CASES TERRORIST – TARIFFED, SO YOU HAVE A LOT OF DEMAND PUSHING THOSE PRICES UP. YOU ALLUDED TO THE BORROWING SIDE OF THIS. ONE INFLUENCE ON THESE INTEREST RATES IS THAT THERE IS A LOT OF DEMAND FOR MONEY. THAT IS PUSHING THE PRICE OF MONEY UP, AND IT IS HARD TO SEE THAT THAT WILL GO AWAY ANY TIME SOON, BUT WE MIGHT BE SURPRISED, BUT IF WE ARE SURPRISED, IT WILL NOT BE A GREAT SURPRISE IN TERMS OF

33:17 ECONOMIC GROWTH BECAUSE THAT AI INVESTMENT IS CLEARLY CONTRIBUTING TO U.S. ECONOMIC GROWTH. PAUL: IS THERE ANYTHING THAT COULD BE OR SHOULD BE DONE ON THE PHYSICAL SIDE TO HELP GET INFLATION UNDER CONTROL IN THE U.S.? DO YOU IMAGINE ANY CHANGE IN POLICY AFTER THE MIDTERMS? >> THIS ONE IS TOUGH BECAUSE THE FUNDAMENTAL PROBLEM IS THE SIZE OF OUR BUDGET. THE DEBT, THE SIZE OF THE BUDGET DEFICIT.

33:51 ACTION ON REDUCING THE TREND RATE ON SPENDING, GROWTH OF THE BUDGET WOULD BE MEANINGFUL, AND I THINK THAT WOULD HELP. IT IS NOT SO MUCH A REVENUE SIDE PROBLEM AS IT IS AN EXPENDITURE SIDE PROBLEM. REVENUES HAVE NOT GONE DOWN SHARPLY IN RECENT YEARS, BUT SPENDING HAS GONE UP. AND YET, IN THIS WORLD TODAY, WITH GEOPOLITICAL THREATS EVERYWHERE AND ECONOMIC THREATS, BY WHICH I MEAN THE

34:22 PRESSURE TO KEEP UP WITH TECHNOLOGY AND TECHNOLOGY COMPETITION WHERE THE GOVERNMENT IS SEEKING INCREASINGLY TO PLAY A ROLE IN THAT, THAT IS ALL EXPENSIVE. IT IS HARD TO SEE THIS TURNING AROUND ANY TIME SOON. HAIDI: ALWAYS GREAT TO CHAT WITH YOU, JEANETTE GARRITY. MORE AHEAD HERE ON OPEN THE ASIA TRADE – “THE ASIA TRADE.” THIS IS BLOOMBERG.

34:54 ♪ PAUL: ASIAN STOCKS LOOK SET TO DECLINE AS INVESTORS NAVIGATE ACCELERATED CHIPS SELLOFF. WE HAVE INCREASE CHANCES OF A FED RATE HIKE. LET’S GET THE SET UP WITH MARKETS REPORTER ANTHONY STEPHENS IN HONG KONG. IT IS LOOKING LIKE IT WILL NOT BE A TREMENDOUSLY FUN DAY.

35:25 AFTER A ROUGH DAY ON WALL STREET, I THINK WE HAVE THE RUSSELL IN CORRECTION AS WELL. WE HAVE NOT EVEN MENTIONED THAT. ANTHONY: NOT A LOT OF PLACES TO HIDE IN ASIA. ALMOST ALL THE LEADS ARE POINTING ONE WAY. WE HAVE THE SK HYNIX – WE HAD THE HIGH NEXT – WE HAVE THE H YNEX POINTING DOWN. YOU HAVE THIS CONCERN AROUND THE AI DATA CENTER SPENDING

35:56 PART MEET MACRO CONCERNS. THAT IS COMPANIES’ BIG CHALLENGE IN TERMS OF FUNDRAISING POTENTIAL, JUST AS INFLATION PROBABLY ENDS UP RAISING THE RATE HIKE PROBABILITY. YOU FINALLY HAVE THAT CONFLUENCE OF U.S. INFLATION IMPACTING AI DATA CENTER SPENDING IN A MATERIAL WAY. WE SAW A BIG DRAWDOWN IN THE AI SPACE. DELL WAS DOWN AROUND 11%.

36:29 ORACLE WAS DOWN 8%, AND THAT WAS ACTUALLY A MASSIVE UNDERPERFORMANCE VERSUS A SEMICONDUCTOR INDEX THAT WAS DOWN 4%. IT HAS BEEN DOWN IN PRETTY MUCH A STRAIGHT LINE DESPITE VERY STRONG EARNINGS COMING ACROSS THE AI SUPPLY CHAIN. WE HAD A VERY DECENT NUMBERS FROM ASML GOING INTO THE U.S. SESSION THAT WERE COMPLETELY IGNORED. NOW WE ARE NAVIGATING THIS AI EARNINGS GLOBAL NARRATIVE, WHICH WILL BE EXTREMELY HARD TO PUSH BACK ON UNTIL YOU HEAR FROM THE LIKES OF OPENAI AND

37:01 ANTHROPIC ON FURTHER SPENDING. ANTHROPIC’S ARR JUST CAME OUT BEFORE YOU GUYS WENT TO AIR, AND THAT DID NOT HELP. YOU SAW NASDAQ TRADE LOWER OFF OF THAT NUMBER. IT REALLY WILL TAKE SOME DOING TO TURN THAT AROUND. HAIDI: IT’S REALLY INTERESTING. YOU HEARD CORY WAY’S CEO SAYING THE MARKET IS ACTING IRRATIONALLY. ALTHOUGH PLENTY OF CRITICS HAVE SAID IT WAS IRRATIONAL ON THE WAY UP, TOO. DO YOU THINK THIS IS A

37:33 FLASHPOINT IN TERMS OF A FUNDAMENTAL SHIFT? PREVIOUSLY, WE WOULD SEE SOLID EARNINGS AS A CATALYST TO RECOVERY. ANTHONY: A, AND WE NEED TO DRAW A LINE BETWEEN WHAT PARTS OF THE TECH TRADE ARE CHALLENGED BY THIS DEVELOPMENT AND WHICH ARE RESILIENT. YOU HAVE THE U.S. HYPERSCALERS DO REASONABLY WELL, AND THEY ARE THE COMPETITION FOR SPENDING WITH OPENAI AND ANTHROPIC HAVING TO COMPETE WITH MEGA PLAYERS, THE

38:05 LIKES OF META, GOOGLE, AND MICROSOFT. THAT IS WHAT THE ASIAN CHIPMAKERS HAVE TO CHALLENGE. ON THE OTHERS HAVE THINGS, YOU HAVE THE RELATIVE EASE OF RAISING MONEY FROM THE CHINESE HYPERSCALERS, SO THAT ECOSYSTEM LOOKS A LITTLE MORE RESILIENT THAN WHAT THE KOREANS AND TAIWANESE ARE FACING. IN TERMS OF FLOW, WE ARE IN A TOUGH SPACE WITH MONEY COMING UP AGGRESSIVELY FROM KOREA AND TAIWAN INTO SOME OF THESE U.S. VALUE NAMES OR LARGE CAPS.

38:36 IT’S INTERESTING FOR ME TO SEE A DEFENSIVE POSTURE IN THE U.S. MARKET. YOU HAD PHARMACEUTICAL AND FOOD COMPANIES DO REALLY WELL. THAT SPEAKS TO INVESTORS BATTENING DOWN THE HATCHES INTO THE LAST QUARTER OF THE YEAR, AND IT DOES NOT SET UP REALLY WELL INTO THE BACK HALF OF THE YEAR. HAIDI: ANTHONY STEPHENS, OUR BLOOMBERG MARKET REPORTER. INDIA’S NATIONAL INVESTMENT SAYS IT IS LOOKING TO INVEST AROUND $800 BILLION ACROSS THE

39:07 DATA CENTER CHAIN. THE CEO ALSO LAID OUT WHY INDIAN INFRASTRUCTURE CONTINUES TO ATTRACT GLOBAL INVESTMENT. >> INDIAN INFRASTRUCTURE HAS BECOME VERY ATTRACTIVE FOR INTERNATIONAL INVESTORS. WHEN I MEET WITH INVESTORS HERE, THEY ARE INTERESTED IN PUTTING MONEY TO WORK IN INFRASTRUCTURE, AND IT’S LARGELY DRIVEN BY THE FACT THAT IT IS DOMESTIC DEMAND ATTRACTING INVESTMENTS INTO OUR

39:39 COUNTRY. WE JUST DID THE FIRST CLOSE OF OUR SECOND INFRASTRUCTURE FUND BY $2 MILLION, AND ALREADY EXISTING INVESTORS HAVE PAID UP. >> YOU JUST RAISED $2 BILLION, AS YOU SAY. HOW DO YOU PLAN TO DEPLOY THAT? >> WE WERE INVESTING IN TRANSPORTATION, ROADS, AIRPORTS. WE WILL INVESTIGATE IN DISTRIBUTION AND DIGITAL DATA

40:11 CENTERS. THE DIGITAL SIDE, THE ENTIRE AI ECOSYSTEM, THE DATA CENTERS. AS I WAS TELLING YOU EARLIER, OUR CLIENTS WANT TO PUT LARGE SUMS OF MONEY TO WORK AS CO-INVESTMENTS. $800 BILLION OF EQUITY

40:42 INVESTMENT WITH ABOUT 60% COMING FROM AND ARE FUNDS AND 40% COMING FROM THE LP’S WE ARE IN DISCUSSIONS WITH. YVONNE: HOW DO YOU WEIGH THE METRICS BEHIND TO APPLY CAPITAL INFRASTRUCTURE TO DIGITAL INFRASTRUCTURE? HOW SIGNIFICANT IS THE DATA CENTER PORTION? >> IT IS VERY SIGNIFICANT. I WOULD ARGUE THAT ALL

41:16 INVESTMENTS ARE ATTRACTIVE FROM A RETURN/RISK POINT OF VIEW. DATA CENTERS ARE THE EMERGING SIDE OF IT, AND THAT IS INTERESTING TO US AS A GP, BUT THE ENTIRE VALUE CHAIN IS TRANSMISSION, RENEWABLE INVESTIGATION. YVONNE: DO YOU PUT A NUMBER ON IT, HOW SIZABLE THAT INVESTMENT IS? >> WE HAVE RAISED – THIS FUND IS GOING TO BE ABOUT $3.2 BILLION. OF THAT, APPROXIMATELY 700

41:49 BILLION DOLLARS, $800 BILLION WILL GO INTO DATA CENTERS. WE HAVE CO-INVESTMENT FROM OUR LP’S AS WELL. YVONNE: YOU MENTIONED ABOUT THIS COINVESTMENT FUND YOU PLAN TO RAISE. ANY PROGRESS? >> THIS IS NOT A SEPARATE FUND WE ARE RAISING.

42:20 OUR LP’S ARE INTERESTED IN CO-INVESTING ALONGSIDE US. IT IS NOT A SEPARATE FUND. PAUL: THAT IS INDIA’S NATIONAL INVESTMENT AND INFRASTRUCTURE CEO. COMING UP FROM THE NEW ECONOMY FORUM TODAY, A PROMINENT AI CREDIT, GARY MARCUS, THE COFOUNDER OF AN INDIAN RENEWABLE ENERGY GIANTS AND HEAD OF THE U.S.-INDIA

42:51 STRATEGIC OWNERSHIP FOR THEM, AND ALSO FORMER ECB PRESIDENT AND ITALIAN PRIME MINISTER MARIO DRAGHI WILL JOIN US IN CONVERSATION LATER IN THE DAY. HAIDI: THIS AS WE CONTINUE TO WATCH THE DATA POINTS THAT WILL INFORM WHAT DATA CENTERS WILL DO. AUGUST MACHINE ORDERS RISING 5.2%, A BIG BEAT ON EXPECTATIONS OF 3.2% ON A MONTH ON MONTH BASIS. 18.6% IS THE GAIN AGAINST EXPECTATION OF 15.6%.

43:22 ROBUST NUMBERS WHEN IT COMES TO CAPEX SPENDING ON CORE MACHINE ORDERS. THIS COMES AT A TIME WHEN WE HEAR BANK OF JAPAN OFFICIALS MIGHT BE LEANING AGAINST WHAT WOULD BE A RARE BACK-TO-BACK RATE HIKE THIS MONTH WHILE LOOKING AT THE POSSIBILITY OF ANOTHER MOVE AS SOON AS DECEMBER. THAT IS STRENGTHENING WHEN IT COMES TO THE DATA FROM CERTAINLY ADDING TO THAT ARGUMENT. MORE AHEAD ON “THE ASIA TRADE.” THIS IS BLOOMBERG.

44:01 HAIDI: UKRAINIAN LEADER VOLODYMYR ZELENSKYY HAS ACCUSED PRESIDENT TRUMP AND ELON MUSK OF RESTRICTING HIS MILITARY’S ACCESS TO THE SATELLITE TECHNOLOGY. HE SAYS IT HAS LED TO CIVILIAN DEATHS BECAUSE UKRAINIAN FORCES CAN NO LONGER INTERCEPT RUSSIAN DRUMS AS EFFECTIVELY. HE POSTED ON X THAT ANY SUCH LIMITS ARE DECIDED BY THE AMERICAN MILITARY AND ULTIMATELY TRUMP. A SENIOR U.S. OFFICIAL HAS DENIED THE ALLEGATION. THE JAPANESE PRIME MINISTER HAS SUFFERED A BLOW WITH ONE OF HER

44:34 MINISTERS QUITTING OVER ALLEGATIONS OF POSSIBLE VOTE BUYING. TAKAICHI SHE HAS – SAYS THAT SHE HAS ACCEPTED THE RESIGNATION AND TAKES RESPONSIBILITY FOR APPOINTING HIM AS AGRICULTURE MINISTER. PAUL: LET’S LOOK AT SOME OF THE MARKET ACTION WE SEE AT THE MOMENT IN AUSTRALIA. WE ARE OFF BY ABOUT 1%, PERHAPS TO BE EXPECTED, BUT NOT A LOT OF EXPOSURE TO THE TECH STORY

45:05 IN AUSTRALIA. IT IS TO THE RIGHT OF THAT BOARD WHERE YOU SEE THE REAL ACTION START TO HAPPEN. NIKKEI FUTURES DOWN AHEAD OF THE OPEN. KOSPI FUTURES DOWN ALMOST 6%. IT HAS BEEN A HORRIBLE WEEK FOR THE KOSPI AND IT LOOKS LIKE WE WILL SEE FURTHER LOSSES TODAY. THOSE BIG NAMES, SK HYNIX AND SAMSUNG ELECTRONICS, WERE ALREADY TRADING LOWER AHEAD OF THE OPEN AS WELL. HOT CPI DATA DID NOT REALLY HELP RISK SENTIMENT.

45:36 3.7% WAS THE NUMBER, THAT WAS MORE THAN EXPECTED. THE NUMBER IS ALSO VERY BROAD BASED. PRETTY MUCH THE PRICE ON EVERYTHING WENT UP, SOME OF THOSE SEEING RECORD ADVANCES. THAT IS STOKING BETS WE WILL SEE MORE FED TIGHTENING. WE WILL PROBABLY HEAR FROM KEVIN WARSH LATER ON TODAY, AND YOU ARE SEEING THAT REFLECTED IN THE PRICES TODAY OF GOLD AND SILVER. WE SAW A GOLD HOLDING DECLINES INITIALLY AFTER THAT JUMP IN INFLATION. IT IS TAKING UP.

46:07 SILVER HOLDING JUST ABOUT THAT $56 PER OUNCE LEVEL. HAIDI: THE QUESTION IS HOW MUCH FURTHER WE CAN SEE THAT PUSH HIGHER WITH THE DOLLAR BECAUSE IT HAS TO BE TRACED SOME OF THOSE GAINS AND SETTLED A LITTLE BIT LOWER. WE SAW THE RALLY OVERNIGHT ON THAT HOT U.S. INFLATION TRADE. WE ARE WATCHING THE YUAN IS WELL GOING INTO THE START OF

46:38 CHINA TRADING. THIS IS BLOOMBERG. ♪ HAIDI: THIS IS “THE ASIA TRADE.” IT LOOKS LIKE IT COULD BE QUITE A CHALLENGING SESSION AS CONFLUENCE OF HEIGHTENED FED

47:08 EXPECTATIONS WITH THE INFLATION PRINT COMING IN HARDER THAN EXPECTED, AND WE ARE SEEING A REAL DIGGING IN WHEN IT COMES TO THIS TECH SELLOFF AS WELL. PAUL: EXACTLY. THE COREWEAVE CEO SUMMED IT UP SAYING THIS IS JUST IRRATIONALITY, SO IT UNDERSCORES THE DEBATE WE SEE IN THE MARKET ABOUT WHAT IS GOING ON IN THAT SPACE. HAIDI: IT HAS BEEN SUCH A BIG CLIMB TO THE TOP, AND WITH THAT, WE SEE

47:39 A FEW JITTERS IN THE MARKET, NOT HELP BY THE FACT THAT WE SEE SOME OF THESE CONCERNS BEING REVIVED BY HOW QUICKLY THE FED WILL GO AND HOW MUCH THAT WILL IMPACT THE MARKETS, INCLUDING BOND MARKETS, AND WE SEE THAT ACROSS JGB FUTURES IN PARTICULAR. THE FACT THAT THEY ARE MARCHING HIGHER UNDERSCORES THAT RISK SENTIMENT, LOOKING PRETTY SOUR, NOT JUST FOR EQUITIES BUT OTHER ASSET CLASSES AS WELL. TREASURIES DID SETTLE DOWN EVENTUALLY AT SORT OF THE END OF THE SESSION, BUT WE SEE THOSE JITTERS CONTINUE TO THE

48:10 ASIA SESSION. LET’S GET YOU TO THE START OF TRADING IN JAPAN. WE DID GET SOME CORE MACHINE ORDERS NUMBERS THAT WERE QUITE STRONG, SO THAT LEANS INTO THE STORY THAT WE COULD SEE A MORE CONFIDENT, MORE ASSERTIVE BOJ IN TERMS OF THE REPORTING WE DID ON POTENTIAL BACK MOVES AND AGAIN IN SEPTEMBER – AGAIN IN DECEMBER, TWO. WE DID SEE THE DOLLAR PULLING BACK SOMEWHAT.

48:41 UNDOUBTEDLY, WE HAVE SEEN YOU YET ANOTHER SESSION OF LOSSES TO THE TUNE OF ABOUT 4% FOR THE SEMICONDUCTORS INDEX OVERNIGHT IN THE U.S. THAT WILL CONTINUE PUSHING THROUGH. WE ALREADY HAD MEDICATION THE LIKES OF SAMSUNG AND SK HYNIX HAVE BEEN DOWN IN THE PREMARKET AND THAT IS HOW THEY HAVE COME ONLINE. PAUL: OUCH, BUT TO BE FAIR, SAW IT COMING. PART OF THAT INSPIRED BY THE CPI PRINT SAW COMING OUT OF THE U.S. HARDER THAN EXPECTED AND EVERYWHERE IS PRETTY MUCH THE HEADLINE. BOTH THE TWO AND 10-YEAR

49:16 SPIKING BUT THEN PULLING BACK A BIT. THE 10-YEAR LOWER THAN IT WAS AT THE START OF THE WEEK. CRUDE PRICES, WE HAVE NOT EVEN TALKED ABOUT THAT YET. THERE WAS A CARGO SHIP SUNK IN THE STRAIT OF HORMUZ AFTER BEING STRUCK BY UNKNOWN PROJECTILES, SADIQ KHAN – SO THE CONFLICT IN THE MIDDLE EAST VERY MUCH ALIVE. HAIDI: YOU SAID OUCH. CERTAINLY IS WHEN IT COMES TO THE KOSPI. WE ARE SEEING THIS DEEPENING OF

49:50 THAT WATER SHIP ROUTE. THE FOREIGN SELLING HAS BEEN A BIG PART OF THE STORY. WE SAW THAT FALL UNDER THE 6000-POINT LEVEL, SO EARLY GAINS FROM THE ASML WE SAW PREVIOUSLY IN THE WEEK, BUT ALL THIS NOT ADDING TOO MUCH JOY FOR KOREAN MARKETS. THE CHIEF APAC REGIONAL EQUITY STRATEGIST AT GOLDMAN SACHS JOINS US NOW. TALK US THROUGH THIS. WHEN IT COMES TO TECH, PREVIOUS ITERATIONS OF THIS, WE WOULD SEE SOME REALLY ROBUST NUMBERS, SOMETHING POSITIVE AS A CATALYST, AND WE WOULD SEE THAT

50:22 RECOVERY. THE BEARS SEEM TO BE DIGGING THEIR HEELS IN AT THE MOMENT. TIM: OH, FOR SURE. LET’S GIVE A MARK TO MARKET RIGHT NOW. CLEARLY, THE PRICE ACTION IS VERY NEGATIVE. THE KOSPI IN AGGREGATE BROKE THE MOVING AVERAGE A COUPLE OF DAYS AGO. FROM A PURE TRADING STANDPOINT, THINGS LOOK BLEAK.

50:54 YOU HAVE SEEN THAT THE APPROXIMATE CAUSES FOR THAT ARE CONCERNS ABOUT HIGH INTEREST RATES BUT ALSO ABOUT ACCESS SUPPLIED, SOME OF THAT COMING FROM SOME CHINA NEWS WHICH WE CAN GET INTO LATER, AND THEN ALSO CONCERNS ABOUT IF THE DEMAND SIDE WILL BE AS STRONG AS PEOPLE HAVE BEEN EXPECTING IN TERMS OF CAPEX BUILD AND ALSO FUNDING OF THE CAPEX WITH HYPERSCALERS. THAT IS SORT OF THE MARK TO OUR VIEW IS THAT THE MARKET IS OVERLY BEARISH. I KNOW THAT SOUNDS PERHAPS FOOLISH OR UNDULY CONFIDENT,

51:26 BUT WHEN WE LOOK AT THE OBJECTIVE, FUNDAMENTAL DATA, WE SEE NO SIGN THAT DEMAND IS SLOWING DOWN. FOR EXAMPLE, YOU SAW STRONG EXPORTS FROM CHINA YESTERDAY, INCLUDING CHIP EXPORTS. THAT WAS 1% INCREASE IN VOLUME AND 130%-PLUS INCREASE IN PRICE. THEY ARE SHOWING CHINA IS ALSO BENEFITING FROM A TIGHT SUPPLY SITUATION AND HIGHER PRICING. ASML NUMBERS WERE ALSO QUITE STRONG AND INDICATED ADDITIONAL NEED TO INVEST FURTHER INTO

51:59 2029 AND 2030. IF YOU LOOK AT THE TRACKING OF TELECOM USAGE ON SOME OF THE MORE TIMELY INDICATORS, THAT HAS BASICALLY DOUBLED IN THE LAST NINE MONTHS AND IS ON TRACK IF YOU RUN THE NUMBERS TO REACH 24 TIMES INCREASE IN TOTAL DEMAND BETWEEN 2026 AND 2030. OUR REVIEW CONTINUES TO BE THAT WE SEE STRONG INCREASE IN DEMAND WHICH WILL BE SUSTAINED. SUPPLY STILL AT RECORD SHORTFALLS THIS YEAR. WE THINK WE WILL GET DEEPER NEXT YEAR AND STILL BE IN SIGNIFICANT SHORT ALL IN 2028,

52:30 WHICH STILL LEADS TO A POSITIVE PRICE ENVIRONMENT FOR THE AI SUPPLY CHAIN, AND WE THINK THAT LONGER AND STRONGER CYCLE, WHICH IS OUR COLLECTIVE VIEW, IS SOMETHING THE MARKET IS UNWILLING TO EMBRACE RIGHT NOW AND IS PRICING VERY MUCH THE LEFT A TALE OF DISTRIBUTIONS. GIVEN THE EVIDENCE AT HAND, WE THINK THAT REALITY WILL TURN OUT TO BE STRONGER THAN MARKETS ARE CURRENTLY PRICING, AND THEREFORE, WHEN WE CLEAR OUT THIS CURRENT NEGATIVE MOMENTUM,

53:02 THAT WILL SET THE MARKET UP FOR ANOTHER RUN HIGHER. HAIDI: IF YOU ARE A LONGER-TERM INVESTOR THAT SUBSCRIBES TO THAT THESIS, THE CONTRIBUTION TO EARNINGS, AS YOU SAY, IN THIS REGION, DO YOU TRY TO CATCH THAT FALLING KNIFE RIGHT NOW WHEN IT COMES TO KOREA AND SOME OF THE NAMES IN I WANT TO DO YOU STEP ASIDE AND LOOK AT THE COMPELLING VALUATION OPPORTUNITIES IN CHINA AI? TIM:

53:34 IF YOU’LL WILL ALLOW ME, I KIND OF SAY BOTH. OBVIOUSLY, CATCHING A FALLING KNIFE IS VERY DANGEROUS, AND WE HAVE TO RESPECT PRICE ACTION. THERE’S WAYS YOU CAN MITIGATE THE RISK AROUND THAT. THERE ARE STRATEGIES WHICH WE HAVE EMBRACED WHICH HELPED TO GIVE MORE ASYMMETRICALLY POSITIVE RISK/REWARD OUTCOMES. FROM A TRADING PERSPECTIVE, YOU HAVE TO STEP GENTLY RIGHT NOW FOR OBVIOUS REASONS. DOUBLE-CLICKING ON THE CHINA AI SIDE OF THINGS, WE JUST ISSUED A QUITE DETAILED REPORT TWO DAYS AGO WHERE WE MAPPED OUT

54:09 THE ENTIRE CHINA AI UNIVERSE, SUBDIVIDING IT INTO THE FIVE KEY COMPONENTS THAT JENSEN HUANG HAS ARTICULATED – POWER, SEMICONDUCTOR MEN, MEMORY MODEL FORMULATION, AND FISCAL AI, ETC., BUT THE KEY POINT I WANT TO MAKE IS YOU ALSO SUBDIVIDE ACCORDING TO THE SPECTRUM SERVING EXTRA DEMAND VERSUS THOSE SERVING DOMESTIC DEMAND. I THINK IT’S FAIR TO SAY THE POLICY IN CHINA IS CLEARLY FOCUSED ON DEVELOPING CHINA’S

54:42 INDEPENDENCE AND SELF-SUFFICIENCY IN TERMS OF THE WHOLE SEMICONDUCTOR SUPPLY CHAIN AND WITH THAT POLICY AT YOUR BACK, BECAUSE OF INTERESTING FUNDAMENTALS, IT IS HARD TO HAVE THE SAME OVERREACTION AND EXCESS SUPPLY BUILDUP DOMESTICALLY GIVEN THE FACT THAT IT TAKES $15 BILLION TO $25 BILLION, SO YOU JUST WILL NOT HAVE THE SAME DEGREE OF RISK AS YOU SAW IN OTHER INDUSTRIES PREVIOUSLY. WE THINK THAT DOMESTICALLY IN CHINA THAT THERE ARE A LOT OF

55:13 VERY ATTRACTIVE AI OPPORTUNITIES, AND THAT IS SOMETHING WE ENCOURAGE INVESTORS TO FOCUS ON. PAUL: YOU ARE OPTIMISTIC ON CHINA, BUT AS YOU SPEAK, WE HAVE SOME OF THESE NORTH ASIAN TECH STOCKS AS WELL THAT ARE SUFFERING PRETTY BADLY. ADVENTISTS ARE 4%, SK HYNIX OFF 6.7%, AND THAT HAS BEEN PRETTY MUCH THE START OF THE WEEK, BUT IF I CAN REFRAME THE FALLING KNIFE REMARK, COULD THIS BE A DIP BUYING OPPORTUNITY?

55:46 ARE YOU SIMILARLY OPTIMISTIC ABOUT THE OUTLOOK FOR THESE STOCKS? TIM: I THINK THE LONGER TERM UPSIDE IS POSITIVE. THAT SOUNDS LIKE AN ODD STATEMENT TO MAKE WHEN THERE’S ALL THIS RED ON THE SCREEN, BUT LET’S PUT SOME NUMBERS ON THE TABLE. CURRENT PRICING, STOCKS ARE TRADING IN ROUND NUMBERS ABOUT THREE TIMES EARNINGS, AND AS WAS MENTIONED PREVIOUSLY, WE THINK EARNINGS ARE LIKELY TO SUSTAIN. WE WILL NOT SEE THE SAME DEGREE OF GROWTH WE SEE THIS YEAR. THAT IS SUPERNORMAL GROWTH, BUT

56:20 WE THINK DEMAND AND SUPPLY CIRCUMSTANCES WE HAVE MAPPED OUT FOR THE BROADER INDUSTRY, THAT PROFITS CAN BE SUSTAINED AND IN FACT INCREASE IN 2027 AND 2028, AND WE ARE STILL OPTIMISTIC ABOUT THE OUTLOOK SOMEWHAT BEYOND THAT. GIVEN THE FACT THAT THEY STOCKS ARE TRADING AT THESE MULTIPLES, WE THINK THE PRICE IN YEN, EFFECTIVELY IMMINENT COLLAPSE IN PROFITABILITY, AND IF THAT DOES NOT COME THROUGH, THAN I THINK THE RISK/REWARD WOULD PROVE TO BE MORE CONSTRUCTIVE. THE FINAL POINT I WANT TO MAKE IS IT IS NOT JUST PHANTOM

56:54 NUMBERS IN TERMS OF WHAT VALUATIONS ARE. THERE’S ACTUALLY CASH RETURN TO SHAREHOLDERS TAKING PLACE. 50% OR MORE IS BEING RETURNED IN THE FORM OF DIVIDENDS AND STOP BUYBACKS, WHICH OVER TIME SHOULD PROVE TO BE SOMETHING WHICH IS CONSTRUCTIVE, ESPECIALLY WHEN YOU TALK ABOUT THE SORT OF LOW MULTIPLES. PAUL: BEFORE WE LET YOU GO, WE SPENT A LOT OF TIME UNPACKING THE AI/TECH STORY SO FAR IN THIS CONVERSATION, BUT A LOT OF INVESTORS ARE PROBABLY STILL NERVOUS ABOUT THE CONCENTRATION RISK. WHAT IS YOUR ADVICE FOR

57:27 DIVERSIFY AND CONSIDERING THAT THE AI STORY IS TOUCHING PRETTY MUCH EVERYTHING RIGHT NOW, EITHER IN TERMS OF FUNDING OR IN TERMS OF HOW IT IS DISRUPTING INDUSTRIES? TIM: IT IS A FANTASTIC QUESTION, AND WE HAVE DONE SOME DETAILED WORK ON THAT, A FANTASTIC PIECE WE DO NOT HAVE TIME TO GO INTO NOW, BUT ONE OF THE KEY POINTS FROM THAT IS IF YOU LOOK AT THE MSCI ASIA EX JAPAN INDEX, THE STOCKS ACCOUNT FOR ABOUT – A ODD STOCKS ACCOUNT FOR ABOUT 40% OF CAPITALIZATION, WHICH IS A RECORD HIGH. THE WAY THINGS HAVE EMERGED,

58:02 YOU DO HAVE THAT CONCENTRATION RISK WHERE THE TOP THREE STOCKS – TSMC, SAMSUNG, SK HYNIX – COLLECTIVELY ARE 25% OF THE INDEX. WHAT THAT MEANS IS INVESTORS DO NEED TO FIND WAYS TO DIVERSIFY, AND THERE ARE MANY THINGS THAT ARE ATTRACTIVE AWAY FROM THE BROADER TECH SPACE, AND THAT WOULD INCLUDE, FOR EXAMPLE, THE THEME OF TECH SPENDING, POWER INVESTMENT, SHIPBUILDING, AND ONE THEME WHICH I PARTICULARLY

58:33 WANT TO CALL OUT WHICH I THINK IS RELEVANT IN THE CURRENT ENVIRONMENT IS THE THEME OF IMPROVING SHAREHOLDER RETURN. THIS IS MUCH LOWER VOLATILITY BUT HIGHER SHORT RATIO, HIGHER REWARD VERSUS RISK, AND IT IS ONE WHERE YOU SEE CERTAINLY POSITIVE CONTAGION ACROSS ASIA. JAPAN HAS REFORMED ITS CORPORATE GOVERNANCE. KOREA HAS FAST FOLLOWED. CHINA IS DOING THIS AS WELL. SINGAPORE IS DOING IT, AND WE SEE AN ARRAY OF STOCKS WHICH

59:05 OFFER GOOD DIVIDEND YIELDS GROWING EARNINGS WELL AND AT REASONABLE VALUATIONS, SO I THINK IT IS A MUCH MORE STABLE AND SECURE WAY TO INVEST WHEN WE ARE IN THE MUCH MORE CHALLENGING ENVIRONMENT WE FIND OURSELVES TODAY, FROM HEADWINDS, HIGHER BONDS, UNCERTAINTY ABOUT THE U.S. MIDTERM ELECTION AND HIGHER ENERGY PRICES COMPLEMENTED BY THE UNCERTAINTY WE TALK ABOUT THIS MORNING IN THE AI SUPPLY CHAIN. I THINK THE IMPROVEMENT IN CORPORATE GOVERNANCE IS ONE THAT PLAYS WELL AGAINST THE CURRENT MARKET BACKDROP. PAUL:

59:38 THANKS, AS ALWAYS, FOR YOUR TIME AND ANALYSIS. IT IS THE THIRD AND FINAL DAY OF THE BLOOMBERG NEW ECONOMY FORUM IN NEW DELHI. LATER, WE WILL BE IN CONVERSATION WITH FORMER ECB PRESIDENT AND FORMER ITALIAN PRIME MINISTER MARIO DRAGHI. THIS IS BLOOMBERG. ♪

1:00:15 PAUL: LET’S CHECK IN ON WHAT WE SEE IN ASIAN MARKETS AFTER 15 MINUTES OF TRADE. IT IS AN UGLY START, AS WE ANTICIPATED. YOU CAN SEE SOME OF THE BIGGEST DECLINERS THERE. SK HYNIX DOWN BY MORE THAN 8%. THE KOREA EXCHANGE HAS ACTIVATED THE SIDECAR – THAT IS UNSURPRISING, 2 – TWO TRIED TO HALT KOSPI PROGRAM SELLING. COREWEAVE SHARES BONDS HAVE HIT LEVELS TYPICALLY INDICATING DISTRESS.

1:00:54 THE CEO SAYS THE MARKET IS ACTING IRRATIONALLY, AND HE REMAINS CONFIDENT IN THE COMPANY’S BUSINESS MODEL. LET’S GET TO SAN FRANCISCO FOR MORE WITH OUR TECH EDITOR, NICK TURNER. SOMETHING TO SEE HERE OR NOTHING TO SEE HERE AS THE COREWEAVE CEO SAYS? NICK: I’M SURE IT IS SOMETHING BETWEEN THOSE TWO EXTREMES, BUT THIS IS A COMPANY THAT HAS OBVIOUSLY BEEN VERY SUCCESSFUL. ONE OF THE BIGGEST IPO’S OF LAST YEAR WITH THE PROMISE OF BUILDING OUT THE AI

1:01:25 INFRASTRUCTURE. IT IS A CATEGORY COMPANIES WOULD CALL NEIL CLOUD, AND IT CERTAINLY HAS TREMENDOUS DEMAND THAT IT IS WORKING WITH, AND SOME HUGE CUSTOMERS. THE MAIN QUESTION IS THAT IT IS A VERY EXPENSIVE BUSINESS THEY ARE GETTING INTO, AND IF ULTIMATELY THE COSTS WILL BE TOO GREAT, BUT AS YOU MENTIONED, THE CEO IS CONFIDENT THAT THE COMPANY IS ON TRACK AND THAT IT WILL HAVE ENOUGH ORDERS TO BE ABLE TO COVER ITS DEBT.

1:01:55 HAIDI: IT IS PERHAPS NOT THE MOST IDEAL MARKET CONDITIONS TO BE PREPARING FOR AN IPO. WE KNOW THAT WILL HAPPEN FOR ANTHROPIC NO LATER THAN THE END OF THIS YEAR. WE HAVE THAT NOVEMBER DATE WE ARE WORKING TOWARDS. ARE THE REVENUE NUMBERS ENOUGH TO IMPRESS INVESTORS, DO YOU THINK? NICK: WITH ANTHROPIC, OBVIOUSLY, IT IS STILL MOVING ALONG TOWARDS THAT IPO. IT SEEMS THERE HAS NOT BEEN TOO MUCH HESITATION, MAYBE A LITTLE MORE FOR OPENAI, BUT WITH EVERY

1:02:28 SET OF NUMBERS THAT COMES OUT THAT LOOKS PRETTY SOLID, I THINK IT IS PROBABLY REASSURING TO PEOPLE. IT HAS BEEN KIND OF A STEADY STREAM OF VARIOUS METRICS FOR BOTH, AND I THINK IT MAY COME DOWN IN THE END TO WHAT SENTIMENT FEELS LIKE. IF PEOPLE FEEL GOOD ABOUT AI AT THAT MOMENT. UNTIL THIS POINT, CERTAINLY, PEOPLE HAVE BEEN INTERESTED IN GETTING INTO ANTHROPIC AND OPENAI, AND I FEEL LIKE THEY ARE STILL ON THAT OTHER SIDE.

1:03:00 PAUL: THANK YOU. TO THE TECH SUPPLY CHAIN, ASML SHARES ROSE AFTER GAVE A STRONG DEMAND OUTLOOK AND SAID IT IS SEEKING TO INCREASE PRODUCTION OF ITS CHIPMAKING MACHINES. IT’S AT ITS CUSTOMERS ARE PUSHING TO EXPAND SO QUICKLY THAT IT WILL NOT BE ABLE TO MEET DEMAND IN THE NEXT TWO YEARS. ONE OF THOSE CUSTOMERS IS TSMC. IT WILL BE REPORTING EARNINGS AND FACING A HIGH BAR TO IMPRESS INVESTORS AFTER THE STRONG EARNINGS FROM GLOBAL

1:03:31 CHIPMAKERS FAILED TO BOOST AI TRADE. LET’S GET MORE FROM ASIA EQUITIES REPORTER CHARLOTTE GANG. QUITE A DAY TO BE ANNOUNCING EARNINGS. A BIT OF EXTRA PRESSURE FROM TSMC. WHAT IS THE MARKET EXPECTING? WHAT QUALIFIES AS A BLOW OUT? CHARLOTTE: THE MARKET EXPECTS A STRONG SET OF RESULTS FROM TSMC. WE ALREADY KNOW IT HAS REPORTED A 15% JUMP IN SALES, SO EYES WILL BE TURNING TO ITS PROFITABILITY AND IF IT HAS THE ABILITY TO PROTECT THAT AS TSMC

1:04:05 IS NOW DOING SO MUCH OVERSEAS EXPANSION, AND A LOT OF ATTENTION HAS TURNED TO HAVE TSMC WILL BE FRAMING ITS OUTLOOK FOR NEXT YEAR’S CAPITAL SPENDING. THE EARNINGS CALL IS USUALLY WHERE THEY CAN PROVIDE A FIGURE FOR THAT, BUT NONETHELESS, THE MARKET IS EXPECTING 75 BILLION DOLLARS CAPITAL SPENDING FOR NEXT YEAR. GOLDMAN IS LOOKING AT $90 BILLION OR $85 BILLION FROM UBS, SO THAT SHOWS YOU THERE IS ELEVATED EXPECTATIONS INTO THE SET OF RESULTS, AND IF YOU LOOK AT WHAT HAPPENED TO SAMSUNG

1:04:38 AFTER REPORTING NEARLY NINE FOOT PROFIT LAST WEEK, STILL, SHARES DROP. I THINK WHAT WE NEED FROM TSMC IS MORE THAN A STRONG BEAT, BUT MORE CONCRETE SIGNALS THAT THE AI BOOM HAS DURABILITY INTO THE NEXT COUPLE OF YEARS AND ALSO THOSE EXECUTION RISKS HAVE SOME INVESTORS GETTING WORRIED ABOUT IF AI DATA CENTERS ACTUALLY GET BUILT OUT. YOU HAD ALL THIS LOCAL BACKLASH, SO THEY WILL BE TURNING TO TSMC, WHICH HAS BEEN – WHICH HAS WEATHERED DECADES OF THIS BOOM AND BUST CYCLE.

1:05:17 HAIDI: THERE IS ALSO BROADLY CONCERNED ABOUT REGULATORY CONSTRAINTS, SOME OF THE FLASHPOINTS ABOUT AI WITHIN THE COMMUNITIES. ARE THOSE THINGS TSMC MIGHT BE ABLE TO COMMENT ON? CHARLOTTE: I THINK THAT IS WHAT INVESTORS ARE HOPING TO SEE, BUT THE EXECUTION IS NOT SOMETHING DIRECTLY IN TSMC’S OPERATION BECAUSE INVESTORS SEE THEM AS A SAFE BET BECAUSE THEY HAVE YEARS OF LEADERSHIP.

1:05:48 THEY ARE NUMBER ONE IN TERMS OF STRONG EXECUTION SKILLS, BUT I THINK TSMC IS UNIQUELY POSITIONED THAT THEY DO SEE ON THE SUPPLY CHAIN THE DIFFERENT PARTS OF THE SUPPLY CHAIN. IF THERE WILL BE ANY HICCUPS, WITH PHYSICAL BOTTLENECKS OR SOME REGULATORY UNCERTAINTIES, I THINK IT WILL BE ABLE TO PROVIDE SOME VISIBILITY, SO THAT IS CERTAINLY WHAT INVESTORS ARE HOPING TO GET FROM TSMC. HAIDI: BLOOMBERG ASIA EQUITIES REPORTER CHARLOTTE GANG –

1:06:20 CHARLOTTE YANG. BANK OF AMERICA’S BIGGEST REGULATORY FIND IN A DECADE LOOMED OVER OF ITS RESULTS. CEO BRIAN MOYNIHAN BRUSHED ASIDE CONCERNS, AGREEING TO CALL IT A SETTLEMENT AND TO MOVE ON. BRIAN: WE HAVE TO UNDERSTAND A CLEAR PATH FORWARD. WE HAVE BEEN TO COMPUTE – COMPLETING TASKS OVER THE LAST SEVERAL MONTHS, AND WE WILL CONTINUE TO FINISH IT UP. THERE’S A LOT OF TECHNICAL DISCUSSION ABOUT IT, BUT AT THE END OF THE DAY, WE UNDERSTAND WHAT TO DO, WE ARE DOING IT, AND WE WILL DELIVER. HAIDI:

1:06:56 LET’S BRING IN FINANCE REPORTER KATHERINE DOHERTY. MARKETS HAVE HAD TIME TO PARSE THROUGH WHAT WAS A BIGGER THAN EXPECTED FINE. IS THERE AN EXPECTATION THAT THIS MIGHT BE AN ISSUE THAT CONTINUES TO DRAG? CATHERINE: THERE WERE A LOT OF ISSUES ON THE EARNINGS CALL. YOU HAD THE FINE AND THEN THE THIRD QUARTER RESULTS, AND THE MAJORITY OF TALK FROM ANALYSTS WAS ALL ABOUT THIS FINE AND WHAT TO EXPECT IN THE FUTURE, IF THINGS LIKE THE SETTLEMENT

1:07:27 AND THE COSTS ARE ALREADY BUILT INTO THEIR FUTURE AND EXPECTED SPENDING GOING FORWARD. WHAT MANAGEMENT HAS SAID, AS YOU HAVE HEARD FROM BRIAN MOYNIHAN HIMSELF, IS THAT THIS IS SOMETHING THEY ARE CALLING – IT IS A ONE-TIME SETTLEMENT, SO THEY ARE NOT INDICATING THERE WILL BE ANY FURTHER, BUT WHAT WAS APPARENT THROUGH THE QUESTIONING WAS THE TIMING OF ALL OF THIS AND IF THE ISSUES THAT TREASURY AND REGULATORS HAVE FLAGGED ARE RESOLVED. WHEN ASKED IF THERE WAS 90% OF

1:07:58 THE WORK DONE, 100%, MANAGEMENT DID NOT GIVE AN INDICATION OF HOW FAR ALONG THEY ARE ON RESOLVING SOME OF THESE ISSUES. THEY ALSO WOULD NOT SAY, WHEN ASKED ABOUT THE NUMBER OF EMPLOYEES THAT WERE APPLYING TO FIX SOME OF THESE PROBLEMS. THEY DID SAY IT WAS IN THE THOUSANDS BUT DID NOT INDICATE AN EXACT NUMBER OR IN THE FUTURE IF THEY WILL HAVE TO ADD MORE EMPLOYEES. WHILE THEY ARE MOVING FORWARD AND SAY THAT THEY CONTINUE TO WORK ON THESE PROBLEMS THAT

1:08:30 HAVE BEEN IDENTIFIED YEARS AGO – THIS IS NOT SOMETHING THAT CAME OVERNIGHT – THERE ARE STILL MANY QUESTIONS THAT WERE UNANSWERED, AND IT SEEMS LIKE WITH THE STOCK REACTION TO, THIS IS SOMETHING THAT INVESTORS ARE LOOKING FOR MORE CLARITY ON AS WELL. PAUL: DIFFERENT STORY FROM MORGAN STANLEY. PRETTY MUCH A GOOD NEWS STORY HERE. WHAT ARE THEY SAYING ABOUT THE COMING 12 MONTHS?

1:09:03 KATHERINE: LOOKING FORWARD, IF THERE ARE A STRONG PIPELINE OF IPL’S, WHICH IS EXPECTED, AND MORGAN STANLEY IS ONE OF THE BANKS THAT HAS BEEN AT THE FOREFRONT OF THESE BIG PUBLIC OFFERINGS, THAT WILL FEED INTO THEIR WEALTH BUSINESS. THEY ARE HELPING SOME OF THEIR BOTH EMPLOYEES OF THESE COMPANIES AND FUTURE WEALTH EARNERS BOTH BECOME NEW EMPLOYEES OF MORGAN STANLEY AND FOR THOSE THAT ALREADY ARE

1:09:40 CUSTOMERS OF MORGAN STANLEY IN THE WEALTH DEPARTMENT. THIS WILL CONTINUE TO FEED INTO THEIR BUSINESS, AND IT’S NOT JUST SHOWING UP IN THE THIRD QUARTER, BUT MANAGEMENT IS INDICATING THIS IS SOMETHING THEY WILL BENEFIT FROM MOVING FORWARD. HAIDI: LET’S GET YOU A QUICK CHECK OF THESE MARKETS. ALTHOUGH PERHAPS IT IS BETTER IF WE DON’T TAKE TO CLOSE A LOOK IN TERMS OF THESE STEEP LOSSES WE CONTINUE TO SEE BLEED FROM THESE TECH-HEAVY GAUGES. THE KOSPI CLEARLY SUFFERING THE BRUNT OF IT AS UNSURPRISINGLY,

1:10:14 WE DID HAVE ANOTHER SESSION OF DECLINES WHEN IT COMES TO THE PHILADELPHIA SEMICONDUCTOR’S INDEX OVERNIGHT. THIS ENTRENCHED SELLOFF HAPPENING NOW. THE SITUATION WE SEE WHEN IT COMES TO SAMSUNG AND SK HYNIX WAS INDICATED BY THE EARLY FREE-TRADE SESSION WHERE WE SAW SOME VERY STEEP DECLINES. THE FACT THAT WE SEE MORE EXTENDED DECLINES FOR THE NASDAQ CERTAINLY DOES NOT BODE WELL FOR THE REST OF THE ASIAN SESSION. PAUL: INDEED NOT. STILL TO COME, THE BLOOMBERG NEW ECONOMY FORUM CONTINUES IN NEW DELHI. WE WILL BE SPEAKING TO A

1:10:52 PROMINENT AI CRITIC, GARY MARCUS. MORE AHEAD ON “THE ASIA TRADE.” THIS IS BLOOMBERG. ♪ PAUL: LET’S TAKE A LOOK. HOW U.S. FUTURES ARE SHAPING UP. I BEG YOUR PARDON, AND LOOK AT HOW YIELDS ARE SHAPING UP. 5.4% ON THE 10-YEAR. DID SPIKE AFTER THOSE HOT INFLATION NUMBERS OUT OF THE U.S. IN SEPTEMBER.

1:11:27 THE YEN STILL A LITTLE BIT WEEK, 157.86. 3.7%, THE ON YEAR CPI. VERY BROAD AS WELL. WE WILL HAVE MORE IN A MOMENT. THIS IS BLOOMBERG. ♪ PAUL: LET’S GET YOU ACROSS THE AUSTRALIAN UNEMPLOYMENT NUMBERS. THEY HAVE NOT COME IN AS EXPECTED, WHICH IS IN ITSELF WEIRDLY NOT UNEXPECTED. WE WERE EXPECTING 4.6% IN THE

1:12:01 SURVEY. WE WERE ALSO EXPECTING 20,000 JOBS TO BE CREATED. INSTEAD, WE HAD A LOSS OF MORE THAN 39,000 JOBS TAKEN OUT OF THE MARKET. MOST OF THOSE, THOUGH, PART-TIME EMPLOYMENT. BIG CHANGE, A 7700 JOB CONTRACTION. FULL-TIME EMPLOYMENT GROWING. BIG CHANGE IN THE NUMBER OF PEOPLE LOOKING FOR WORK. IT WAS 67.1 PERCENT IN AUGUST.

1:12:32 IT IS NOW 66 POINT 8%. THE HEADLINE NUMBER, UNEMPLOYMENT. IF WE ARE LOOKING FOR A SILVER LINING, A SOFTER JOBS MARKET MIGHT SLOW THE PACE OF THE IBI MOVE – THE RBA MOVEMENT. HAIDI: REACTING AGAINST A HOT CPI PRINT WE HAD OVERNIGHT AND FEEDING INTO EXPECTATIONS FOR THE FED, BUT LOOK AT WHAT WE ARE WATCHING BROADLY BECAUSE IT IS THIS ACCELERATION OF THE TECH SELLOFF.

1:13:03 SLUMPED INTO DEPRESSED TERRITORY FOR COREWEAVE BONDS OVERNIGHT. YOU ARE SEEING THE BROADER NIKKEI 225 DOWN BY 3%. IN THE CONTEXT, IT IS PRACTICALLY AN OUTPERFORMER IN THIS BROADER REGIONAL MARKET. WE SAW THAT ACTIVATION OF THE SIDECAR MECHANISM FOR THE LIKES OF SAMSUNG. SK HYNIX CONTINUING TO COME UNDER PRESSURE GIVEN THE ACCELERATION AND THE DEEPENING OF THIS TEXT SELLOFF.

1:13:39 OF COURSE, BROADER GEOPOLITICS AND MACROECONOMICS CONTINUES TO BE AT PLAY HERE. WE WILL HEAD OVER TO THE IMF AND WORLD BANK ANNUAL MEETINGS UNDERWAY IN BANGKOK. SEPTEMBER INFLATION NUMBERS RAISING THE STAKES FOR FED CHAIR KEVIN WARSH’S APPEARANCE FRIDAY. AVRIL HONG IS STANDING BY WITH OUR NEXT GUEST. AVRIL: JOINING US NOW, SLOVENIAN BANK GOVERNOR AND ECONOMIC COUNCIL

1:14:10 MEMBER. IT SOUNDS LIKE MOST OF YOUR COLLEAGUES ARE NOT TERRIBLY WORRIED ABOUT SECOND ORDER EFFECTS. WHAT IS YOUR THINKING ABOUT INFLATION AT THE MOMENT? >> HEADLINE INFLATION IS WELL ABOVE THE TARGET, BUT ON THE OTHER HAND, CORE INFLATION IS MORE WITHIN OUR TARGET, SO WHAT WE SEE RIGHT NOW IS THAT – ACTUALLY, WE DON’T SEE

1:14:42 SECOND-ROUND EFFECTS YET, AND THIS IS IMPORTANT FOR OUR DECISION IN THE FUTURE. AVRIL: WHY IS THERE NOT SECOND-ROUND EFFECTS? WHAT DO YOU THINK IS HOLDING HIGHER WAGES BACK, FOR EXAMPLE? >> THE MOST IMPORTANT FACTOR IS THAT THE ENVIRONMENT TRUSTS THAT WE WILL DO OUR JOB AND BRING INFLATION DOWN, SO THIS MIGHT BE ONE FACTOR THAT IS HOLDING NEGOTIATIONS AROUND WAGES MORE STRICT. THEN THERE’S SOMEHOW A

1:15:18 DIFFERENT SITUATION IN THE LABOR MARKET AS WELL. IT IS NOT SO TIGHT ANYMORE. OTHER POLICIES ARE NOT ACCOMMODATIVE AS THEY WERE A COUPLE OF YEARS AGO. I WOULD SAY THERE ARE DIFFERENT REASONS FOR THAT, BUT LUCKILY FOR US, WE HAVE THE SITUATION THE SITUATION THAT SECOND-ROUND EFFECTS ARE NOT VISIBLE OR NOT VISIBLE YET. AVRIL: DO YOU THINK AI IS ALSO PLAYING A ROLE IN THAT IN TERMS OF PRODUCTIVITY GAINS?

1:15:52 >> IT MIGHT PLAY A ROLE. WE DON’T HAVE THE DATA ON THAT, BUT FOR SURE, THERE MIGHT BE SOME PRODUCTIVITY GAINS, AND THERE MIGHT BE SOME FEAR ON THE LABOR MARKET OF SOME PEOPLE LOSING THEIR JOBS. I DON’T KNOW, SO WE HAVE TO BE ATTENTIVE TO THIS PERSPECTIVE AS WELL. AVRIL: WITH THAT IN MIND, THEY LONGER OIL PRICES, ENERGY PRICES REMAIN AT THIS LEVEL, THE HIGHER THE RISK OF THE BUILDUP OF INFLATION. WHAT DO YOU SEE AS AN APPROPRIATE MONETARY RESPONSE TO SUCH RISK?

1:16:27 >> AS SIMPLE AS WE HAVE COMMUNICATED SO FAR. WE HAVE TO BE VIGILANT ON THE DATA. WE HAVE TO ANALYZE ALL SORTS OF INFORMATION WE HAVE ON THE TABLE. WE SHOULD NOT COMMIT OR PRE-COMMIT TO ANY INTEREST RATE PATH AND SIMPLY GO MEETING BY MEETING AND SEE WHAT TO DO. WITH THIS IN MIND, THERE IS NOTHING ELSE TO DO BECAUSE IT IS SUCH A HUGE UNCERTAINTY. EVERY DAY IS SOMETHING

1:16:58 DIFFERENT. EVEN OIL PRICES CHANGE RAPIDLY. AVRIL: WHAT WOULD TAKING MONETARY POLICY RATES OUT OF NEUTRAL LOOK LIKE? HOW MUCH MORE WOULD YOU HAVE TO RAISE IN THAT REGARD? WHAT WOULD MILDLY RESTRICTIVE LOOK LIKE? >> IT IS DIFFICULT TO SAY BECAUSE THIS QUESTION IS NOT

1:17:31 SCIENTIFIC, SO IT IS MORE ABOUT EXPERT OPINION. I WOULD SAY THAT WE ARE APPROACHING TWO RESTRICTIVE AREA . PROBABLY WE ARE STILL NOT THERE, BUT WE ARE ON THE LIMITS, I WOULD SAY. AVRIL: DOES THAT MEAN YOU WOULD HAVE TO HIKE QUITE A BIT MORE IF INFLATION TURNS WORSE? >> I DID NOT SAY QUITE A BIT MORE. WE KNOW WHAT MARKETS EXPECT, AND I WOULD NOT SAY MORE THAN THAT. AVRIL: WHAT ARE YOU SEEING ALSO IN

1:18:06 FRANCE OR OTHER COUNTRIES THAT ARE PHYSICALLY CHALLENGED AT THE MOMENT? HOW THAT IS PLAYING OUT IN THE BOND MARKET REPRICING, FOR EXAMPLE, AND HOW ARE YOU THINKING ABOUT IT AS A CENTRAL BANKER? >> WE HAVE SEEN QUITE A BIT OF REPRICING IN THE MARKETS. WITH THIS, I WOULD SAY THAT MAY BE THE MARKETS GO ALONG WITH OUR MONETARY POLICY. IF THERE IS TIGHTENING ON

1:18:38 FINANCIAL MARKETS, THEN MAYBE WE DON’T HAVE TO DO AS MUCH AS WE WOULD OTHERWISE, BUT AS I SAID, MONETARY POLICY, WE HAVE OUR OWN GOAL, SO WE HAVE TO STICK WITH IT. OF COURSE, BE VIGILANT ON ALL THE DATA AVAILABLE, BUT WE CANNOT INTERFERE WITH OTHER POLICIES DIRECTLY. AVRIL: THAT IS A FISCAL CHALLENGE FOR GOVERNMENTS TO DEAL WITH, BUT IF THERE ARE MARKET RUPTURES,

1:19:11 THE ECB MIGHT WANT TO STEP IN. THERE IS A LOT OF DISCUSSION ABOUT THE USE OF TPI BUT ALSO THE SENSE THAT WE ARE NOT AT THAT STAGE YET. WHAT ARE THE TOOLS YOU THINK THE ECB MIGHT USE REALISTICALLY IN SUCH AN ENVIRONMENT, AND WHAT ARE THE CONDITIONS THAT MIGHT WARRANT A MOVE? >> WE HAVE DIFFERENT MONETARY POLICY MEASURES IN OUR TOOLKIT. EVEN TPI, AS YOU MENTIONED, BUT THEY WOULD BE USED IF NECESSARY

1:19:42 IF THE CONDITIONS ARE MET. IT IS DIFFICULT TO SPECULATE RIGHT NOW WHEN, HOW, AND WHY DIFFERENT KIND OF TOOLS WILL BE USED. AS I SAID, WE ARE DATA-DEPENDENT. WE ANALYZE THE DATA EACH TIME WE MEET, AND THEN WE DECIDE FROM THE POLICY TOOLS WE HAVE IN OUR TOOLBOX WHAT TO USE, WHEN, AND HOW. AVRIL: MIGHT YOU CONSIDER PAUSING QT

1:20:13 IF YIELDS GO MUCH HIGHER AND FINANCIAL CONDITIONS ARE QUITE TIGHT? IS THAT POTENTIALLY SOMETHING YOU WOULD CONSIDER TO CALM THINGS DOWN? >> AS I SAID, WE WILL MEET IN TWO WEEKS AND AT THE END OF DECEMBER, WE WILL SEE ALL THE DATA THAT WE HAVE, AND WE WILL DECIDE ON THE POLICIES THAT WE THINK APPROPRIATE AT THAT TIME, SO I WOULD NOT SPECULATE FOR MORE. AVRIL: GREAT TO HAVE YOU WITH US. THANK YOU SO MUCH FOR YOUR TIME

1:20:44 TODAY. PAUL: THANKS VERY MUCH. AVRIL HONG IN BANGKOK. COVERAGE FROM BANGKOK CONTINUES ON OPEN THE CHINA SHOW – ON “THE CHINA SHOW.” LATER TODAY, DON’T MISS OUR EXCLUSIVE CONVERSATION. WE HAVE MORE ON “THE ASIA TRADE.” THIS IS BLOOMBERG.

1:21:17 ♪ >> THE OTHER THING I WOULD SAY TO FOLKS IS ALSO TO THINK ABOUT THE SAFETY AND SECURITY ELEMENTS. WE KNOW THAT FROM A CYBER PERSPECTIVE, CHINESE MODELS ARE GETTING VERY STRONG IN WHAT THEY DO. WE THINK YOU WANT TO BE ON MORE WESTERN MODELS, FRANKLY, ON THE CYBER FRONT. PAUL: OPENAI’S CHIEF FINANCIAL

1:21:49 OFFICER AT THE AI SUMMIT IN DUBLIN. MEANWHILE, NVIDIA’S CEO SAYS SAFETY AND CONTAINMENT MUST BE INTEGRATED INTO AI SYSTEMS. HE TOLD US EXCLUSIVELY HE WOULD CONSIDER CUTTING OFF ANY CUSTOMERS THAT BUILD UNSAFE AI. >> SOVEREIGNTY BASICALLY MEANS YOU HAVE TO CONTROL YOUR OWN EXPERIMENTS, AND IN THE CASE OF AI, THAT MEANS CONTROLLING YOUR DATA. YOUR DATA, YOUR LIFE EXPERIMENTS, THE COMPANY EXPERIENCE, YOUR COUNTRY’S CULTURE, VALUES, THE INSTITUTIONAL KNOWLEDGE OF YOUR

1:22:22 PEOPLE, THE FLYWHEEL OF CREATING MORE DATA, MORE EXPERIENCE, MORE INTELLIGENCE, THAT ALL BELONGS TO YOU, AND THE COMPUTER IS JUST AN INSTRUMENT. THAT IS ONE. THE SECOND IS SOVEREIGNTY MEANS NOBODY CAN DENY YOU SERVICE. AI IS LIKE INFRASTRUCTURE, LIKE ELECTRICITY, LIKE INTERNET, LIKE WATER, AND THOSE ARE CRITICAL RESOURCES AND CRITICAL INFRASTRUCTURE FOR YOUR SOCIETY AND YOUR COMPANIES. YOU CANNOT EVER HAVE A DENIAL OF SERVICE, AND SO YOU HAVE TO

1:22:53 CONTROL THAT. THAT IS SOVEREIGNTY. SOVEREIGNTY MEANS THAT YOU HAVE THE ABILITY TO DETERMINE YOUR OWN DESTINY, AND YOU MIGHT NEED TEAMWORK, YOU MIGHT NEED COLLABORATION, YOU MIGHT NEED PARTNERSHIP AND SUPPORT FROM OTHER PEOPLE. YOU HAVE AGENCY. EMILY: MORE THAN 100 DATA CENTER PROJECTS HAVE BEEN BLOCKED OR DELAYED IN THE U.S. SO FAR THIS YEAR. THERE’S PUSHBACK IN EUROPE, TOO. YOU HAVE A ARE PROJECTS GETTING DELAYED, GETTING SCRAPPED. ARE WE SEEING CRACKS IN THE AI

1:23:27 BOOM, AND COULD YOU BE LEFT HOLDING THE BAG? >> THERE’S NO LOOKING BACK. IN A LOT OF WAYS, IT IS FUNDAMENTAL IRRESPECTIVE OF NEAR-TERM CHALLENGES. THE NEAR-TERM CHALLENGES ARE SOMEHOW ALSO SELF-IMPOSED. AS AN INDUSTRY, WE ARE DOING A HORRIBLE JOB ASSOCIATING THIS TECHNOLOGY, WHICH IS BUILT BY PEOPLE – IT IS ENGINEERED,

1:23:58 OBVIOUSLY. WE OBVIOUSLY KNOW ENOUGH ABOUT HOW IT WORKS TO MAKE IT BETTER EVERY DAY, AND BECAUSE WE ARE BUILDING IT, WE HAVE EVERY POSSIBILITY TO ADVANCE IT SAFELY AND RESPONSIBLY. I THINK IN A LOT OF WAYS, THE NARRATIVE OF THE INDUSTRY IS REALLY OUT OF CONTROL AND OUGHT TO BE STOPPED, BUT THAT’S JUST AN INDUSTRY GROWING UP. YOU PROBABLY REMEMBER THE GOOD OLD DAYS OF THE INTERNET, AND THE INDUSTRY GREW UP. I THINK OUR INDUSTRY IS – MANY

1:24:34 OF THE YOUNG COMPANIES ARE GOING THROUGH THEIR GROWING PAINS, AND THEY ARE GROWING INCREDIBLY FAST, WHICH I’M VERY PROUD OF. THEY ARE JUST INCREDIBLE ENGINEERS AND REALLY BRIGHT COMPUTER SCIENTISTS. THERE IS AN ACCOUNTABILITY, RESPONSIBILITY THAT GOES ALONG WITH BUILDING COMPANIES THAT I THINK THEY ARE JUST GROWING INTO. EMILY: YOU ARE A MAJOR INVESTOR IN ANTHROPIC AND OPENAI. THESE ARE TWO OF YOUR CUSTOMERS AS WELL. WHAT HAPPENS WHEN FRONTIER LABS GO PUBLIC?

1:25:05 >> I’D SAY THAT I’M DELIGHTED TO SEE THEIR SUCCESS. THESE ARE THE TWO FASTEST GROWING TECHNOLOGY COMPANIES IN HISTORY. THEIR REVENUES ARE REAL AND THEIR PROFITS GENERATED FROM REVENUES ARE REAL. THIS LAST SIX MONTHS, AI WENT THROUGH A TRANSITION. IT USED TO BE UNPROFITABLE, UNUSABLE, VERY CURIOUS, GREAT POTENTIAL, AND NOW WE ARE USING IT IN REAL WORK. IT IS PRODUCTIVE. IT IS PROFITABLE. BECAUSE THE TOKENS ARE NOW PROFITABLE AND BECAUSE THE

1:25:37 TOKEN DEMAND IS SO INCREDIBLE, IT’S THE REASON WHY THEY WANT MORE COMPUTE BECAUSE THE COMPUTER TRANSLATES TO MORE TOKENS, TO MORE PROFITS, AND THAT FLYWHEEL FOR THEM WILL BE GREAT. I THINK THEIR IPO IS JUST ANOTHER DAY IN THE JOURNEY, AND IT IS A VERY IMPORTANT DAY FOR THEM, AND THEY WILL RAISE A LOT OF MONEY, AND THEY CAN APPLY THAT MONEY TO FUELING THEIR GROWTH. WE ARE JUST LOOKING AT THE TIP OF THE ICEBERG WITH THE TWO OF THEM BECAUSE THEY ARE THE MOST

1:26:08 VISIBLE, BUT IF YOU LOOK AT THE INDUSTRY, IT IS BROAD AND EXTREMELY DEEP. EMILY: IT IS ALSO EXTREMELY EXPENSIVE. WHEN INVESTORS SEE WHAT AI REALLY COSTS, WILL THEY BE HAPPY OR WILL THEY DECIDE THE NUMBERS DO NOT ADD UP? >> THE COST OF A TOKEN IS REDUCING BY 30, 40 TIMES A YEAR. THE COST OF TOKENS IS DECREASING. THE COST OF INTELLIGENCE IS ALSO DECREASING, SO THE BENEFITS TO CUSTOMERS ARE ACTUALLY GOING UP EXPONENTIALLY. EMILY: THAT SAID, AI IS DEEPLY UNPOPULAR, AND PEOPLE ARE

1:26:41 SCARED. SAM ALTMAN, DARIO AMODEI, ELON MUSK ALL SAY WE SHOULD SLOW DOWN. YOU HAVE BEEN CONSISTENT IN YOUR OPTIMISM. WHAT DO YOU SEE THAT THEY DO NOT, AND HOW CAN THEY BE SO WRONG? >> FIRST OF ALL, SAFETY IS PARAMOUNT. IN ORDER FOR US TO REALIZE THE INCREDIBLE POTENTIAL AND THE OPTIMISTIC FUTURE WE ALL HOPE FOR AND BELIEVE IN, WE HAVE TO DEVELOP THE TECHNOLOGY SAFELY AND RESPONSIBLY.

1:27:14 I BELIEVE WE HAVE AGENCY IN HOW THIS TECHNOLOGY ADVANCES. WE SHOULD ACCELERATE THE DEVELOPMENT OF OPEN SHELF. WE SHOULD ACCELERATE THE INTEGRATION OF THIS CONTAINMENT TECHNOLOGY INTO AI SYSTEMS. WE SHOULD ACCELERATE THE DEVELOPMENT OF MONITORING TECHNOLOGY AND AI’S THAT MONITOR AI’S. I THINK THAT THERE IS A FALLACY – I THINK IT IS IN FACT A MISTAKE TO SEPARATE AI

1:27:46 CAPABILITY AND AI SAFETY AS IF IT IS TWO CONVERSATIONS. IT IS ONE CONVERSATION. EMILY: IF ONE OF THE LABS WAS DOING SOMETHING YOU FELT WAS TOO DANGEROUS, WOULD NVIDIA STOP SELLING TO THEM? >> IT IS A HYPOTHETICAL, BUT OF COURSE. BEFORE YOU DO SO, YOU WOULD HAVE TO HAVE A CONVERSATION. WE DON’T RUN OTHER PEOPLE’S COMPANIES. THERE IS A LIMIT TO THE JUDGMENT BY WHICH WE APPLY TO OTHER COMPANIES’ USE OF OUR TECHNOLOGY . OUR TECHNOLOGY IS

1:28:20 GENERAL-PURPOSE, SO IMPOSING OUR VALUES ON SOME OTHER PEOPLE’S COMPANIES AND, FOR EXAMPLE, INSTITUTIONS OR COUNTRIES, THAT IS LARGELY OUT OF BOUNDS, BUT IF WE KNOW FOR CERTAIN THAT AN APPLICATION OF OUR TECHNOLOGY IS BRINGING HARM TO PEOPLE, OF COURSE. HAIDI: NVIDIA CEO JENSEN HUANG SPEAKING EXCLUSIVELY TO BLOOMBERG PRODUCER AND INTERVIEWER EMILY CHANG.

1:28:52 CHIP STOCKS IN CHINA ARE BRACING FOR SLIDES, BUT THE BANKING SECTOR COULD OUTPERFORM RECENT LENDING DATA. ANTHONY STEPHENS JOINS US NOW. WHAT IS STANDING OUT DURING THE SESSION THIS MORNING? ANTHONY: IT IS REALLY QUITE A HORRENDOUS DAY WHEN YOU LOOK AT BIG CAPS IN JAPAN AND KOREA. THOSE ARE DOWN 5%, 6%, BUT YOU ALSO HAVE WORSE PAIN ON THESE CYCLICALS THAT WERE TRADED AS STRUCTURAL NAMES IN THE AI

1:29:24 TRADE, THE LIKES OF COMPONENT MAKERS, CABLES, CAPACITORS. ALL THIS NEW STUFF IN THE CHAIN IS GETTING HIT AROUND 9% OR 10%. THIS IS A SIGNIFICANT DRAWDOWN STARTING TO PAUSE RARE TECHNICAL DAMAGE. LOCALS HAVE JOINED IN THE SELLING, AND WE SEE FOREIGN SELLING LOOKING TO HIT NEW NUMBERS ON THE WEEK, SO THIS KIND OF MOMENTUM ON THE DOWNSIDE IS SOMETHING THAT NEEDS TO BE STOPPED.

1:29:55 WE HAVE YET TO HEAR TSMC NUMBERS. THAT IS THE LAST HOPE THE MARKET HAS OF FINDING SOME RECOVERY. IT GOES AGAINST WHAT JENSEN HUANG WAS JUST SPEAKING ABOUT. THIS WHOLE TRADE GETS CHALLENGED IF IT IS SLOW ON THE TOP LINE, AND WE SAW SOME OF THAT HAPPENING IN THE U.S. ALREADY. CHINA IS A LITTLE BIT DIFFERENT. IT LED ON THE WAY DOWN, SO THE 10 X INDEX HAS PRETTY MUCH

1:30:28 GIVEN UP ALL OF ITS GAINS AND THE HSTECH IS WHERE WE WERE TWO YEARS AGO, SO CHINESE TECH MAY HAVE SOME DOWNSIDE POTENTIAL JUST BECAUSE IT HAS TREATED SO POORLY THUS FAR. ON THE OTHER HAND, CHINESE MACROS HAVE INDICATED SOME SLOWING OF THE PAUSE, SO YOU HAD SLOWING ACROSS BOND SALES IN BANK LENDING. CHINA COULD BE A MORE RESILIENT PLACE. PAUL: STILL TO COME, WE WILL BE A BLOOMBERG’S NEW ECONOMIST FOR

1:31:02 THEM IN NEW DELHI TO HEAR ABOUT BUILDING AI WE CAN TRUST. THAT CONVERSATION IS COMING UP AT THE TIMES ON YOUR SCREEN. WE HAVE MORE AHEAD ON OPEN THE ASIA TRADE.” THIS IS BLOOMBERG. ♪ PAUL: INDIA’S EDUCATION MINISTER SAYS THE GOVERNMENT IS WORKING TO PLUG THE LOOPHOLES IN THE EDUCATION SYSTEM THAT HAVE TRIGGERED PROTESTS IN DELHI AND OTHER CITIES. REFORMS WERE UNDERWAY EVEN

1:31:32 BEFORE PROTESTERS TOOK TO THE STREETS ACCORDING TO HIM. >> UNFORTUNATELY, SOME INCIDENT TOOK PLACE. HAVING SAID THAT, I DON’T WANT TO GO INTO DETAIL OF THAT, BUT I CAN SAY WE ARE ALREADY CHANGING THE SYSTEM, MAKING IT TECHNOLOGY-DRIVEN, AND MAKING IT MORE TRANSPARENT.

1:32:15 SOME OF THE PEOPLE PREPARING QUESTIONS IN NEWSPAPERS BECAUSE OF THE INCIDENT THAT CAN HAPPEN – THAT HAPPENED, WE ARE ALREADY PLUGGING LOOPHOLES. WE ARE MAKING THE TECHNOLOGY COMPATIBLE AS EARLY AS POSSIBLE. THE TOTAL PARTICIPANT MORE THAN 2 MILLION STUDENTS. SO MAKING THE ARRANGEMENTS FOR

1:32:49 ALL THESE THINGS THROUGH TECHNOLOGY IS OUR CHALLENGE. WE ARE ALREADY AT IT NOW. IVANA: WHAT WE HAVE SEEN WITH THE LABOR DYNAMICS AND DEMOGRAPHICS OF THE ECONOMY IS IT DOES NOT SEEM LIKE THERE IS A PROBLEM IN THE SHORTAGE OF JOBS IN INDIA. IT IS MORE OF A SKILLS MISMATCH THAT SOME OF THE NEW JOBS BEING CREATED ARE NOT GRADUATE JOBS IN I.T. OR HEALTH CARE AND MEDICINE . WHAT DO YOU DO TO ADDRESS THE SKILLS MISMATCH?

1:33:23 >> ONE OF THE CHANGES I HAVE BROUGHT IN EDUCATION ITSELF . WE ARE TRYING TO BUILD UP THE INNOVATIVE MINDSET. WHEN A CHILD STUDIES IN INDIA IN PRIMARY EDUCATION OR STUDIES

1:33:54 IN SECONDARY EDUCATION, THAT IS OUR INNOVATION MISSION. WE HAVE ESTABLISHED THOUSANDS OF TOOLS WHERE WE EXPERIMENT AND UNVEIL NEW THINKING, NEW APPROACHES. THIS CHANGE WE ARE DEVELOPING, AND ALL – AND WITH THAT, THE SKILLING ALSO. HAIDI:

1:34:24 LET’S GET YOU A QUICK CHECK OF THE MARKETS BECAUSE WE ARE WATCHING THE START OF TRADING ACROSS GREATER CHINA. TAIWAN IN PARTICULAR IN FOCUS AS CHIP STOCKS CONTINUE TO SLIDE. CONCERNS MOUNTING OVER HIGHER RATE STRETCH VALUATIONS, THE COST OF THE AI BOOM. THIS IS BLOOMBERG. ♪