OpenAI Accuses Moonshot of Extracting Data From AI Models

Read the Portuguese translation →

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: OpenAI Accuses Moonshot of Extracting Data From AI Models · Channel: Bloomberg Television · 1:37:30 · Watch on YouTube

Topics: Enterprise AI applications, Markets and economy, AI models, Health and science, AI safety

Summary

Bloomberg Television’s China Show covers a holiday-thinned Asian trading session, with Japanese stocks outperforming Korean shares despite strong AI-related demand and Micron’s upbeat outlook. The program reports OpenAI’s accusation that Moonshot AI made thousands of attempts to extract hidden reasoning data, alongside broader debates about AI safety and China’s AI ecosystem. Other segments examine rising bond yields, Netflix’s strategy and the entertainment industry, a pilot stabbing incident aboard a FlyDubai flight, Naidc’s accounting troubles, and the haze caused by Indonesian wildfires. The broadcast closes by reviewing market trends and the economic strength supporting risk assets.

Key points

• OpenAI said it identified as many as 16,000 attempts in late July to uncover hidden information about how its models reason; Moonshot had not responded to the accusation.
• DeepSeek and Huawei are developing an AI software ecosystem compatible with Huawei’s Ascend chips, supporting efforts to build a domestic AI supply chain.
• Micron’s results and guidance were seen as strong, with management pointing to robust AI demand and memory-market visibility through 2028.
• Japanese shares rose more strongly than Korean shares, as investors weighed shareholder returns and the flow of profits to investors in each market.
• A market analyst warned that long-term Treasury yields could move toward 6%, with upcoming 10- and 30-year auctions a key test for bond markets.
• Netflix co-CEO Ted Sarandos discussed engagement, live programming, theatrical releases, gaming, partnerships, and the company’s focus on original movies and television.
• Authorities in Saudi Arabia questioned a FlyDubai pilot accused of stabbing a colleague during a flight; passengers and crew helped regain control, and the motive was not established.
• Naidc shares fell sharply after its auditor withheld an opinion on the company’s financial statements, adding to concerns about past accounting issues.
• Pakistan’s rapid adoption of Chinese solar panels is reducing demand for grid power and complicating the economics of Chinese-backed coal plants.
• Indonesian wildfires and unusually dry conditions linked to El Niño worsened haze across Southeast Asia, threatening major sporting events.

Chapters

Start	Chapter	Summary
00:01	Market headlines and the holiday-thinned session	The hosts introduce the day’s stories, including weaker Asian markets, the OpenAI-Moonshot accusation, and a FlyDubai incident, while noting that Hong Kong and mainland China are closed.
03:15	Micron earnings and the AI memory outlook	The hosts discuss Micron’s results, strong memory demand, and expectations for continued industry visibility through 2028.
04:52	Japan and Korea diverge	A market reporter contrasts Korean investors’ concerns about shareholder returns with Japan’s broad rally across the technology supply chain.
06:55	Q4 outlook and Treasury market risks	Mark Cranfield reviews the AI-driven market outlook, the approaching US earnings season, and the risks surrounding long-term Treasury auctions and yields.
12:50	Naidc’s accounting concerns	The hosts highlight Naidc’s steep share-price decline after its auditor withheld an opinion on the company’s financial statements.
13:56	OpenAI accuses Moonshot of data extraction	A China correspondent explains OpenAI’s claim of thousands of attempts to obtain hidden model reasoning and discusses potential US responses.
16:02	DeepSeek, Huawei, and AI safety oversight	The discussion turns to a DeepSeek-Huawei software toolkit, Bill Ackman’s views on AI firms and oversight, and concerns about malicious AI use.
20:51	Hong Kong updates and market discussion	The program reports New World’s pledged family support and Hong Kong’s visitor-arrival figures before returning to regional markets and trade data.
25:17	FlyDubai flight and Federal Reserve headquarters	The show reports a pilot allegedly stabbing a colleague aboard a FlyDubai flight and President Trump’s criticism of the Fed headquarters renovation.
27:56	Bloomberg Screen Time opens	Lucas Shaw introduces the event’s focus on changes in media, streaming, AI, and entertainment before beginning his conversation with Netflix co-CEO Ted Sarandos.
31:53	Ted Sarandos on Netflix’s business	Sarandos discusses Netflix’s programming breadth, engagement growth, live events, partnerships, gaming, and theatrical releases.
50:34	Netflix strategy, talent, and production incentives	The conversation covers a possible free tier, talent relationships, the Warner Bros. deal, and the case for US production incentives.
1:00:20	Bond yields and economic fundamentals	An investment strategist argues that strong US economic and corporate fundamentals support higher yields while cautioning against rushing into duration.
1:11:07	AI safety concerns in China	A Bloomberg opinion columnist discusses whether China is confronting AI-agent risks and how its safety framework signals awareness of those concerns.
1:14:14	Naidc, oil markets, and Pakistan’s solar boom	The show revisits Naidc’s accounting troubles, discusses China’s oil demand, and examines how Pakistan’s rapid solar adoption affects coal power.
1:25:34	FlyDubai investigation, Southeast Asian haze, and markets	The broadcast updates the flight investigation, examines wildfire-driven haze in Southeast Asia, and ends with a brief review of seasonal market patterns.

Quotes

The scale of this attack up to 16,000 at one point is still much smaller than what Anthropic previously accused Moonshot AI of doing. — 15:01

The market is very narrowly focused, I think, on SpaceX and anthropic. — 17:39

So we are first and foremost we are growing engagement. — 35:09

solar has become cheap enough that it can drive an energy transition alone without policy. — 1:22:21

we see countries turning to electrification, turning to solar and batteries to replace those expensive fossil fuels. — 1:24:32

Concepts and entities

OpenAI, Moonshot AI, AI distillation, GPT, Anthropic, DeepSeek, Huawei, NVIDIA CUDA, Bill Ackman, Anthropic, Ted Sarandos, Netflix, AI agents, Naidc, Fly Dubai

Full transcript (original language)

00:01 9 am Shanghai Shenzhen and here in Hong Kong you’re watching the China show. I’m Y Ivon man with David and Glass. >> Good morning. Let’s get to your top stories today. Asian stocks slipping to begin this new quarter after a late drop into the close on Wall Street. A [music] raising gain sparked by this uh tepid inflation numbers. You have bonds in a in New Zealand tracking the move lower in treasuries. OpenAI accuses its Chinese rival Moonshot of extracting data from its AI models, adding [music] to Silicon Valley’s claims of large-scale Chinese distillation. >> Also ahead, passengers avert disaster on

00:34 a Fly Dubai flight after [music] a pilot stabs his colleague reviving debates about the need for cockpit video recording. >> Plus, we’ll be live from Bloomberg Screen Time in Los Angeles with the Netflix co-CEO Ted Sandos joining us along with some big names [music] there as well.

01:06 Yeah, it’s it’s not much of a China show today. I got to tell you here. Golden Week is underway. So certainly we’re seeing both Hong Kong and China is shut. So we got to talk about other things, right? We can also talk about Conan O’Brien and Ben Affleck coming on our show. >> Let’s talk about that. [laughter] It’s a good chance to talk about that. But yes, markets were starting off the quarter not too golden at this point. >> No. Uh no. And I think what’s interesting is obviously because of we are entering this new quarter. We were up against month end quarter end overnight which is I guess goes a long way to explain why uh the headline on

01:36 markets today is really that massive close lower uh in the US session. Uh there’s a micron earnings micron earnings that we’ll unpack better. Uh you had some issues around the margin. uh unimpressed as far as markets go but I think you know let’s give it some time for markets to really digest what happened because the commentary from the street is really really good set of earnings it’s showing up across some uh big names here in the Asia Pacific as far as data goes um on the AI story South Korea exports were uh again another banger >> explosive I guess you could say right more than 100% gains uh for the month so certainly does that add to this whole

02:11 robustness when it comes to AI boom and demand picture there what it means for the chip sector in particular Er, so certainly that could be any uh in terms of beneficiary to of course the chip space here today. Uh Cosby is slightly bit up but we are seeing quite a bit of movement in Japan here. The nic 225 up about one and a half%. >> Yes survey was decent right >> it was better than the last quarter’s read. I think we went from 22 to 24 on the large manufacturers gauge. Slightly missed expectations there. I I think what’s interesting too is on the exchange rate where you do have

02:43 corporates still expecting a weaker uh the Japanese yen to remain on the weaker side of things. That takes me into just one last note here. The dollar is coming off the best month uh going back to March. We the last few days and the move in the BBDXY managed to edge uh the June uh gain there. So let’s call it 2% uh and exchange rates on your screens uh in a moment. We’ll also talk about the fixed income space. By the way, the 30-year yield is again starting to exhibit some weakness there again to uh to the upside. But yeah, back to the uh

03:15 the big earnings story from overnight micron earnings adjusted sales and revenues just over 54 and a quarter uh to the upside there. Earnings also climbing in 334. Uh when you break things down, DRM and NAD, you have about 40B on DM NAND closer to about 14B. I’m rounding down as far as that’s concerned. not much reaction in the after hours trade, but when you look at what the street is saying and what the CEO is saying as far as some of the sort of uh more qualitative uh takeaways from the numbers

03:47 themselves, uh it does seem the the memory story continues to be a strong one uh through to 2028. >> Yeah, that certainly seems to be there’s a bit more runway in this whole uh you know memory chip cycle in some ways. That’s certainly what we heard from the Micron CEO saying that you know they delivered record fiscal 2026 results. expect an even stronger fiscal 2027 and memory he says enhances the intelligence and the competitiveness of our customers platforms. Uh the the call from the street is this right city was talking about yes these are better than expected results the guidance was also good here

04:21 amid the sort of robust AI demand so that certainly should help the the Korea side of this trade here this morning too. Yeah, uh vital knowledge also coming in here. The qualitative commentary on supply demand is bullish. Uh the backlog is growing and again this underscores the the visibility through 2028. Uh let me just wrap things up with the comment coming through out of Zach’s investment research. Micron crushed earnings expectations across the board. The stocks muted reaction perhaps how Wall Street investors likely already

04:52 expected a beat. >> And also the the need to increase worker pay, right? compensation that was really what could lead to maybe that margin outlook. >> Why not? Company’s doing well. >> Yeah, you got to pay your workers, right? >> Okay. Um let’s have a look at how this is playing out across markets today here in the Asia Pacific. The markets that are open, of course, and Anony’s here with us with a look at the some names here. Anthony. >> Yeah. What’s been really interesting in the early going in Asia is how muted the reaction is in Korea versus kind of the joy in Japan. And one of the reasons for

05:22 that is that Korea has gotten more muted over time. There is a kind of a short-term shareholder revolt against the fact that there isn’t be isn’t a kind of a program of shareholder return that goes with the extraordinary profits that the memory space is having. So you’re seeing that again play out. Samsung is flat on the day versus up almost four and SoftBank is up three. So there’s a huge divergence. And now flip the board and you can kind of graphically see why that is the case. we see that Korean earnings have just

05:53 absolutely exploded to the upside but dividends have not followed. So you’ve seen earnings explode here on the blue line but the dividends are just pretty much where they where they have always been and that speaks to some of this Korean discount uh kind of concerns and that’s really cracked the picture for the positivity in Korea. The volatility has come right off after the boom times in July cracked and it has not recovered even though the index has recovered. You contrast that to Japan. You flip the board and you see every time there is a

06:25 positive news that comes out of the tech space, the Japanese stocks react on the upside. That is what the kind of optimism in Japan is about. That’s why the Nicay is so strong and the gains are pretty much across the board on the Japanese stocks today. You see advantage is almost up seven. uh we have big gains in laser techch which is a a testing and kind of uh chipm tool uh provider. It’s just across the ecosystem. The money is actually flowing through to shareholders in Japan and that’s driving this dispersion. There is still about a 30%

06:55 gap between Japan and Korea and let’s see how much of that it closes. >> Anthony, thank you. Anthony Stevens there, our Bumba Markets reporter joining us with the latest and of course let’s bring in our Mark Cranfield now from our mive team for more on these markets here. Mark, it’s a slow day start of the quarter here. What’s going to be something that you’re looking out for here for Q4? >> Yeah, I think it’s exactly um what Anthony was saying there. People are going to be looking for continue. The AI theme looks as though it’s making a recovery. It’s now just a question of who are the who are the winners going to

07:26 be in this next phase. So, Micron’s kicked off a period here already some Japanese names are doing very well off the back of that and we’re likely to see some some follow through as the Taiwanese markets get going today. And then as we look into the to the US, it’s right the beginning of the earning season and most of the big names will be expecting to have very decent results again or at least the the outlook from um analysts is that most of the mag seven companies plus the other major tech companies will have another very strong quarter. So confidence should start to return. The we do have the the

08:00 elections in the US right in the middle of the quarter. That will of course be a speed bump for some people. But if you look at the way the markets are digesting the rate hikes that we’ve seen so far, the projections are that they’re going to be very gradual. It looks as though everybody can live with it. The still the wild card is the Middle East. What happens to oil prices, but even that seems to be something that people are factoring into their equations for the rest of the year. So all in all, the backdrop is pretty decent. If the AI theme has got legs, then we can expect the tech sector to lead everybody

08:33 forward again. We should start to see some evidence of that over the next few days. So what we’re seeing here in Asia is likely to follow through to the rest of the world. So a a positive outlook for the AI space should feed into everybody else barring upsets in the Middle East. Mark, we had some data overnight in the US and I think goes to your the point you made earlier in the week um around you know some signpost to watch to really understand whether confidence to your borrow your phrase there is coming

09:04 back into the bond markets. Um are we in a a better situation now as far as treasuries go than this time last week? Now, >> um we are apart from the very long end of the curve probably we have a a huge uh sale next week. We have 10 and 30 year auctions. The 30-year Treasury auction is a major obstacle for the whole market. You can see that the traders are pricing that they want to get their concession in early. They want to move the yield to a level where there should be demand for it. The insurance

09:35 companies should come in. They should match asset liability managers. they can push the yield to a certain level where you would expect the the sale to go pretty well. If it doesn’t, that’s a huge problem for the whole market. But by the time we get to the auction at the end of next week, there should be enough in the market already to see that go through. Then people can relax a bit. But there is a very important auction. And the way that the US Treasury themselves under Scott Bessant have behaved with their buybacks. Traders are also looking over their shoulder and saying, “Is there more going to come

10:07 from the Treasury Department? Are they going to do more to stabilize the bond market or are they going to panic? Are they going to cancel 30-year auctions if they see another bad one?” So, there’s a lot of debate about what’s going on, particularly at the long end. Plus, when you look at what’s happening with the the lowest class of credit, the triple C credits, they’re starting to get really hammered. They’ve gone above the thousand point range. That’s a sign that we can expect some more defaults coming in the US market in those are weak companies anyway but the default rates have been relatively low and that’s

10:38 something else the treasury market has to take into account. It’s a pretty fluid situation but if we can get through the auctions next week the whole market will probably calm down. >> Uh yeah I’m just wondering now that we have most of the Treasury curve above 5%. There doesn’t seem that many out there that are willing to stick their neck out and say that I’m going to go full on into duration >> now. There there isn’t that sort of conviction just yet. I feel I mean do you think 6% for for the Treasury curve

11:08 still is a possibility here or how do you think the direction of travel is going to look like? >> I think at the very long end of the curve 6% is very realistic. I think that it’s going to be hard actually to stop the 30-year yields getting towards 6%. not so much in the short end of the curve. We we’ve had a a steepening over the past few days. It’s probably going to continue. The the messaging we’re getting from the Federal Reserve is that they do want to raise interest rates again, but at a measured pace. So that probably means December, possibly another rate cut, another another rate

11:41 hike next year, but that’s uncertain, but at least one more this year. That’s a similar story in the Bank of Japan, probably the European Central Bank. So it’s it’s something that people can factor in. They can see it coming, but it’s not too fast. As far as the very long end of the curve is concerned, there’s never great demand for 30-year bonds anyway. But if you’re not quick enough to dampen down on inflation expectations, if the Fed is seen as slightly behind the curve, that is not good for that end of the market. Plus, you got the mortgage factor as well. 7% yields on mortgages in the US

12:15 means there’s convexity. People have to sell long-term treasuries to hedge for that as well. It’s not a pretty picture at that end of the market. It probably means they need to get to something like a 6% a shock a shock value here to get people back in the market. The shorter end of the curve is a different story. That may start to stabilize as Fed speakers give the idea that they’re not going to squeeze the market too much. There won’t be 50 basis points hikes. There’ll be a gradual tightening of policy. Market can absorb that. >> Mark, thank you so much. Mark Cranfield

12:50 there out of Singapore. Uh right ju just to mark you know one stock we’ve been tracking all week Naid we’re down a further almost 20% at one point down 17 currently let’s call it 30 31% over the course of the last three days in terms of the drop here and the latest here on on the back of some accounting issues is the and this is a really bad sign when your auditor withholds their opinion it’s almost akin to you going to the doctor and the doctor basically saying let’s go into another room and then just breathe It’s a really really really uh

13:25 long side there. >> Um so this is something that we’re continuing to track. Obviously the markets hating this from a bullish perspective. We’ll have more on this of course later on in the show, but shares are down 17% as the auditor has now withheld opinion on the company’s financial uh statements. Right. Coming up uh we’ll be at Bloomberg screen time in LA hearing from the Netflix coco [music] Ted Torandos as well as on your screens. Ben Affleck and Conan O’Brien are joining us for those conversations. So, do join us as well. Uh, check that out on the times on your screens. And

13:56 just a reminder that Hong Kong and Chinese markets are shut [music] for National Day. We have plenty more ahead still. This is the China Show. Open AI has accused its Chinese rival Moonshot AI of a widescale effort to extract data from its GPT systems. Now, it adds to growing concerns in

14:27 Washington and Silicon Valley about the use of AI distillation by Chinese developers. >> Yep. Let’s bring in Minman Low, our China correspondent here to talk us through how big of a scale uh are we looking at currently. Yeah. >> So, OpenAI has revealed that they found as many as 16,000 attempts at least in late July. That was the peak. 16,000 attempts to uncover hidden information in terms of how Open AI’s models approach reasoning uh through problems. And what Open AI has done so far in a bit to stop distillation is that they have already hid uh the reasoning part

15:01 of its model. Right? So, it offers answers instead of explanations to user queries. But according to OpenAI, Moonshot was able to get around it by copying the encrypted reasoning and then asking a model in a different conversation to decrypt and transcribe it. The scale of this attack up to 16,000 at one point is still much smaller than what Anthropic previously accused uh did uh Moonshot AI of doing. That was in the millions. But still, it adds to this pile of accusations we have heard from Silicon Valley companies

15:32 against their Chinese counterparts. Of course, Moonshot has not responded to the accusations, but the Chinese government has hit back against it. And this is the crucial matter, right? Because um OpenAI has already shared this information with government partners, with other Silicon Valley companies. And the question is what the US will do about this. And if the US does play some sort of punitive measure, that could have tremendous impact on the ability of these Chinese AI models to scale globally. >> Meanwhile, there’s a story about DeepSeek and Huawei. uh they’ve

16:02 developed something together in terms of an AI toolkit. Yes, this is also very very critical because we know for example Nvidia’s hardware have had a had trouble entering uh China because of export controls but Nvidia’s mode also comes in the form of its software the the CUDA ecosystem has been seen as this global industry standard and it’s very integrated by Frontier models whether it’s in the US or in China and it’s very hard to switch there’s a lot of migration cost to it kind of like if you’ve been using the Apple iOS for a

16:34 long time you’re very reluctant to switch to Android, right? So, what DeepSync is doing is that it partnered with Huawei to create its own uh software ecosystem that is directly compatible with Huawei’s Ascend chips. So, they allow developers to program those AI chips and what this does is that it would eventually allow many companies to access those chips and use that domestic ecosystem uh and allow Huawei to eventually be that anchor for the domestic EI supply chain. Right? It’s all part of the an answer to the to

17:05 the government’s call for import substitution and this software stack is going to be free open source and Deepseek has touted that its programming language is also simpler and more straightforward so making it more accessible to developers as well >> amazing Minman thank you so much Minman Low our China correspondent there on the other topic we just touched on there which is the security angle of course to AI Persing Square CEO Bill Aman uh well for Ron talking about how anthropic is really one of the greatest business stories that he’s ever seen and that government oversight to the point we just made there is not needed for a larger AI firm. Speaking exclusively to

17:39 Bloomberg, Aman also told us that markets are just too focused on big IPOs. >> The market is very narrowly focused, I think, on SpaceX and anthropic uh and on on the picks and shovels that support the SpaceX. >> Is that a problem? Especially if anthropic I think we should all remind everyone I think it was on the 22nd you put out something basically saying are we going to see in anthropics s1 oh by the way there’s a 10% chance we kill humanity and that is exactly what we saw there was a large issue part of that

18:11 perspectus that basically said here’s all the harm we might cause what do you make of an IPO with that sort of thing in it and is that a company you would even buy >> so I think uh I don’t Anthropics uh it’s perhaps the greatest business story I’ve ever seen in terms of you know from the denovo to two trillion uh I would say as significantly just the revenue ramp of the company the quality of the product uh you know we we use uh claude internally so it’s uh it’s clearly an amazing company you know query whether the frontier model companies will be able to maintain their market presence

18:45 in light of the power of and of of of uh open source and and open wave models >> does that mean you you wouldn’t buy it because you’re scared of that competition >> you know we look to buy businesses is that we can predict what they’re going to look like over a very long period of time. You know, kind of boring things like, you know, perhaps Microsoft or S&P Global or Visa or Mastercard, you know, things that uh [snorts] are in our portfolio. Um, we are less likely to be an investor in a very fast growing business that’s, you know, lo consuming a huge amount of capital and you’re betting on kind of the lines crossing at some point in the future. Do you think I

19:17 think it’s super interesting business? Has the perspectus actually been filed? I’ve read. >> No, no, it’s just reports at this moment. So we have to wait what the what the actual language says. >> But on the point so you know interesting uh I think Jensen’s made this point well if you’re a $2 trillion company and you have a product or service uh that can cause enormous harm um you’re going to be very careful about releasing that product to the market. I feel like you don’t need at least for the you know the anthropics of the world you don’t need legislation or the government to protect

19:48 them from doing something stupid. you would hope you wouldn’t because they’re, you know, it’s a bit like a pharma company. You don’t release a drug to the world. You know, maybe in the case of a drug, you want you have government oversight, but the there’s huge disincentive to put out a product that’s going to destroy the world. >> Does that mean that you’re less concerned about all this, you know, AI worst case scenario out there? You think they’re going to self-regulate? Okay. >> I’m actually less concerned about anthropic or open AI being the source of the problem. I’m probably maybe more concerned about a a bad actor, a rogue actor who does not have the same

20:20 considerations, who, you know, uh, uses the resources of an open source model to cause enormous harm. And I think that’s still a very significant risk. So I’d rather that the best labs, the best frontier labs are are incredibly powerful. So they can protect us a from the rogue operator using a less powerful uh AI. Some stories were falling out of Hong Kong today. The embattled Hong Kong

20:51 developer, New World, says it has the financial support of the billionaire Chang family. [music] That’s even after a massive write down of a Hong Kong airport complex led to a $3.6 billion loss for the fiscal year. The pledge of support confirms investor expectations of the family behind New World would back the firm. Hong Kong visitor arrivals climbed [music] in August to their highest level since May 2019, signaling sustained tourism momentum [music] after the recent recovery. The tourism board says total visits rose about 6% [music] to 5.4 million. This was driven mainly by travelers from

21:24 mainland China, while international arrivals softened [music] and fewer visitors chose to stay overnight. One notable weak spot was India, from where visitor arrivals to Hong Kong fell from a year ago. >> Yep. And that’s uh well this is essentially why uh we are on holiday here today. So no market open of course across Hong Kong and mainland China. It’s um and it’s one of those days where yeah of course we you know money doesn’t sleep as they say in news. Uh >> so don’t so we so we don’t either. So,

21:55 we don’t and it’s one of those days where after the broadcast, Ivon and I step outside and we kind of feel like we’re in a scene from what was that uh the the Will Smith movie, I am Legend. When he walks through New York City, [music] it’s completely >> uh a ghost town. That’s the feeling you get here in the financial district >> a little bit. >> But we don’t mind because you guys keep us company every day and we thank you for that. Lots more ahead here. This is Bloomberg. [music]

22:35 [music] Welcome back. You’re watching the China Show. Of course, a reminder that yeah, mainland markets in here in Hong Kong are closed for a holiday here today. So, I’m guessing you guys are heading either to the train station, the airport on your way, of course. Rash for one day here in Hong Kong though. So, certainly uh yeah, enjoy it while you can. We’re still here though on this holiday and we’re taking a look at when it comes to markets here. You are still seeing some standouts when it comes to Japan that seems to be outshineing the likes of the

23:06 Cosby here today. We continue to see uh that momentum behind Nick A225. We’re close to 2% gains now here right now. A50 futures are slightly in the red here this morning. But yeah, it’s interesting what’s happening with the Cosby. >> I guess there was a bit of a moderate response to the micron earnings. Maybe that’s why the chip sector is not really >> booming here. But certainly the export side of things and the data that we got from Korea continues to be very very strong >> beyond crazy some of the names. And I think the if you think the previous month’s growth rates were already

23:38 um out of whack with what is uh orthodox uh this last number which came out um I think the adjusted one is north of 100% >> growth in exports >> headline was 83 and a half% but yeah adjusted is even bigger >> even bigger and I think it just underscores the micron story and the supply chain right even further uh the time one number we’ve kept we talk t talked about that a lot. The Hong Kong imports number which grew at the fastest pace since the 1960s which I think was out a few about a week a week and a half

24:09 ago all are pointing to the same thing that the boom for AI exports is almost singlehandedly lifting many economies especially here across >> uh the supply chains certainly the key area of growth and I would imagine will be the key driver of equity market returns just looking at how consistent and how much momentum there is behind that. Um just very quickly too so the exports number and I think have we showed that can we show that please just to give you a sense really of the direction of travel there right so if you took a snapshot this time in May you’d already be impressed you take that

24:43 fast forward uh no the exports number can we talk I think it’s much on the left side >> uh 80% is the headline adjusted is north of 100 and on Japan >> uh the the the tankan survey was out this is of course the BOJ quarterly survey which also underscored an improvement in underlying sentiment across large manufacturers in Japan and maybe a lot of that might have to do with the fact that the yen is of course weaker and of course you have a a big part of supply chain >> it was kind of like a goldilock sort of print right where it was a strong economy but not exactly like redot

25:17 >> to a point where the BOJ needs to hike uh sooner than later right so I think that itself has eased a little bit of that pressure for the central bank as well but certainly maybe maybe the bo has to really rethink things too when it comes to their, you know, tightening cycle, which they also are now underway as well. Um, in some other world news we’re also following here today, authorities in Saudi Arabia are now questioning a commercial pilot who allegedly stabbed his colleague and tried to crash a plane carrying more [music] than 170 people. Passengers and crew stormed the cockpit of the Fly

25:49 [music] Dubai plane that was on its way to Tel Aviv after it plunged more than 14,000 [music] ft in less than 30 seconds. They were able to subdue the attacker with another pilot who was on board as a passenger able to land the Boeing 737 in [music] Saudi Arabia. >> I salute these heroes who showed exceptional resourcefulness and courage. They saved many lives and prevented a major disaster. >> President Trump says former Fed Chair Jay Powell should res resign from the

26:20 central bank’s board of governors over the mismanaged renovation [music] of its headquarters. A report from the Fed’s internal watchdog has outlined a series of missteps that [music] caused the project’s cost to balloon from initial estimates of $1.3 billion to $2.4 billion, but it found no evidence of criminal wrongdoing. >> It’s horrible what they’ve done. He’s incompetent and the man that’s incompetent should not be sitting on the Federal Reserve Board. [music] And I get I’m sure that Todd and everybody’s going to be looking because the report was a pretty bad report. The report said they

26:54 did they did a bad job. They didn’t know what they were doing. >> All right. Uh just ahead here will be well on your screens coming up of course conversations [music] with these individuals. Uh my understanding is Bloomber Time has in fact just started in LA. Anyway, do stay tuned of course for those uh big conversations coming up with the co-CE of Netflix and of course Conan O’Brien and of course also Ben Affleck. Lots of

27:24 uh >> star studded names >> suffice to say. >> Yeah. Um if you haven’t got enough of the the the gravitas of me and Ivonne >> Oh yeah, >> you have more big stars coming in any day, right? We don’t even hold a candle to these guys, right? And certainly they’re going to be having a lot of conversations uh really when it comes to the opportunities, the challenges facing the entertainment industry. Of course, in the age of AI as well. So stay tuned for those discussions. There’s our very own Lucas Shaw kicking off the show.

27:56 >> We’re going to listen in. >> Markets really take off. AI slop became something we all talked about. Um you had the movie business, which I think had been left for dead at basically every event we’ve done for this feeling very strong right now. We have a new CEO at the Walt Disney Company and Josh Dearo. His predecessor Bob Iger just bought the Lakers which is my basketball team and David Ellison bought his second movie studio in as many years maybe in one year. Um I am not prone to hyperbole but it does feel like we are on the the

28:27 brink of a pretty major change in media in the sense that you know streaming which has been the kind of the the engine of growth for the last 10 years is slowing down a little bit. You have AI music, which I think was kind of a novelty when we started this a few years ago, now being very mainstream. You have a lot of music being made with AI. Uh, and social media creators, podcasters, people who’d been treated as kind of secondass citizens in entertainment are now being treated as and paid as much as pop idols and movie stars. Uh, I cannot promise to know what is going to happen over the next 12 months, but I trust

29:01 that the people that we have speaking here will be able to elucidate and help us a little bit. We’re going to kick things off on this stage with the the gentleman waiting over there, the co-CEO of Netflix, Ted Sarando. He is our first returning guest, so be nice to him. Um, then we’re gonna go to producer Kathy Kennedy. Uh, we’ll hear from comedian/podcaster Conan O’Brien. And then close things here with Ben Affleck, actor, director, and AI entrepreneur. Uh, but before we get things going, I want to run through a few logistics, things you should know. Um, I need to thank our supporting sponsors, Autodesk,

29:35 Harborview Equity Partners, Turkish Airlines, and Wild Gotch and Manis. Uh, as well as our participating sponsor, Cord Music Partners. Now, for a second, as probably the only time I’ll ask you to do this, take out your phones. Um, put them on silent, do not disturb, whatever you do. Uh, there is a a QR code here for an app. That’s the hub app. You can use it. It’s kind of your one-stop shop during the event. can get Wi-Fi information, you can get the agenda, you can meet up with other people. The number one feedback we hear from folks who come is they want to kind of network. And so we introduced these

30:08 bilateral meetings this year. Uh we have a couple of other new additions to the screen time portfolio, if you will. There’s a social content hub out there behind the registration desk. It’ll give you some fun questions. You don’t have to do it. I am I said that the uh the Oscar winner for best picture was going to be the Odyssey, which is not a particularly original opinion. Um, there’s also this Momento AI partnership we have related to photos taken of people here. So, if you want to track them or track them down, use that. If you want to talk about the event on social media, use the hashtag Bloomberg

30:38 time. Tag us at Bloomberg Live. Tag me at Lucas Shaw. I think my handle’s a little different on Instagram, but don’t worry about it. Um, and one final thing before we get going. This is really more for tomorrow, but we do have that Turkish Airlines lounge across the way. AC quiet. It’ll be good when it’s 85 degrees. Fortunately, not next week when it’s 99°. Um, you all know Netflix. I think most of you know who Ted Sandos is, but it has been a pretty busy year the last 12 months for them. So, we have a little sizzle to to show you what’s happening. [music]

31:21 All right. As they have just dimmed the lights, so will we for a couple of moments. We’ll take you straight back there to LA with Boomer screen time in a moment. This is Boomer. Good morning from the Asia Pacific. Welcome back. By the way, we’re taking you straight back here to LA. Bloomer screen time is underway. And as you can see on your screens, that is Lucas Shaw, our managing editor for media,

31:53 entertainment, and sports. And his conversation is just starting there with, as you can see on your screens, the co-CEO of Netflix, Ted Sarandos. It’s time for us to Netflix and relax. Have a look. >> We’re all to agree on what to watch. So you make a lot of things that appeal to different tastes including more uh prestige awardsy kinds of programming for that audience and which was by the way when we started that’s all we did. >> Sure. >> So to think get a kind of an idea of how the programming initiative has broadened

32:26 over over the years that day and we started with house of cards in February of 2013 we had one kind of thing just prestige serialized drama. Uh, and then we’ve since then we’ve added competition shows and game shows and cooking shows and travel shows and original movies and standup comedy. Everything we’ve done since then has just been an ongoing expansion, but we’ve been doing we’re not doing it instead of the kind of things you were talking about. Um, so and I so I don’t think um and and including by the way doing it in nearly every country in the world. So when we talk about Netflix only half of the

33:00 story revenue or watching is happening in America. It’s happening all over the world and we have these culturally resonant shows in nearly every market that we operate in. >> Right. But so does that mean to to follow up on it that the the answer is essentially something for everyone? Not that all programming is for everyone, but you have something for everyone because >> there is something for everyone. For sure. Yeah. But it doesn’t say that any one thing is for everyone. Yeah. >> Um there’s been a lot of focus over >> talking like Willy Wonka around. Yeah. Um there’s been a lot of focus over the last six to eight months, shall we say,

33:33 on the question of engagement, which is a jargony word for how much time people are spending watching you? There’s people are worried that the the growth has not been as strong as it once was. And so >> what is your answer for why engagement on Netflix is not growing as quickly as people would like it to? And and what are you guys doing to fix that? Well, if I can talk about engagement for a second, just itself, the whole act of it, we we kind of set up this debate ourselves, not on purpose. Uh, but at one point, we stopped talking about subscriber growth and we talked we we

34:05 stopped talking about subscriber growth because when you look at our business model, it used to be a one for one. We were a one skew company. We had one product. So, if you added a a new member, you knew exactly how to take those economics out. uh now we have multiple types of memberships, multiple in every different country, various arms. So it became much less easy for Wall Street or the press to track Netflix by subscriber growth uh our growth in any given part of the world. So we said and so instead of giving that number, we said here look we’re going to give you engagement. So we publish a

34:37 report of everything watched on Netflix and you know down to the minute uh you know twice a year and so we started talking a lot about engagement. So don’t worry about subscriber growth. Count revenue profit just like a real company. Uh and engagement is a is just as another metric. But at the time we said that I think we were pretty unsophisticated about how we talked about engagement. Meaning in that world all thing all revenue is equal, all profit is equal, all engagement is equal and all engagement is not equal. So we

35:09 are first and foremost we are growing engagement. Uh, so we’re growing on 200 billion hours of watching. We grew 2%, you know, in our last announcement, >> right? But 2% is not what people are hoping for out of you, right? They’re used to doubledigit growth in at least in certainly in revenue and to some extent even in viewership, they’d expect more. >> This is my this is my point about the the growth in general. Yes, overall we’re not growing as fast as I want us to and we’re working on on making that move faster. We are though also doing things that create a lot of headwind to

35:40 that number. Meaning when we do live programming on Netflix, which is a relatively new thing, um we spend about 5% of our content budget on live events. They generate about 1% of our watching >> right >> now. They all but they do a very different job than >> they generate a lot of signups. They’re really effective for >> sign up, retention, advertising, all those things that they do. But it creates engagement headwind in how you invest against it. Um, and remember when I say we grew 2%, that’s an easy number to sneeze at, but it’s through all the

36:11 growth of live, it’s through incredible headwinds from things like the World Cup and World Sports and all those things that are going on too. So, it is a we are growing the business. We want to keep growing it faster. This past quarter, we did double digit revenue growth in every in every region of the world. So, the business is great and growing fine. Um, I do I mean, if you asked me when we if we were growing at 20%, I’d be telling you I wish we were growing faster, >> right? Yeah. >> So, but when you said you wish you were going faster and we’re working on it, what are the things that you are working on to kind of reacelerate that that growth? >> Well, these are some of the things are

36:42 in the expansion of what we do. So, live was an expansion of what we did that didn’t necessarily bring more gross engagement, but it brings very valuable engagement. So, it’s not a mystery that all engagement is not equal because if is it’s you probably are not surprised to know that an hour of Judge Judy in the middle of the day does not generate as much revenue as an hour of NFL football. And so those are >> I saw some CPM chart recently that showed what you make per view versus what YouTube makes per view and yours is higher. >> Yeah, we generate more. We monetize

37:13 better. Our programming monetizes better. Now we do we’re looking constantly of how do we do things to bring more value to the members more things to watch more ways to watch all those things. So that is some of these things that are and and I I don’t want to overcharacterize things like podcast and those things because they’re very small investment and very small addition to what we’re doing. Um the vast the vast majority of what we spend on is professionally made movies and television series and and games. And so as we lean into those things and make those big swings, we have $20 billion

37:44 content budget and about 5% of that goes to live and a fraction of that goes to all those other things I was just talking about. But there’s other ways to, you know, put things on the format for people that they love. Our TF1 deal in France was an example where um you can watch our our customers in France would like more French content faster than we can make it. So, we have an arrangement with TF1 where the TF1 programming is available on Netflix and it’s very successful and it’s growing very fast. >> Were you I mean, speaking of of TF1, YouTube just did that deal with Peacock

38:19 which was similar in that you’re bringing in another type of programming for YouTube Premium. Was that something that you like why didn’t that end up at Netflix that felt like >> um I but by the way, we’re in our infancy in doing all that part and doing all those add-ons. So, uh in that particular model, I’m not sure how the economics of it play out. It it should be designed so that it’s they’re selling the pe selling peacock through YouTube which is not different than other channels deals. They’re I think they’re trying to incorporate some of the content into their own premium tier but I haven’t seen any of the details of it yet. >> But do you think cuz >> had you ended up doing the Warner

38:51 Brothers deal you would have added HBO as you know you would have purchased it as an add-on to Netflix essentially right it would have been bundled. Do you feel like going forward because Netflix has always been a service you go there there is one one place you watch everything that as you try to keep growing you have to become more of a platform where you are selling other services >> it’s not that we have to but we we should be we I think we should be much more nimble to be able to add new ways to watch on Netflix for sure over time >> what are the types of services that you think would >> well I I think uh this the entertainment

39:21 business itself is plenty big and we’re only you know about 6% of it 7% but That means like you would if they haven’t done this with anyone, but like if you could sell Disney Plus as an add-on, you would do that. >> I think over time those things will evolve. I think for us the the what we did with TF1 was the one of the more difficult executions of it, which enables us to then pan that out to much simpler, more straightforward add-ons, right? If if we choose to go that path and I think you look at it is we’ve not looked to any of those ways to grow revenue yet. So that’s upside in the

39:51 business over time. Um, I know you said YouTube and podcasting is a small part of what you do, but I I have to ask because you you like talking about different types of viewership. >> Yeah. >> And you made at this point somewhat infamous remarks. I think it was last year where you talked about sort of Netflix is where you spend time and YouTube is where you waste time. I probably >> time I didn’t say waste. >> Um, >> sorry, Neil. You have done a bunch of deals with prominent YouTubers. We we were at dinner last night. Mark Robber was there. You’ve done a deal with him. He’s a big star on YouTube. So, has your opinion of YouTube changed as you do

40:23 more of these deals? >> I shouldn’t have said that. [laughter] The the truth of it is no. I mean, we’re definitely we’re not in the UGC business. We are um we are in the prof I told you and we’re in the professionally produced content business. Now, I think there’s a bunch of people on platforms that are doing pretty close to professional programming already and and if we can better monetize that programming for them, they we can make a deal with them. But we’re definitely not trying to bring over the whole population of creators. There’s some people I would remind you my my kids are 30 and 32 years old when they were seven and nine if I’m doing the math right

40:58 they were watching Blues Clues on on Nickelodeon. It looks just like some of those just like Danny Go. I mean that programming that’s how that’s how that stuff has evolved. So when I look when we’re looking for new talent we’re looking everywhere film festivals, film schools, submissions everywhere we go. So of course you’re going to look to the platforms and find new talent. And what we do, and you could ask Mark about it when you see him, Mark Robber, we basically take this what they’re doing and give them uh the resources financially and infrastructure uh and otherwise and and production support to

41:29 do things on a larger scale than they can do currently and that they can monetize well on on other platforms. >> And so is that the because if I’m a YouTuber and YouTube has sort of made it known recently that they don’t love you, your deals have changed a little bit. The Mark Robber deal was make a bigger show than you were making. But you’ve started to do these deals where it’s day and day post to YouTube your videos to YouTube and Netflix at the same time and YouTube does not like that. So if I’m a YouTuber and YouTube says please don’t do that. Why am I still going ahead and doing a deal with Netflix? What is >> don’t know. I mean it must be good for you or you wouldn’t do it. And and in a

42:02 perfect world, I think anytime you’ve got a business where you’ve built up your a content brand and you’re trying to monetize the best you can, you’re trying to figure out how to build one without cannibalizing the other. The same way the studios do it today with windowing or the networks do it today with lease with should they license their content or not. >> So how do you build a business without cannibalizing the other one? And sometimes you can’t and you just have to pick a partner. >> Um you you mentioned gaming earlier which is though you’ve done it for a few years still feels new for you guys. um five years from now, do you guys do

42:33 you think you’re still hosting games on the service? I >> I think so. Really, what’s exciting right now and the mobile gaming was a gateway to cloud gaming. So really I we were much more interested in what you could do on the TV using your phone as a remote and remember in a kind of postconole world there’s going to be all kinds of opportunities for gaming on the television and that we want to be, you know, early invested in that. I I like it for for IP extension. I certainly like it for uh brand value for people who want to spend time on that screen gaming instead of watching uh that we

43:04 have an option for them. >> And would you because you’ve closed some some studios some of which you bought I believe would you as you look to scale it would you ever buy one of the big studios take two Microsoft seems to be unhappy with that. Well, as you know, we’re not we have not been traditionally big buyers. Um the Warner Brothers notwithstanding um that we’ve not really been we’ve been been builders from the from scratch. So, I do think we looked at some we have built some worked with some of the smaller studios and programmers and developers and there’s a likeliness of those things come. the the

43:38 big problem with with when you do these deals uh and the reason why I go you know back why the Warner Brothers was attractive even though I said we were not going to do that is it’s very rare that so that this kind of asset was so clean it was just you’re just buying just the things we wanted to buy and so we were able to very easily look at this and say how will this add value to Netflix and not destroy value in other ways how do you take this growth engine and have it supercharge our growth engine and for us the the ability to do that made that deal super unique. We’re not looking for the next opportunity to

44:11 backfill that deal because we’re our our plans and how we’re going to grow is is primarily organic and we’ll look for opportunities that complement the business as we go. It’s game that’s for games too. >> I’m curious knowing what you know now and how the street has sort of turned on you a little bit because of that deal. Do you regret going after Warner Brothers at all? >> No, I I think it was um the plan was solid. Um, I think we we and we certain we won the deal at some point, so we priced it right. Um, at our scale, that was the top price point where I thought

44:45 we could return value to our shareholders with that asset. Any more than that, I didn’t I thought we’d be taking into negative territory even with our scale. So, uh, when I look at that and I think, well, you and I think that what you’re just referring to, I think what it did is it the deal itself kind of threw the business narrative off for for for investors, for for the press, for other f. And it and you have to be willing to put the business narrative at risk for something that’s good for the long term of the business. Not the whole

45:15 business. You don’t put the business at risk but put the business you have to make have to put the business narrative at risk if you’re convinced that it’s good for the long-term return. And we have we’ve always run this business for the long term. >> And how do you reset the narrative when investors come to you and say, you know, we’re a little worried. How are you going to grow? You just say more of the same because that feels like an answer that’s not going to >> I you it’s been the answer though. you have many many years and I’d say if you look at it and say you know the businesses go double digit growth in every region of the of the world um is

45:48 growth and we are doing that and there’s a funny thing like all the bells and whistles and all the the exotic things you want to do and try in India right now our business is growing very very healthy and it h the reason why it’s working is they have two shows that are very very hot in India right now uh uh operation safar and muser cafe and They have a daily show called lockup. It started off as a five day a week show and it went to seven days a week. Uh it

46:18 was one day a week went to five days a week went to seven and it is drives so much conversation and buzz in India that it go they come in and then they lean into this other show which is kind of a top gun-like series and this other one which is like a slowburn romance and it’s just the the programming is on fire in India right now and that’s driving the business. No, they don’t even have an ad tier in India. So it is it’s all that the end of the day we will win and lose by executing on that core having the programming the movies and TV that you can’t live without. >> Okay. Movies. Um you have a movie

46:50 opening in a couple weeks. Laboolenegra is getting I think the longest window Netflix has ever given a movie. >> Um yes window from the first before it ever shows up again. Remember we when people always talk about these windows we don’t take the movies out of the theater when they come on Netflix and some of them do great business after they’re on Netflix. Uh I I think um Frankenstein played in theaters for like four months, >> but you are giving label you’re giving credit fours. Yes. >> You’re giving it more than a month where it’s in theaters before it goes to

47:20 service. Why are you doing this now? >> Um there’s a couple things I’d say when we were looking at the business early on, we we this is a true thing that people have a hard time with. Um movies in the box office are not necessarily bigger on Netflix. Not not no not no disparaging movies in the box office but movies that come out in the theater do pretty well. What happens is the the most passionate audience went to see it in the theater. So by the time it comes to Netflix you’ve lost that passionate audience and you got the people that go oh I meant to see that or I’ll get around to that

47:54 >> or I heard that was crappy and I’m curious now. >> Yeah. Now we’ll take a look at it. But by the way is this isn’t that new. I I go to the theater all the time. I sit I I listen to what people are talking about and they do talk in the theater a lot more than they used to. Um, but the people sitting in front of me while they’re running the trailers, they’ll go, “Oh, I’m going to see that. I’m going to see that. Oh, we’ll watch that on Netflix. Oh, we’re going to watch that on Netflix. Oh, we’re going to see that. I’m going to see that.” So, it’s not like The Window is really driving that decision. They made that choice for the first time they saw the trailer, >> right? >> Um, but I do but I but what surprises people if you look at that uh data that we publish twice a year or once a year

48:26 now of uh the top movies, all of our top movies are the Netflix originals. they they beat all the pay TV window titles that come to Netflix except for the kids and family movies because they get a lot of re-watching. So, what we’re doing is looking at this model and saying, “Okay, how do we serve movie lovers who may want to see this movie in a theater and how do we not harm value to Netflix and how do we position the film best in the world?” Last year we put over 30 movies in the theaters. All with bespoke plans of how many days are going to be out,

48:59 how much marketing to spend, what cities to play them in. Very bespoke, but 30 movies in theaters. And the when when you look at all this, what you figure out is that on one end of the spectrum is Leboenegra Train Dreams last year. Um that could have played in the theaters for six months and it wouldn’t have impacted it would have done you know net positive to Netflix. those kind of art house films or you know play like that. Um and then the other end is the kind of four quad family rewatch movie and that that you know so we said let’s take those two and treat them different. So we’re going to

49:32 do a big wide release for Narnia next year. Um and then we’ll do a big wide release for Charlie versus the Chocolate Factory at the end of the year. Um we think they’ll do great and when the K-pop Demon Hunter sequel comes you could expect a very broad theatrical release. And uh what does >> and then on the other on the other end too we have um you said Leboenegra but we also have uh a 7 uh IMAX release of uh further adventures of clip booth. >> Um and we have a a shorter but not by design shorter window release for

50:04 Mosquito Bowl which is Pete Berg’s new uh World War II movie. >> The one with Pat McAfee in it. >> Yeah, Pat McAfee is in it. But it’s a phenomenal movie and I’m so thrilled that we’re going to get to see it on big screens, too. What does success because it’s not your main business and what does success for a theatrical release look like for Netflix? >> Well, it won’t be tied to the eventual I mean the P&L itself would not we don’t have relatively low expectations that will add much to the financial outcome of the of the film itself. Uh so if it but the success would be that it played

50:34 >> even with a big likewig Narnia movie. I would say look there’s there when you do all these things if you’re going to say pick pick a little risk to the Netflix performance it should have the potential for a very big upside in the theater. So if that and that I think for for Narnia for K-pop Demon Hunters that’s why they’re going to get big broad global release. Um but I think in the other ones where it’s kind of in the middle that’s where it gets tougher >> right. Um we talked about selling other services. I’m curious. You guys have also talked about giving a or creating a free version of Netflix. I know you’re

51:09 not necessarily doing it, but what would that look like? >> Um, well, we’re not doing it. And I and I >> You’re not doing it. >> No, no. I said not now at the not at the second. We’re looking at it, but we’re you look at all these different models and I think the one that would look when you look at that, you see um Avod has been an interesting new engine in the last couple of years that is taking attention on time and attention on television. Now, none none of those services have gotten very big and none of them have gotten profitable. Um you

51:40 I’m talking about the you know >> Tuby Pluto. >> I don’t want to name names. You can. >> Sure. Um, >> I think they might quibble with the they’re not profitable, but >> maybe maybe um but when I look at it, what the hard part is is that you’re making these trade-offs of saying how this can’t be. So, this can’t it won’t be big enough that it will pay for cannibalizing the core product. So, you have to figure out that’s a very fine line to walk of how much product you put in that product and how much you put in the pre product and how much you put in the hybrid one. I don’t think that the Avod service can support very ambitious

52:11 programming, right? Um, and we’re we are our primary reason for being the reason we jump out of bed in the morning is for ambitious programming. >> Um, we’re low on time, but I so I’m going to speedrun through a few questions with you. You mentioned >> this is where we get in trouble. >> No. [laughter] Um, you mentioned kind of big ambitious programming and I’m just curious because in the I feel like in the last little bit there have been a lot of folks that you were in business with for a long time who are taking deals somewhere else or not sticking around

52:44 with you. We had the Noah Bombach announcement, the Shan Levy announcement. And I wrote something about Fincher this week and I’m just curious, >> does this say something to you about where you stand with the talent community or each of these are just individual cases where it, you know, >> No, they’re individual cases and the talent these these deals all serve completely different purposes. Sometimes it’s a simple way to organize a lot of work that you’re going to do together for 10 years and the overall deal is an interesting a good way to package it and present it. Um there there’s other ones which is you’re a a filmmaker a a

53:17 television creator has a very specific thing that they want to do and that we’re going to do it together and it’s going to take many years to develop and the the overall deal is a way to do business together for two or three years it’s going to take for this product to come to market and different things come at different times. I’ll talk to about a couple of the ones you just mentioned that the Duffers have worked, you know, with us for the first decade of >> creators of Stranger Things. >> Stranger Things, sorry. Uh, and they and they had a a dream that they did not want to make more TV shows right now. They really want to make big temple theatrical movies. And I said to them, I

53:51 told told Matt and then I said, “Guys, Matt and Ross, you guys are great at what you do. And I think you should go do that. You’re you’re 40. don’t wake up when you’re 60 wishing you did that 20 years later and I’m thrilled for them and they’re going to have great success and they have great success and we the Stranger Things universe are going to continue to be a part of forever and that’s fantastic. Sean also was with that with them and he just kind of doing the same thing and the problem when you have an overall deal with someone who has a commitments in other places you’re in constant conflict for their time and

54:23 Shawn is going to be making Star Wars movies for a while and he’s like so that the fact that his deal is with Disney makes a lot of sense and I’m thrilled for Sean we’re going to do a ton of things together you know we we’re still we have we have shows in development together we have a show called Sticks coming up that we’re doing we have a lot of that stuff’s going to stick around but it was a big challenge I think even in the Ryan Murphy deal when when we brought it on was he had all these comm all these commitments to everybody else though. >> I mean the desire to do movies would seem like something you could solve now that you are putting certain movies in theaters. But >> yeah, if that’s going to be your primary thing that you want to do, that’s probably not the right. And then with

54:55 David, by the way, we’ve been in business with David Fincher since 2013. >> 2011 really when you first did the deal. >> When we did the deal. Yeah. And then we did and he has not done a movie outside of Netflix since 2014. And he’s um and he he doesn’t know what he’s going to do next. and he’s he’s he’s a great guy. We made I love the the three films we we’ve done. Wait, do you see the further mis further misadventures of Cliff Booth? It’s phenomenal. Um I’m super proud of Mine Hunter. Uh 17 Emmy wins for Love, Death, and Robots, House of Cards, of

55:27 course. Um and he’s just I um he’s just he’s an he’s one of the greatest living directors. and the meetings when we we we plan on being in business together for a very long time. And this this deal is not like he’s leaving me to go somewhere else and do something else somewhere else. We’ll see what he does next and we’ll be in the mix with it. >> Um we talked about Warner Brothers. How big of a threat competitive threat do you see the whatever they call this new company? >> Uh well it’s it’s for it looks on paper so far it’s one in one. So I don’t know

56:00 if one and one is two or one in one is one and a half or one in one is three. >> And when you say one and one, just their share of streaming or Yeah. >> Yeah. >> Um they do have someone running it in Casey who we know you like a lot though. >> He’s I’ve He’s a good guy. Yeah. >> Um >> for some reason we had a very well publicized lunch. I >> Well, I think that I mean >> we have eaten together many times but yeah >> from what I heard there was some suggestion that there might be a job for him. not necessarily at Netflix, but working with Netflix.

56:31 >> Yeah, I that’s that he he’s going to be in a very good position wherever he does. He’s a super talented guy. >> Um you’re another thing that got a lot of attention during that process was was sort of relationships between the Ellison family and the president, you and the president. Um I guess two-part question. What is the like what is your relationship with President Trump like? And what do you think are the odds that we actually get this federal film tax credit passed? Well, this is for everything else you might have think he is a guy who really cares about the entertainment business and he

57:03 cares about protecting the industry and creating jobs and he loves creating jobs in the entertainment business in America. So, we talk a lot about how that could work and what’s the upside and the downside of that. We’re one of the largest producers of, you know, film and television in the world. Um, and we do business in we’ve shot last we over the last couple of years we’ve shot actually in every in all 50 states. Um, so we understand the kind of the where it works and where it doesn’t and where these incentives actually do create jobs and where they don’t and how they work best. And I feel like what we’re doing

57:35 right now in New Jersey, we developed an incentive in New Jersey that is the most competitive in the country that actually competes with most of the country, most of the places in the world. A good chunk of the production in America has gone to the UK because there’s a very big very attractive incentive and public companies have a fiduciary responsibility to deliver the most they can for the money. So they’ve chased those incentives all over the place. Um in the US the states compete with each other for that. Uh but they do not compete well with other countries for it in total. So the federal incentive,

58:09 which would be a a layer of incentive that would go on top of the states incentives, would compete with other countries and bring those keep those jobs back in America. So what we do when when we film in New Jersey, it’s an economic for it’s not >> that’s why you like it. But do you think it’s going to happen? >> There there’s a couple of wild card things. I think it’s a bipartisan approach which is helps a lot. Um, I think it makes it’s completely sound and it has a a working model that’s proven that you can put a dollar in and get six to $9 out depending on how well you

58:42 administer the the incentive. Um the problem is is you have, you know, depending on what’s going to happen in a couple of weeks, you’ve got a a lame duck session and if you have a change in control and who wants to champion what and who wants to give who a win, the the win for America is if that if we got it, that would be a win for the country. Um I don’t I don’t I can’t predict what’s going to happen in politics. I’m not very good at that on a good day. So yeah, but I do think I do it’s it is e absolutely economically sound policy to

59:12 have a competitive production incentive just like you would any other industry. >> That was the number one question I got from some of the people backstage who work in the industry and are desperate for the jobs to come back. >> Yeah. And I think by the way I think that I’m I say this to the California as well. I I just think over the years California got I think complacent that the talent was here. Um they let the infrastructure age. They make it very difficult to shoot in the city of Los Angeles. Um, I tell you, we just finished the the David Fincher’s movie was no walk in the park, but um, Animals

59:45 that opens next week. Uh, Ben, you’re going to been going to have been here. He we shot that in LA. We shot uh, Clip Booth in LA. And we shot the new season of Everybody Wants This U This U This All coming up in the next couple months. >> And those three productions alone, over $400 million of production spending in Los Angeles. Um >> well without without you know the best incentive. So yeah >> on that note thank you very much. >> Thank you so much >> Anthony I see he’s floated. [music]

1:00:20 >> All right there you go the Netflix coco the Netflix co there speaking with our very own Lucas Shaw on all things of course streaming and the like and yeah certainly a very interesting conversation there. We’re going to have more from Liber Screen Time ahead as we hear from the comedian Conan O’Brien. Also, Hollywood heavyweight Ben Affleck. We’ll be discussing AI’s impact on the industry and the creative process. >> Okay. Yeah. From O’Brien to Ben to Bonds. Uh the >> somehow you made that segue.

1:00:52 >> Yeah. Well, >> someone’s got to do it. >> Maybe we we have a future either on Netflix or along Conan. Far from that, of course. Uh we’re looking at the Bloomberg global aggregate index which really had a terrible time in September. This is just to say of course bond yields have been rising uh to levels we haven’t seen actually in a in a generation when you look at some of the yields here. Now you know the debate in market is whether or not this is is it negative factors pushing yields up or is it positive factors pushing real yields higher and I think the answer to the question will I guess inform us where the bond market eventually lands and

1:01:24 what that means actually for risk assets. But on price, bonds had a not a very good time uh in the last quarter. Worst one in fact since we were battling that massive inflation issue back about two three years back. Well, joining us to help extrapolate u what this means uh as far as risk assets go and specifically of course DM bonds. Let’s bring in Amy Sapatrick, head of income strategies at at Pendle Group. Amy, as always a pleasure to have you on the show. the the premise what what do you think was behind the

1:01:58 tailwind uh pushing yields higher uh in the last month in the last quarter? >> Yeah, it’s a tailwind I suppose if you want yields higher but yeah absolutely I am more in the camp that it’s to do with real fundamental economic reasons. I mean of course inflation is here, inflation is with all of us but one thing I think the US is slightly different on is the extent to which the growth engine is still very much on. when I look across, you know, the health of corporate profitability, it’s not all in the AI and tech sectors. Um, you

1:02:30 know, we came off 3Q earning season um still really hot and even though analyst expectations are softening at the margin, the way that the US economy is currently tracking does support the fact that yes, yields ought to be higher, real yields ought to be higher. And from a demand perspective, you know, somehow the economy is withstanding these, you know, slightly higher interest rates, definitely higher interest rates at the long end of the interest rate curve as well as higher fuel prices, um, and a lot of, you know, macro uncertainty. So,

1:03:02 it it tells me that, you know, this is probably still got legs from a real economic point of view and probably also why from a risk asset perspective. So when you look at at least the S&P 500 for example, you know, typically when we’ve had strong moves higher in yields over a short period of time, especially moves higher in real yields, you’ve seen um equity markets come under stress, you’ve seen credit markets come under stress, and albeit there’s been a little bit more volatility, a small bit of widening in credit spreads, but all the risky assets are holding up, which again tells me that, you know, economic and

1:03:33 corporate fundamentals are still holding up. Um, yeah. I mean, everyone’s saying, look, this is the time for bonds to really kind of take advantage and get some income. Now, when you’re talking about a Treasury curve that is mostly above 5%. >> You’re still saying you’re not full out ready to go outright long on duration. Tell us why. Yeah, look, I think it’s it’s difficult from a fixed income perspective because again, you know, lots of investors rely on the fixed income asset class to provide income into their portfolios and

1:04:06 it is so attractive, right? looking at not only US treasuries but especially the the corporate bond bond curves and how yields have ratcheted higher over the month of September and it’s it’s tempting to jump in but I think what I’ve seen at least locally in Australia is that that allin yield appetite for going after corporate credit has softened somewhat over the last few weeks because bond volatility has just picked up too much. I mean on the one hand you want bonds to deliver that steady rate of income into your portfolios but when you have yields going like this you’ve got marktomarket

1:04:37 capital losses that you then have to on the other hand explain to investors as to why your defensive part of the portfolio is causing you more volatility right now than the the growth part and the risky part of your portfolio. So I think you for for that investor appetite for overall global fixed income to return to the four you do need a period where the world believes that you know enough is enough yields will be higher for longer but you need to see that volatility come off and I’m not sure you know again from a fundamentals

1:05:07 perspective we’re into that right now when I look at for example coming up tonight you’ll get um ISMS in the US and again a really great indicator for that is how the regional PMIs are stacking ing up in the US and you get lots of reports of that um intra month before you even get the ISM and unfortunately it’s not good news ahead you know there’s still lots of good fundamental reasons to sort of stay away from duration right now but that doesn’t mean that you know fixed income is dead but you just probably got to look at the floating part of fixed income rather than the fixed part of fixed income

1:05:39 >> yeah that’s really where you the fine print lots of people miss that bit of the fine print Amy which really gets them into trouble well since you mentioned Australia can I just ask you I the the the spread between where you are on treasuries, let’s call it the 10-year uh and we are on the Aussie 10 year has just narrowed substantially. It’s called 10 basis points now. Where do you see that spread going? Um and is there a chance that the US now becomes uh high yield nominally as far as compared to Australia is concerned? >> I do think that the divergence is becoming more and more stark and the

1:06:12 reasons behind them becomes more stark to me as well. I think one thing that the rest of the world does miss relative to the US is this demand for capital from such a large need for capex spend from the AI and from the tech sector and that competition for capital you know you could argue at least for the US economy it makes this growth engine this this marginal part of the growth engine for the US story relatively insensitive to interest rates. I mean, I was talking about this with my colleagues this morning, but you know, when you take a company like um Alphabet, for example, you know, does it really matter that

1:06:46 they’re funding here or they’re funding, I don’t know, 100 basis points higher or even 200 basis points higher when the their need for borrowing is underpinned by the strength of demand that they’re seeing and their return expectations that are well into the double digits. So if if that is what’s underpinning the US demand and competition for capital, you know, you’re not seeing that over here in Australia where we’re we’re building data centers as well and there will be a higher need for capital, but that that grab for capital from a relatively interest rate insensitive sector is not nearly the same the world over. So that

1:07:16 divergence, you know, that is one reason alone why that divergence can can continue to grow. Now Amy, it’s it’s plausible because when you look at the Aussie the the US tenure right now, it’s we’re above most of what you see in Europe with the exception of guilt. Um a little bit more to our point, you’re higher than Oz. What would be the global implication if the US Treasury market does become the world’s high yield play? U and do you see that as being plausible?

1:07:49 Um, I don’t see any great sort of breaking point if if that does indeed become the case. Again, as long as it’s being underpinned by the relative strength of economic fundamentals between the US and everywhere else in the developed world, I I think that’s fine. I you know what I would be looking at are pain points that tell you that something in the bond market is either causing the bond market itself to break or breakage along other parts of the financial system. So here you you should be looking at you know not just term

1:08:20 premier but you should be looking at swap spreads for indications of funding stress whether the world is starting to doubt the fiscal sustainability of the US debt story and is that coming out in in swap spreads we don’t see that yet for example right and we definitely not seeing it in you know the rise of the vig or the rise of credit spreads the world over so I would be looking at things like that to monitor whether the US you know whether the level of US yield has gotten too high and it’s about to break something but I also wonder you very controversially maybe to to end our conversation today whether you know it

1:08:51 has to be the Fed that kind of breaks the back of the US economy a little bit here because everything that I see you know whether it’s the labor market it’s strong it’s tight whether it’s you know underlying demand consumers are still relatively resilient although I’m sure there’s you know stress stories everywhere else something more needs to be done here to break the back and if the fiscal lever isn’t willing to be tightened which you know arguably not nothing much is going to happen on that side does the Fed then have to do something more drastic Well, Amy, one of our stories today, I’m not sure if you saw it on the Bloomberg, you know, triple C the spread is now on

1:09:23 junk, right? I think a thousand basis points. I guess my question there is if it is indeed a very strong economy. Does that do we need to be looking at that part of the curve jump specifically as not as you know the default risk as not as something we should be too worried about? Uh is what I’m trying to get to here. Yeah, I would be more worried about whether the overall composition of the junk market is becoming more junk. Um, and I would argue that, you know, default rates whilst they’ve been picking up at the margin that nothing is exploding. When I look at lending

1:09:56 conditions in the US, everything is incredibly benign. Financial conditions are still, you know, relaxed enough. And don’t forget like again sitting in Australia it’s stark because the RBA has already hiked four times in this hiking cycle and the US hiked once and and the world is kind of in a in a bit of a panic about the whole situation but relatively speaking you know I think lending conditions are are okay um there is no funding stress signs yet in the US and triple C’s I mean when things get a little bit worse yeah you do expect that end of the credit spectrum to to have much higher beta that’s the way it

1:10:30 should be but again I would worry more if we start to see more and more of the credit universe migrating lower in their credit ratings rather than just the absolute spread of one particular slice of the credit spectrum. >> Amy, always great to have you. Amy Sha Patrick there, head of income strategies at Pendle Group. We got plenty more ahead. Keep it here. This is Bloomberg.

1:11:07 Well, OpenAI has accused its Chinese rival Moonshot of conducting [music] a widescale effort to extract data from its GPT models. And the company said it observed thousands of attempts by users associated with Moonshot to decipher hidden information about how its models [music] reason through problems. The accusation adds to growing concerns among US firms that Chinese AI developers are [music] improperly piggybacking on their models using a technique known as distillation. [music] Now, of course, this whole debate about

1:11:37 AI safety has been really brought up into the spotlight here, and recent breaches by AI models and warnings from industry leaders have renewed focus when it comes to safety. But while the spotlight has been on Silicon Valley, China’s rapidly advancing AI models have drawn far less scrutiny. Let’s bring in our Bloomberg opinion columnist, Katherine Thorber. She’s been writing about this in her column here this morning and really examining whether China is ready for those same safety challenges facing the world’s leading AI labs. Katherine, thanks for joining us. We’ve heard a lot about AI safety risk

1:12:08 in the US. Are we starting to see those same risks in China now? Well, I think more broadly, I’ve tried to reject some of the AI apocalypse framing that we’ve been seeing. Uh, but I do and I do think some people in the Chinese industry uh also seem to say that, you know, maybe Chinese AI is just a little bit more behind. They’re not seeing some of these existential risks as much as Silicon Valley or maybe they’re just sort of less doomerilled. But I do think, you know, when it comes to AI agents, we are starting to see the sort of traces of behavior that has caused all this halaloo. whether that’s

1:12:40 uh agents, you know, sort of misbehaving or behaving in ways that are sort of unexpected or being a little bit harder to contain. So, I think and China, as we know, is going really allin on AI agents. So, I think if this is really where the risk lies, I think it it won’t be just a Silicon Valley problem for a long time. >> Well, I mean, just on that last point, Katherine, Beijing has called some of these warnings fear-mongering. Are are I mean, is China changing its tune? So I do think that we’ve we’ve started to see a little bit of a change in tune.

1:13:13 And you know when when China put out its uh AI safety governance framework, one of the explicit risks that it it stated in there was actually uh fear of losing uh humans losing control over AI. So AI sort of going rogue and that’s another uh concern that President Cinping himself has repeatedly said. So I do think China is at least showing that it’s, you know, listening to these concerns and that that AI safety uh governance framework was also put out in English. So it was, you know, explicitly it seems like put out for an international audience. So it’s showing that it wants to at least be a sort of

1:13:44 global leader in AI governance. And so I think it’s it’s showing that is it’s at least aware of some of these risks. >> Katherine, thank you so much. Katherine Forbeck, our Bloomberg opinion columnist uh for us there. Uh just now we have lots more ahead. >> [music] >> This is the China show. [music]

1:14:14 Welcome back. It’s a it’s a quiet day. So [music] we are shut of course for markets for a holiday here in Hong Kong and up in mainland China. So a couple of markets are trading for us. Micron earnings is one of the key corporate drivers here. chip socks reacting to varying degrees. Kyokia is up about 4.3 as we head into the Japanese lunch break flat across the Korean names uh here as well. There is one specific name though just apart from the chip story that is really moving the needle on markets and news flow and that’s Naidc. >> Yeah, we’ll have more on that story here and what the accountants [music] have

1:14:45 said about this or lack thereof that’s really weighing on the stock here this morning. Plenty more to come. This is Bloomberg. [music] Japanese markets heading to that lunch break here this morning. It [music] is the standout across these markets. Though volumes are a bit lower. We do have China and Hong Kong markets shut for the national day as well as Golden Week holiday. So yes, the standout is the nick here today. were up more than

1:15:19 2%. The chipmaker certainly is fueling that charge here and the yen still a bit weaker there. 158 levels there. Yields on the back end continue to tick higher. >> Yeah. So, this is a story that whilst we have turned the page on the calendar quarter, it is something that we’re continuing to track the weakness we’re seeing across the yield space here. Now uh just back to the equity markets. We are just in the last it’s called 15 seconds before we head into the cash market lunch break there over in Tokyo and the stock has really seen better days. We were down as much as 20 at one point 18 and a half. We’re down about 30

1:15:51 31%. Over the past few days or so in the latest here, we’ll have more details in a moment. The auditor has basically said, “Yeah, we’re holding off right now from giving our take on what’s going on.” Uh why don’t we bring in Alice French? She’s with us out of Tokyo, our investing reporter to help us understand what is going on. Uh so Alice, we finally have a glance at the fullear results. Why has the market taken them very negatively quite evidently when you look at a stock price today? >> Hi. Yeah, I mean negatively for sure. Uh

1:16:24 the stock’s having its worst day in more than a year this morning and let’s see how it goes in the afternoon session, but unlikely things will look up, I think. I mean, look, as you say, I think the fact that the auditor has withheld an opinion on these results has just it’s really stoking a lot of caution, right? We know that the stock is already on special alert on the Tokyo Stock Exchange. Um, it’s been removed from the NIK225 and I think the fact that the auditor does not want to sign off on these statements is basically a single a signal that there could be more losses to come. So, we’ve got around 630 billion yen worth of write downs and about 480 billion worth of charges

1:16:58 because of these previous accounting issues. Now, the actual amount of those losses, I think, is relatively within expectations because we’d had some media reports earlier in the week, but I do think it’s it’s the auditor really that’s that’s causing the worry today. >> Okay. So, what are the next things to watch for the company? When do you think investors going to get a little bit more clarity on the situation? >> Yeah, I mean, we want clarity as soon as possible, right? And and that’s definitely the sense here in Tokyo. Um, I think the 28th of this month is going to be a key date to watch. So that will mark one year since the stock was put on special alert by the TSSE. Um Naidc will

1:17:32 have to report a a securities report with an auditor’s opinion by that date, otherwise it could risk potentially being reviewed for dlisting. So that’s going to be a key date. I’m sure there will also be things coming out in the next few weeks regarding um you know, we’ve already heard reports that they might be looking into spinning off some of their subsidiaries and and some of those kind of restructuring themes. So we’ll be looking out for reports on that. I think that will also uh impact sentiment a lot around the stock. and and the angle allies on activist investors, how to what extent have they been involved here in a saga so far? >> Yeah, I think it’s fair to say they’ve

1:18:07 been involved quite a lot. So, Oasis, which is which is the biggest activist investor in Japan right now, has about 8% of the stock, second biggest holder. They’ve been very vocal uh speaking out about the fact that we need to, you know, improve governance. They’ve called for kind of board changes, executive changes, and they have been pretty influential. We also heard yesterday that aspects uh hedge fund in Hong Kong had actually so so the CEO stepped down right Kishida earlier uh this week and actually that hedge fund before that step down had backed him to stay so we’re seeing a little bit of kind of um divergence amongst shareholders in how they’re responding to this uh but I

1:18:39 think definitely Naid coming under pressure from all angles basically. Okay, Alice, thank you so much. Alice French in uh Tokyo First, our Japan investing reporter. We’re just getting started here on our coverage and some key dates there to watch as we were just outlining for for for you guys. Okay, uh just to pivot here from Naidc. Let’s have a look at where we are on energy markets right now. So, you have oil coming up on your screens, NATG gas and several others of course there uh on your screens. So, there’s a couple of things going on here, right? Obviously one is you know on the back of where we

1:19:10 are here in brand prices and we are back down to about 100 or just below that part of why the yield story has been so uh front and center in September. Number two is you have this Chinese economy based on early indicators starting to show signs of uh recovery and sort of reception to some of the uh the push we’re getting there from from authorities and I think we’ve had this really good story coming through as well on the where is China as far as them being a buyer of oil is concerned >> that was the biggest wild card right of when China was going to come back into this market and buy up oil again and

1:19:42 would that actually uh fuel a bit more in ter terms of these demand issues and also the supply issues, right? And so therefore, what we’re seeing is that that recovery is more nent than initially thought. So you are seeing several firms that are now trimming their estimates about how much buying China is really going to get or how much they’re going to buy uh here. So that certainly might in some ways help the situation, but certainly uh the giant China demand picture for oil. I mean it goes beyond just the oil story. We got to talk about, you know, what we’ve been seeing in copper prices, diesel prices,

1:20:12 which continues to be uh very robust there in terms of the price levels and the like there, you know, beyond just the oil story, right? >> Yeah. >> Because there’s just so much infl I mean the inflationary pressures that we’re seeing. >> Um beyond just the oil is the big thing to watch, I think. >> And you know, the the their energy mix and how they’ve evolved that to underscores how much really oil that needed to happen. I mean, there’s the coal story as well. uh in fact just on this it’s a fantastic piece here and we will unpack this right now. So you have this clean energy boom right in Pakistan

1:20:44 and I think this really is underscores the multiple sources of energy that China has right so Pakistan has turned it into in fact the third biggest uh global market for Chinese solar uh products and while that shift has actually helped consumers it’s also straining this existing energy infrastructure really complicating deals with other Chinese companies that now operate uh in the nation’s largest coal fired power plants let’s bring in Lily Pike our China climate reporter to help us underscore for the not so obvious trends that are taking place here. Lily, very nice to see you. Fantastic piece.

1:21:17 So, Pakistan, they’ve they’ve had this record-breaking boom in solar over the last couple of years. Why has it taken off in such a big way, specifically in that part of the world? >> Thanks for having me. So, I began looking into this story after seeing this record-breaking solar boom unfolding in Pakistan. And just to put some numbers on this, Pakistan went from almost having no solar at the beginning of the decade to having about onethird of its electricity come from solar

1:21:48 today. So that just really happened overnight. And as you said, it’s become one of the largest markets for Chinese solar panels. And so that is really fascinating. And what’s extraordinary about it is that this happened not because of government policy, but because of pure economics. And so what we saw is that after the Ukraine war and after some IMF reforms in Pakistan, power prices really shot up. At the same time, Chinese solar panels just got super cheap. And so we saw millions of people across Pakistan going to buy these Chinese solar panels to put on their farms, to put on their rooftops,

1:22:21 on their factories. And that really shows that solar has become cheap enough that it can drive an energy transition alone without policy. >> Yeah. I love how you kind of frame the story that this is China’s coal past meeting and really colliding with the present which is solar. Chinese exports have been powering Pakistan’s energy transition. So why is a solar boom also a problem for China then? >> Yeah. >> What’s so fascinating about this story is as you said China is on both sides.

1:22:52 So before the solar boom that we’re seeing now, we saw China build massive coal plants in Pakistan over the last decade. And now what you’re seeing is this clash between China’s old exports, fossil fuels, and China’s new exports in energy, clean technology, including solar, including batteries. So the way that’s playing out on the ground is that we’re seeing as people go off the grid using the rooftop solar, demand for grid power is going down. And that also means demand for those new Chinese coal plants is also falling. That’s a problem for

1:23:25 both Pakistan and China because that leaves Pakistan owing billions in debt to China for those coal fired power plants. Meanwhile, usage is going down. So both countries will have to reconcile that. >> Yeah. And it does take a while of course to decommission coal plants let alone the financing that goes into that is as you know is very very complicated. Now, if to your point here, Lily, if this doesn’t seem to be one that is a story unique to to to Pakistan, it’s it’s not government policy, it’s economics at

1:23:59 work. So, I would imagine this can play out in many other places, this clash between clean tech and this legacy fossil fuel. Should we expect this trend to go beyond where we’re currently seeing it? Indeed, I think that’s what makes this Pakistan story so interesting is that it’s a bellweather for the energy transition to come. So, we see this huge growth engine from China in its clean techch exports now at 190 billion as of last year. And Chinese leaders and companies are really trying to push that

1:24:32 forward. And that’s even going up because of the Iran war. We see countries turning to electrification, turning to solar and batteries to replace those expensive fossil fuels. So, we’ve seen this energy transition taking off all over the world. Um, here in Asia, in the Philippines, uh, all the way over in South Africa, we see grid demand falling because of the rooftop solar boom. And again, this is a problem for all fossil fuel producers in these economies, including China, which put a lot of money into coal plants in the

1:25:02 last couple decades, and is now trying to kind of reconcile and confront this transition from coal, its coal past to its solar future. So, I think we can expect to see more of this to come. >> Lily, thank you so much. Lily Pike, our China climate reporter in Singapore for us. Just ahead here in shows, you might have seen this uh one of the biggest stories of course these last few hours or so. Passengers and crew saved themselves from disaster after this Fly Dubai pilot stabbed his colleague uh on a flight to Israel and the plane

1:25:34 suddenly plunges thousands of feet in a matter of seconds. An update on the investigation [music] is just ahead. This is Bloomberg. >> [music] >> Well, some pretty dramatic moments when it came to us on board that flight here. [music] Authorities in Saudi Arabia are questioning a commercial pilot who

1:26:05 allegedly stabbed his colleague and tried to crash a plane carrying more than 170 people. Now, passengers and crew stormed the cockpit and regained control of that Fly Dubai plane that was on its way to Tel Aviv. Just to tell you how dramatic it was, you take a look at what flight data has showed us, that Boeing 737 plunging more than 14,000 ft before turning back and diverting to Tabo in Saudi Arabia. So, authorities there are questioning now the attacker and trying to figure out a motive. But that that decline that ascent descent I

1:26:39 say I should say David that just happened in a matter of seconds right uh so needless to say it was some pretty pretty tense moments >> to to say to say the least and I think the motive to the last point you just made is certainly something that investigators are focusing on as we as we speak in fact let’s cross it over now to Dubai and our M’s correspondent Abir Abu Omar is there with us right now early in her morning thank you so much by the way uh for for taking the time to join us right now get get us up to speed. What do we what is our understanding right now beer, of where the investigation is? >> Yeah, good morning, David. Well, look,

1:27:13 it’s a developing story. Quite surreal, actually. The developments over the past 24 hours or so. This is a crisis that was averted. Everyone is safe. Everyone landed in Tel Aviv, of course, after a repatriation flight. Uh it took the passengers from Tabuk in Saudi Arabia. So, a quick timeline of what happened. You guys alluded to it, of course, but this flight was taking off from Dubai and then called for a crisis warning, was crossing over Jordan and then made its way back 180 degrees to the northwestern part of Saudi Arabia, that

1:27:44 is where Tabuk is, and landed. This is of course after one of the pilots with a sharp object started stabbing his colleague and then passengers took note of this, started screaming and then the flight of course made the emergency landing in Tabuk. We understand that the pilot who is of Indian nationality that was stabbed is getting the necessary medical treatment in Saudi Arabia. The other pilot who committed the act is getting investigated in Saudi Arabia. Just to note here, we still don’t have a motive. Something to note as well is

1:28:16 that there have been a lot of rumors circulating across social media and certainly within the wider sphere suggesting that this could have links. We don’t know what links this has yet. It is getting investigated. Flight Dubai put out a statement, David, suggesting that we still don’t know the motive behind this crime and that uh that that hasn’t been been made clear yet essentially. >> Yeah. And the Israeli leader Netanyahu also chimed in in calling this, you know, the these people and the

1:28:47 passengers their their heroes as well, this harrowing incident. Um air can you tell us more about what I mean this certainly has sparked a lot of debate about whether we can avoid situations like this whether we need some more precautions here whether you know cockpit video recorders for example that seems to be a a question whether we really need to be installing these sort of systems in place now for events like this. Yeah, absolutely, Von. So, Bloomberg did actually come up with a report suggesting that while these incidents,

1:29:17 these suicide pilot incidents do not occur and they have actually decreased a lot over the past couple of decades, this latest incident suggests that they could still happen. And they bring up questions about whether we do need a return of uh or to bring uh the the recordings in the cockpit uh for for pilots. And so, that is a question that I guess a lot of these uh flight companies will be asking themselves. It certainly uh feels needed at this point in time. But you’re right, Prime Minister Netanyahu did meet with the passengers that have landed in Tel Aviv. He did uh speak to the media and he did

1:29:51 say that it’s too early to make any kind of link that this incident is attached to Iran. Of course, one would be asking themselves the question of whether this is linked to Iran given everything that’s happening in the region. But it’s just important to note here that those links have not been established. President Trump did say that he had spoken to Prime Minister Benjamin Netanyahu. He did say, of course, President Trump did suggest uh we had a headline quoting him suggesting that this perhaps is a terrorist incident, but again, too early to m to make those distinctions, too early to make those

1:30:25 claims. Uh th this is a developing story. We’ll continue to monitor the details. out of Dubai this morning if we get any further statements out of officials here or flight Dubai officials and certainly out of Israel where our colleagues are monitoring the story very closely. Air, thank you. Abu Omar there, Dubai, our Dubai M East correspondent. Uh, in terms of that, we’ll continue to track, of course, this ongoing story. A look at how Asian markets are also doing as we head to that lunch break, [music] commercial break, I should say. Hong Kong, China markets are shut, but we are

1:30:57 still seeing the Cosby and Taiwan [music] uh doing quite well as well. Japan in that lunch break also. Plenty more to come. This is Bloomberg. So, I’m not complaining because you can push back [music] against it. I think we have and I have some of the best conversations of my [music] career.

1:31:30 There are a lot of people who feel safe doing a podcast who never showed up on the late night show because they’re intimidated by that and they think they have to pull a rabbit out of the hat [music] in front of a live crowd and everything has to hit. But now I talk to people, you know, just Al Pacino [music] uh will sit there and talk to me about everything for an hour and a half. You know, Dustin Hoffman, uh Paul McCartney, um [music] Mick Jagger. Um, it’s absolutely incredible. And if you [music] connect with them in the moment,

1:32:06 lock eyes with them, you never know what they’re going to say. There’s no pre-in. Um, and talking to [music] MC Jagger just very recently in London and he started I said, “Did you ever meet, you know, uh, did you ever meet Elvis?” He was like, “No, I never met Elvis. John, so [music] John Lennon.” He starts doing a John impression. You don’t want to meet Elvis. Trust me, Mick. Why didn’t I meet Elvis? Cuz John told me not [music] to. And then I was asking him a lot about the new album. But if you create that sort of symbiotic, we’re in a flow.

1:32:41 We talk about everything. And you know, maybe in a [music] different uptight environment, it would have had to be presented [music] to him. Conor wants to ask you about John Lennon. We’re not really doing the 60s. We’re doing the new album. But this way it’s um he was tricked. >> So even [laughter] >> All right. Always bring the last Kono Brian. I love it. Of course, comedian team co- co-founder and also they talking about podcast and the like. Uh

1:33:12 they’re at Bloomberg screen time. Uh there’s no other way to pivot away from that and all the glitz and glam that’s happening in Hollywood here right now. But maybe what could be overshadowing cities like Singapore and Quala Lumpur these days uh is this whole discussion about the haze there right it are really these cities are choking under some of the worst haze in years as smoke from Indonesian wildfires smothering the region ahead of a busy weekend of major sporting events and the poor air quality is now threatening events including the

1:33:43 Singapore Grand Prix and Malaysia’s return to Formula 1 after 9 years. Yeah, that’s that’s coming this weekend in Malaysia. And on top of that too, you also have the marathon. >> The marathon, which I think is these are running a marathon less than ideal >> in haze. >> Uh yes, conditions for this. So as far as some of the numbers go and the rankings on your screens, right? KL and Singapore have topped the list of cities with the worst uh polluted air powerful and El Nino is certainly contributing to what is shaping up to be the worst haze season as we were just pointing out

1:34:14 there in many many years. Let’s bring in Megan Darresen Albury uh who leads our Asia a agriculture coverage right now uh to to help us understand you know Megan thank you for joining us I mean for our viewers who might not be too familiar this is something of course that takes place happens annually um put this one into context for us what is driving this haze specifically this year and why is it so bad >> sure absolutely so the haze is really being driven by wildfires in Indonesia um as you mentioned These are an annual

1:34:47 occurrence. Part of it is due to land clearing techniques um you know using fire to to make way for farmland and development. But the dryness this year is really exacerbating things. Um El Nino has contributed to a dry season being drier than normal there. Rainfall is running 80% below normal since June. So the number of hotspots is just really climbing. They were over 15,000 in September and that was the highest since 2015. >> Okay. um what are what are people saying about how long this is going to last and and when is expected to end? >> Yeah, absolutely. So, normally

1:35:22 Indonesia’s uh rainy season would be starting around now, but the weather department there doesn’t expect it the rains to really come until November or even December this year. Um if that happens, you know, this haze could continue for for quite a while still. Unfortunately, as mentioned, you know, the the El Nino that we’re talking about, it’s expected to strengthen into one of the the strongest on record. um be quite a historic event and so um you know that often brings dryness to uh swas of Southeast Asia, South Asia. We’ve seen that with India’s monsoon data yesterday as well. It’s just quite dry in parts of this region. >> And you know we we Megan we showed some

1:35:57 of the numbers and really how bad this gets you know from a sort of scientific objective perspective. U how bad is it? I mean you’re in Singapore. Give us a give us an idea of what it’s like there. Sure. It today luckily has gotten a little bit better, but the rest of this week it has been quite noticeable. You know, you can really just see it in the air and almost, you know, smell it a little bit. Um I was talking to my teammate and KL just now who said that it’s it’s quite there bad there as well. Um so yeah, it it I think uh you know the wind patterns that’s kind of been what’s causing the

1:36:28 haze levels to differ from daytoday. Um but overall we you know as someone on the ground we are hoping that these wildfires end soon. >> Okay. Um, Megan, thank you so much. Megan Disres Albury there who leads our Asia agricultural coverage, it is the season for of course these things. Uh, just speaking of and just that’s that’s our pivot really to go into the fourth quarter here. And uh, just in terms of what October tends to look like seasonally, uh, historically when you look at some of the data, right? So whether that’s S&P 500, Asia-Pacific, Chinese stocks, I think we have gold and

1:36:58 bonds in there varying degrees. The S&P 500 tends to outperform in October, but as you can see, it tends to be a non-event for most major assets when you look at the 30-day 30-year average. >> Yeah, I mean, and bad for bonds, good for stocks. Um, that certainly seems to be continuing here today despite this yield, the the the long end of the curve. There are parts of this market, particularly when it comes to the tech side of things, that is really resilient >> to the rising yield environment. And as Amy Sherrick mentioned, this is because of the economic strength that we’re

1:37:30 seeing amidst this AI boom. And that’s why maybe investors are not really completely retreating when it comes to risk either. >> Okay, just a glance at markets. [music] A reminder that we are shut today here in Hong Kong and up in mainland China. So on that note, we’re still here [music] for you. Of course, we’re at work because you don’t have to. Thank you so much for joining us today. We will see you all tomorrow. This is the China Show.