SpaceX Seeks $40 Billion to Buy Nvidia Chips in AI Bet

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: SpaceX Seeks $40 Billion to Buy Nvidia Chips in AI Bet · Channel: Bloomberg Television · 48:16 · Watch on YouTube

Topics: Cybersecurity and software security, AI governance and regulation, Markets and economy

Summary

The program covers record highs in U.S. stocks, supported by optimism about AI and expectations for strong corporate earnings, while warning that borrowing risks are building across credit markets. Bank of Ireland CEO Myles O’Grady discusses Ireland’s growth outlook, savings accounts and the need to manage AI-related cybersecurity threats. IMF Managing Director Kristalina Georgieva urges governments with high debt and deficits to take action, while Apollo’s James Zelter and TheCityUK’s Miles Celic discuss private capital, investment and the U.K. budget. Eurasia Group’s Ian Bremmer assesses U.S. midterm politics, the Iran conflict and competing approaches to AI governance in the United States and Europe.

Key points

AI enthusiasm helped push the S&P 500 to a record, with markets betting that the technology can support companies across the economy.
SpaceX is reportedly seeking to borrow about $40 billion to buy Nvidia chips, as concerns about debt and riskier credit markets mount.
Bank of Ireland CEO Myles O’Grady cites strong domestic growth, lending and investment as supports for Ireland’s economy.
O’Grady says AI presents major opportunities for banking but also increases cyber risks that require investment and cooperation.
IMF Managing Director Kristalina Georgieva warns that high debt, deficits and debt-service costs leave some governments needing to act without delay.
Apollo’s James Zelter argues private capital can help finance long-term investment, including infrastructure, energy and AI-related needs.
TheCityUK’s Miles Celic warns that additional taxes on banks could undermine the U.K.’s competitiveness and its investment and growth goals.
Ian Bremmer expects Republicans to face serious losses in the midterms and says Trump’s political influence may weaken afterward.
Bremmer describes the Iran conflict as constrained and unresolved, with a lasting end likely requiring agreements involving Gulf states and Tehran.
Bremmer argues that insufficient AI governance risks crisis-driven responses and says Europe’s approach to social trust and democratic institutions matters.

Chapters

Start	Chapter	Summary
00:17	Markets, AI optimism and borrowing risks	The opening discusses the S&P 500’s record, earnings expectations, SpaceX’s reported $40 billion borrowing plan and rising risks in parts of the credit market.
03:24	Ireland’s budget and economic outlook	Bank of Ireland CEO Myles O’Grady discusses the country’s fiscal position, lending growth, investment plans and economic prospects.
07:08	Bank levy, savings accounts and AI security	O’Grady addresses Ireland’s bank levy and planned savings accounts before explaining how the bank is approaching AI opportunities and cybersecurity.
13:28	Jamie Dimon on AI and cyber risk	A clip of JPMorgan CEO Jamie Dimon covers data-center siting, AI’s potential benefits and the growing importance of cooperation on cybersecurity.
16:12	The IMF’s warning on debt and deficits	Kristalina Georgieva urges highly indebted governments to act, discusses fiscal pressures across advanced and emerging economies, and explains why bond yields have risen.
23:55	Apollo on private capital and investment	Apollo’s James Zelter discusses ways to expand private capital’s role in Europe and the U.K., as well as financing infrastructure, energy and AI.
30:29	The U.K. budget and financial services	TheCityUK CEO Miles Celic argues against additional bank taxes and calls for stronger government-business engagement and a less risk-averse regulatory approach.
36:37	Trump, the midterms and U.S. politics	Ian Bremmer discusses the political outlook for Republicans, Trump’s influence and the likely consequences of investigations after the midterm elections.
42:49	Iran conflict, China and AI governance	Bremmer assesses how the Iran conflict might end, Trump’s approach to AI and China, and why Europe’s governance choices and public trust matter.

Quotes

But the opportunity is huge. — 09:50

In this environment, delay no more. — 17:20

It is a response to fundamentals. — 22:08

They really want to the swamp drained. — 41:08

When you don’t proactively govern you will instead respond specifically to what the crisis is. — 47:09

Concepts and entities

SpaceX, NVIDIA, AI buildout, cybersecurity, IMF, Kristalina Georgieva, Jamie Dimon, Apollo, JPMorgan Chase, Bank of Ireland

Full transcript (original language)

00:17 >> NEWSMAKERS AND MARKET MOVERS, THIS IS “THE PULSE WITH FRANCINE LACQUA.” FRANCINE: GOOD MORNING AND WELCOME. I’M FRANCINE LACQUA IN LONDON. THE S&P 500 CLIMBING TO ITS FIRST RECORD CLOSE SINCE AUGUST ON GROWING BETS THAT CORPORATE AMERICA CAN WHETHER HIGHER ENERGY COSTS AND INTEREST RATES. LET’S BRING YOU UP TO SPEED WITH WHAT MARKETS ARE WATCHING WITH CHARLIE WELLS. AI ONCE AGAIN BOOSTING SENTIMENT. CHARLIE: ONCE AGAIN, BECAUSE THE MARKET

00:49 REALLY HAS BEEN FOCUSING ON THIS AI STORY FOR A LONG TIME NOW. TAKE A LOOK AT THAT TRAJECTORY. THE MARKET KNOWS ABOUT THIS AI STORY. THE MARKET KNOWS ABOUT THAT CONFLICT STEMMING FROM IRAN AND THE GEOPOLITICAL TENSIONS CONTINUING BUT LOOK AT THIS MARCH UPWARD. THE MARKET KNOWS THE STORY BUT CONTINUING TO BUY THAT ERROR I – AI NARRATIVE THAT THIS NEW TECHNOLOGY WILL NOT JUST STAY IN THE TECH SPACE BUT SWEEP THROUGH THE ECONOMY CAN HAVE THE ABILITY TO BOLSTER

01:20 COMPANIES IN MANY DIFFERENT SECTORS. THAT STORY HELPING TO PROPEL THE S&P 500 TO THAT RECORD YESTERDAY. FRANCINE: OPTIMISM AHEAD OF OIL EARNINGS SEASON DESPITE OIL AND BOND YIELDS RISING. CHARLIE: BLOOMBERG INTELLIGENCE ESTIMATING THIRD-QUARTER EARNINGS, A WEEK AWAY, WILL BE UP SOME 25% FROM THE YEAR BEFORE. THIS IS OPTIMISM ABOUT TECH BUT WE WERE ALSO LOOKING AT THE STOCK MARKET AND WHAT WE KNOW ABOUT THE U.S., IT IS IN A

01:52 K-SHAPED ECONOMY. ON THAT UPPER END OF THE K, A LOT OF AMERICAN CONSUMERS WHO OWN STOCKS. THE STOCK MARKET IS HITTING RECORDS, THOSE CONSUMERS FEEL LIKE THEY CAN BUY COMPANIES FROM THESE S&P 500 – THEY CAN BUY PRODUCTS FROM THESE S&P 500 COMPANIES AND THAT PROPELS EARNINGS. THERE ARE NOT A LOT OF OTHER HUGE ECONOMIC DATA PRINTS COMING BETWEEN NOW AND NEXT WEEK. FRANCINE: MARKETS APPEARING TO SHRUG OFF THE HUNDREDS OF BILLIONS OF

02:23 DOLLARS RAISED TO FUND THE AI BUILDOUT AND SPACEX IS THE LATEST TO BE LOOKING TO BORROW BIG. CHARLIE: RAY DALIO TALKING ABOUT CONCERNS ABOUT THESE BORROWING BUT SPACEX IS LOOKING TO RAISE SOME $40 BILLION IN ORDER TO INVEST IN SOME OF THESE NVIDIA CHIPS FOR THE AI BUILDOUT. THIS WOULD BE ONE OF THE DARKEST DEBT DEALS IN THE AI BUILDOUT AND THERE’S A LOT OF INVESTOR DEMAND BUT DON’T GET LOST IN THE AI STORY. THAT IS WHAT J.P. MORGAN INDICATED WITH A DEEPLY DISTRESSED LEVERAGE LOAN SIDE

02:53 OF THE MARKET. THE RISKIER SIDE OF THE CREDIT MARKET GETTING TO THE HIGHEST VALUE SINCE MARCH 2020. A LOT OF THESE TECH COMPANIES THAT BORROWED YEARS AGO, THEIR DEBT IS COMING UP TO MATURITY AND THEY HAVE A DIFFICULT TIME BECAUSE TECH IS NOT AI. AI IS A PART OF TECH. FOCUSING ON SOME OF THESE TECH NAMES WHERE SOME RISK IS MOUNTING. FRANCINE: CHARLIE WELLS WITH SOME OF THE BIGGEST STORIES. JAMIE DIMON, JP MORGAN CHIEF EXECUTIVE, ISSUED A FRESH WARNING OF GOVERNMENT DEBT AND

03:24 SAYS RATES ARE GOING UP. >> YOU CANNOT BORROW ENDLESSLY AND SPENT ENDLESSLY. IT HAS BEEN GOING ON FOR A LONG TIME. IF YOU LOOK OF THE BUILDUP OF DEBT AROUND THE WORLD – EUROPE TAPPED OUT BUT AMERICA HAS GONE FROM 50% TO 100% GDP. WE CANNOT BE COMPLACENT. THE LESSON IS THERE WILL BE A POINT WHERE THE MARKET WILL LAST FOR MORE AND MORE. FRANCINE: THAT WAS JAMIE DIMON SPEAKING

03:56 TO TOM MACKENZIE. IRELAND’S GOVERNMENT IS INCREASING SPENDING TO EASE SOME OF THE RISING ECONOMIC PRESSURES ON ITS POPULATION. IN A BUDGET YESTERDAY, DUBLIN ANNOUNCED PLANS TO CUT LEVIES ON DOMESTIC FUELS AND EXTENT A TEMPORARY REDUCTION IN DUTIES ON MOTOR FUEL. IRELAND IS ONE OF THE FEW COUNTRIES IN EUROPE WITH A FISCAL SURPLUS, SOMETHING LARGELY BUILT ON CORPORATION TAX REVENUES. TO DISCUSS THE OUTLOOK, WE ARE JOINED BY THE CHIEF EXECUTIVE OF THE BANK OF IRELAND.

04:26 THANK YOU FOR JOINING US. GIVE US YOUR SENSE ON WHAT YOU ARE SEEING IN THE ECONOMY. ARE MORTGAGES OK AND ARE YOU PLEASED OVERALL? >> GOOD MORNING, FRANCINE. YESTERDAY’S IRISH GOVERNMENT’S BUDGET IS CLEARLY VERY IMPORTANT TO OUR BANK. WE ARE COMING TO THE END OF OUR FIRST YEAR OF OUR NEW STRATEGY. THAT IS ALL ABOUT SUPPORTING THE IRISH ECONOMY. WE SEE THAT COMING THROUGH IN

04:58 STRONG GROWTH, STRONG GROWTH LENDING. DEPOSIT GROWTH AND WEALTH ASSETS UNDER MANAGEMENT ALSO GROWING. THE BUDGET YESTERDAY FIRMLY UNDERPINS THAT. WE ARE SEEING DOMESTIC GROWTH OF 3%. YOU POINTED TO THE FISCAL POSITION. IRELAND’S POSITION IS VERY STRONG. BUDGET SURPLUSES 9.5 BILLION NEXT YEAR. 56%, THAT SUPPORTS CAPITAL INVESTMENT AND GROWTH. WE ARE SEEING THAT COMING THROUGH WITH HER OWN BUSINESS CUSTOMERS, THE LENDING BOOK AND THE BUSINESS BANKING BOOK GREW

05:30 BY 14% IN THE FIRST HALF OF THE YEAR. THAT IS A STRONG SENSE OF WHERE SENTIMENT IS AT. BUSINESS IS IRELAND WILLING TO INVEST. FRANCINE: WHAT IS THE BANKS OUTLOOK FOR THE NEXT YEAR FOR THE IRISH ECONOMY? MYLES: AGAIN, THAT OUTLOOK TO 2028 IS PART OF OUR STRATEGY THAT WE COMMUNICATED EARLIER THIS YEAR. IT UNDERPINS A DOMESTIC GROWTH OF BETWEEN 2% TO 3% ON AVERAGE. IF WE LOOK AT SOME OF THE

06:03 FUNDAMENTALS BEHIND THAT, YES, THE FISCAL POSITION BUT THERE ARE ALSO VERY STRONG STRUCTURAL ELEMENTS TO THE ECONOMY THAT ARE SUPPORTING GROWTH. THE GOVERNMENT’S ALL NATIONAL DEVELOPMENT PLAN TO INVEST $275 BILLION OVER THE NEXT 10 YEARS IS A 40% INCREASE ON PRIOR CAPITAL PLANS. NEXT YEAR, SPENDING $20 BILLION. ALSO, ELEMENTS LIKE THE DEMAND FOR NEW HOMES WILL DRIVE THE ECONOMY. AND IN A BROADER SENSE, WE HAVE A GROWING ECONOMY, A GROWING

06:34 POPULATION IN PARTICULAR. 33% OF OUR POPULATION ARE UNDER 25. THAT IS VERY IMPORTANT IN THE CONTEXT OF DRIVING GROWTH. IT IS A COMBINATION OF DEMOGRAPHICS BUT ALSO A STRONG INVESTMENT PROFILE THAT WILL SUPPORT THE ECONOMY. THE BANK OF IRELAND SUPPORTS THAT GROWTH AS WELL. FRANCINE: YESTERDAY AND THE BUDGET, THE FINANCE MINISTER EXTENDED THE BANK LEVY. I THINK YOU HAVE CALLED THIS BANK LEVY IN THE PAST DISCRIMINATORY. WHAT IS YOUR RESPONSE NOW THAT IT IS STAYING? MYLES: OUR VIEW IS THE BANK LEVY THAT

07:08 WAS INTRODUCED AS PART OF THE GLOBAL FINANCIAL CRISIS, THAT HAS SERVED ITS PURPOSE. I BELIEVE IT SHOULD BE REMOVED. OF COURSE, THAT IS A DECISION FOR GOVERNMENT AND NOT FOR ME. OUR POSITION IS CLEAR AND WE KNOW THERE WAS NO CHANGE IN YESTERDAY’S ANNOUNCEMENT. FRANCINE: THE IRISH GOVERNMENT’S NEW SAVINGS ACCOUNTS ARE DUE TO BE UP AND RUNNING IN THE MIDDLE OF NEXT YEAR. DO YOU THINK THIS SCHEME WILL HELP INCREASE CAPITAL MARKET PARTICIPATION? MYLES: I THINK IT WILL. IT IS A VERY IMPORTANT ELEMENT. THE BANK OF IRELAND IS VERY

07:41 SUPPORTIVE OF IT. PART OF OUR STRATEGY TO DRIVE GROWTH IN OUR HOME MARKET, ONE OF THE STRONG PILLARS OF THAT IS OUR WEALTH FRANCHISE. WE HAVE TWO VERY STRONG BUSINESSES. NEW IRELAND IS A LIFE AND PROTECTION BUSINESS. AND DAVY’, IRELAND’S HIGH NET WORTH BUSINESS. WE WANT TO STEP MORE IN THE RETAIL INVESTMENT SPACE. THE MASS-MARKET. THAT IS IMPORTANT FOR A COUPLE OF REASONS. ONE, IT IS ABOUT ENSURING OUR CUSTOMERS ARE PROTECTING THEIR

08:13 LONG-TERM FINANCIAL RESILIENCE AND STABILITY. THAT IS USUALLY IMPORTANT. IT ALSO MAKES VERY GOOD COMMERCIAL SENSE. I THINK IN THE SHORT TERM, IT IS LIKELY TO HAVE A MODEST IMPACT, BUT AS WE THINK ABOUT THE LONGER-TERM, ABOUT GETTING THE CAPITAL MARKETS MORE OPEN TO MORE PEOPLE, AND THE BANK OF IRELAND PERSPECTIVE, IT IS A VERY IMPORTANT DEVELOPMENT AND WE ARE VERY SUPPORTIVE OF IT. FRANCINE: WHEN DO YOU EXPECT AND HOW QUICKLY DO YOU EXPECT THEM TO OPEN UP A LOT MORE? MYLES:

08:46 WE’RE READY TO GO. WHATEVER TIMELINE THE GOVERNMENT WOULD LIKE. IT LOOKS LIKE IT WILL BE INTRODUCED FROM THE MIDDLE OF NEXT YEAR AND WE ARE WORKING ON THE PLATFORM NOW. OUR OBJECTIVE IS TO MAKE THIS EASY FOR OUR CUSTOMERS TO ADOPT, TO SELECT AND INVEST THAT WORKS FOR THEM. WE ARE READY TO GO BUT IT LOOKS LIKE IT WILL COME TO THE MARKET IN THE MIDDLE OF NEXT YEAR. FRANCINE: YEAH, AND THEN MAYBE IT TAKES MORE TIME FOR PEOPLE TO GET USED TO IT AND INVEST A LOT MORE. TALK TO ME A LITTLE BIT ABOUT

09:17 THE RISKS OF AI. WE ARE TALKING ABOUT THAT A LOT, WHAT IT MEANS FOR THE SECURITY OF THE BANKING SYSTEM. HOW SERIOUSLY DO YOU TAKE THIS THREAT AND WHAT CAN YOU DO TO MITIGATE SOME OF THE CONCERNS? MYLES: YEAH, THIS IS – AI CLEARLY IS A TOPIC THAT IS GETTING MANY HEADLINES APPROPRIATELY, BOTH IN THE CONTEXT OF THE OPPORTUNITY AND THE RISK THAT IT PRESENTS. I SPENT THREE DAYS IN SAN FRANCISCO LAST WEEK. I MET SOME OF THE VERY LARGE PLAYERS, BUT ALSO SOME OF THE

09:50 SMALLER FIRMS THAT ARE BRINGING AI TO THE MARKET. THAT IS A VERY EXCITING FRONTIER, BUT IT DOES COME WITH RISKS THAT NEED TO BE CAREFULLY MANAGED. MANAGED BY BANKS LIKE BANK OF IRELAND IN THE CONTEXT OF HOW WE PROTECT AGAINST CYBER RISK, BUT ALSO MANAGED ON A NATIONAL LEVEL AND THE GLOBAL LEVEL AS WELL. I THINK WE CAN MANAGE THOSE RISKS IF WE WORK WELL TOGETHER. BUT THE OPPORTUNITY IS HUGE. I THINK IT WILL TRANSFORM BANKING BOTH IN TERMS OF THE PRODUCTS WE OFFER AND HOW WE RUN OUR BUSINESS. IT IS AN EXCITING DEVELOPMENT.

10:22 LOTS OF OPPORTUNITY FOR THE RISKS NEED TO BE CAREFULLY MANAGED. ALSO, IRELAND HAS GOT A STRONG TRACK RECORD OF ATTRACTING FOREIGN DIRECT INVESTMENT INTO IRELAND, OFFERING ACCESS IS AN OPPORTUNITY FOR IRELAND TO STEP INTO THE AI INNOVATION SPACE TO BE A CENTER OF EXCELLENCE. PART OF THAT IS WORKING OUT THE RISKS AS WELL. FRANCINE: WHAT DOES THAT LOOK LIKE CONCRETELY IN TERMS OF, I DON’T KNOW WHETHER IT IS RESEARCH AND SPENDING WERE JUST CYBERSECURITY? MYLES:

10:54 I THINK THE MOST IMPORTANT THING WE CAN DO IN THE VERY NEAR TERM – WE ARE ACTIVELY WORKING ON THIS. NOT JUST WITHIN BANK OF IRELAND BUT IN COLLABORATION WITH OTHER BANKS ACROSS THE EURO ZONE AND ARE REGULATORS IS MAKING SURE THAT WE PROTECT OUR TECHNOLOGY FOOTPRINT SO THAT WE MINIMIZE THE ABILITY FOR A CYBER THREAT. THERE WILL ALWAYS BE A CYBER THREAT THAT EXISTED BEFORE AI AND IT IS THERE NOW.

11:24 AI MAKES IT MORE, PUSHES UP THE RISK CURVE BUT PART OF WHAT WE ARE DOING IS MOST CERTAINLY TO INVEST IN OUR SYSTEMS TO ENSURE THAT THAT FOOTPRINT IS MAINTAINED AND KEPT SAFE. THAT THE PERIMETER IS KEPT SAFE. THAT WE RESPOND, WE PRIORITIZE OUR INVESTMENT IN PROTECTING OUR SYSTEMS. AS WELL AS THAT, WE ARE ALSO INVESTING IN OUR CAPABILITY. AI IS DESCRIBED AS A TECH PLAY. IT IS ALSO VERY MUCH ABOUT PEOPLE AND HOW WE WORK. INVESTING IN THAT PART OF THIS AND THIS FRONTIER DEVELOPMENT IS ALSO VERY IMPORTANT.

11:55 FRANCINE: MYLES O’GRADY, THANK YOU FOR JOINING US. THE CHIEF EXECUTIVE OF BANK OF IRELAND. COMING UP, WE WILL HEAR FROM THE IMF MANAGING DIRECTOR AS SHE WARNS THE WORLD IS FACING WHAT SHE CALLS A RISK COCKTAIL. THAT IS COMING UP NEXT AND THIS IS BLOOMBERG. ♪

13:28 FRANCINE: THE CONVERSATIONS THAT MATTER, THE INSIGHTS YOU NEED. THIS IS “THE PULSE.” THE EUROPEAN UNION IS PREPARING A SO-CALLED SAFEGUARD MEASURES THAT WOULD ACTUALLY LIMIT THE IMPORTS OF CHINESE HYBRID VEHICLES INTO THE BLOC IN A BID TO IMPROVE THE TRADE RELATIONSHIP. JAMIE DIMON, CHIEF EXECUTIVE OF JPMORGAN CHASE, STRAIT OF HORMUZ SAYS CYBERSECURITY

13:59 REMAINS HIS BIGGEST CONCERN WITH A IKE. HE ALSO – WITH A I. HE ALSO WEIGHED IN ON THE INVESTMENT NEEDED TO FUND THE AI BUILDOUT. >> DATA CENTERS, YOU BUILD THEM WHERE THEY WANT THEM. HALF OF THEM ARE IN TEXAS AND VIRGINIA AND PEOPLE DON’T WANT THEM THERE. YOU ARE NOT GOING TO WIN, YOU GET LAWSUITS. BUT THERE ARE A LOT OF STATES WILL TAKE IT THAT HAVE ACCESS TO POWER. OF COURSE, ANY COMPANY WOULD HAVE TO BE A GOOD COMMUNITY CITIZEN. I THINK A LOT OF THESE PEOPLE ARE GOING INTO TOWN, THERE BEING PART OF THE COMMUNITY,

14:36 HELPING THE COMMUNITY GET THE RIGHTS, THEY MAKE COMMITMENTS THAT WILL NOT RAISE CONSUMER ELECTRICITY COSTS. IT’S JUST THINGS LIKE THAT AND THAT WILL BE WORKED THROUGH. AI HAS POSITIVE EFFECTS. I DO THINK IT WILL CURE A LOT OF DISEASES. IT WILL SAVE ACCIDENTS ON THE ROADS AND IT WILL COMPOSITE MATERIALS. IT WILL MAKE LIFE UNBELIEVABLE FOR PEOPLE. THE DOWNSIDE IS OBVIOUSLY WHAT YOU READ ABOUT WITH THE AGENTS AND MYTHOS AND ALL THESE THINGS. THAT IS A LEGITIMATE CONCERN. IT IS A REAL THING. I AM NOT GOING TO GET HYSTERICAL OVER, IS IT EXISTENTIAL OR NOT? WHAT WE ARE DOING IS ROLLING UP OUR SLEEVES AND GOING TO WORK TO FIX IT. SO, THE BANKS HAVE ALWAYS HAD A SYSTEM IN PLACE WHERE WE HELP EACH OTHER.

15:08 WE ALSO STARTED THIS THING CALLED THE ALLIANCE FOR CRITICAL INFRASTRUCTURE, IT STARTED WITH 50 COMPANIES, IT IS STARTING IN THE U.S., IT IS ACROSS SIX INDUSTRIES, TECH, FINANCIAL SERVICES, WATER, TRANSPORT. THESE ARE INDUSTRIES THAT GOVERNMENT POINTS OUT ARE LIFELINE. BUT EVENTUALLY, IT SHOULD PROBABLY EXPANDED TO HEALTH CARE, PHARMA, AGRICULTURAL. EVERY INDUSTRY IS KIND OF CRITICAL AND WE NEED TO HELP THE SMALLER COMPANIES, TOO, BECAUSE THEY HAVE DIFFERENT VENDORS AND DIFFERENT NEEDS SO IT’S A LOT OF WORK. WE SIMPLY HAVE TO DO IT. AI CREATED VULNERABILITIES THAT

15:41 WE DID NOT KNOW ABOUT AND WE ARE ALWAYS WORRIED ABOUT CYBER BEFORE THESE THINGS. TOM: YOU HAVE THOUGHT ABOUT CYBER RISK FOR A LONG TIME. I KNOW THAT. >> IT IS OUR BIGGEST RISK. TOM: IT IS YOUR BIGGEST RISK. DOES AI MAKE CYBER SYSTEMIC RISKS MORE LIKELY? JAMIE: OH YEAH. THAT’S WHAT I’M SAYING, MYTHOS, WHATEVER YOU THOUGHT IT WAS BEFORE. I SAID CYBER IS OUR BIGGEST RISK. THEY DID NOT PUBLISH MYTHOS YET. I WOULD SAY IT WENT UP TENFOLD AFTER MYTHOS. FRANCINE: JAMIE DIMON AT THE J.P. MORGAN CHIEF EXECUTIVE SPEAKING TO TOM

16:12 MACKENZIE. THE IMF SAYS GOVERNMENTS MUST ACT URGENTLY TO ADDRESS CHALLENGES FROM AN UNBALANCED AI BOOM, A PROLONGED ENERGY SHOCK AND RECORD AT PILES. THE COMMENTS, HEAD OF THE ANNUAL IMF WORLD BANK MEETINGS IN BANGKOK. LET’S GET MORE WITH HASLINDA AMI N, WHO IS JOINED BY SPECIAL GUEST. >> YOU TALKED ABOUT IMF CHIEF KRISTALINA GEORGIEVA SOUNDING THE WARNING, SOUNDING A NOTE OF CAUTION. LET’S BREAK IT DOWN. SHE IS WITH ME HERE. GOOD TO HAVE YOU WITH US.

16:45 YOU SAID GOVERNMENTS NEED TO TAKE URGENT ACTION. WHICH GOVERNMENTS? WHICH COUNTRIES IN PARTICULAR NEED TO ACT NOW? KRISTALINA: THE MOST IMPORTANT GROUP OF COUNTRIES BECAUSE OF THEIR SYSTEMIC SIGNIFICANCE ARE ADVANCED ECONOMIES. WHAT WE HAVE SEEN OVER THE LAST YEARS SINCE COVID’S ADVANCED ECONOMIES ARE HIT BY A SHOCK, THEY ARE RUSHED TO THE RESCUE, THEIR PEOPLE AND THEIR BUSINESSES ON ITS OWN, THIS IS A NOBLE OBJECTIVE.

17:20 BUT SHOCK AFTERSHOCK AFTER SHUT, DEFICITS – SHOCK AFTER SHOCK AFTER SHOCK, DEFICITS HAVE BEEN GOING UP. SHOCK PUSHING INFLATION UP AND INTEREST RATES UP, MAKING THE SERVICE MUCH MORE EXPENSIVE. IN THIS ENVIRONMENT, DELAY NO MORE. GOVERNMENTS WHERE DEBT LEVELS ARE VERY HIGH AND DEBT SERVICE COSTS ARE VERY HIGH AS WELL, WHERE DEFICITS HAVE GONE OUT OF

17:53 THE SAFE SON THEY SHOULD BE – SAFE ZONE THEY SHOULD BE, THEY NEED TO ACT WITH NO DELAY. >> THESE ARE COUNTRIES THAT INCLUDE THE LIKES OF THE U.S., JAPAN. KRISTALINA: FRANCE, ITALY. GERMANY IS ONE HAPPY EXCEPTION BECAUSE OF LONG HISTORY OF FISCAL DISCIPLINE. THERE ARE SOME OTHER COUNTRIES LIKE THOSE THAT HAVE BEEN HIT BY THE EURO ZONE CRISIS. PORTUGAL, IRELAND, GREECE, WHERE WE SEE MUCH TIGHTER

18:26 SPENDING, LOWER LEVELS OF DEBT, LOWER LEVELS OF DEFICIT. BUT EVEN THESE COUNTRIES, AND BY THE WAY, THE WHOLE UNIVERSE OF EMERGING MARKETS THAT HAVE WORKED VERY HARD TO BRING THEIR SPREADS DOWN, TO BRING THE COST OF SERVING DEBT DOWN, THEY NOW SEE THE FOUNDATION GOING UP. AND THAT IS A SPILLOVER FROM THE FACT THAT ADVANCED

18:58 ECONOMIES HAVE GONE TOO LOOSE. >> WHOSE RESPONSIBILITY IS IT, WHEN IT COMES TO THE U.S., IS IT WARSH, BESSENT, PRESIDENT TRUMP? KRISTALINA: WE HAVE HEARD FROM SECRETARY BESSENT ON THIS ISSUE OF DEBT AND DEFICIT ENCOURAGING STATEMENTS. HE RECOGNIZES THAT THE DEFICIT NEEDS TO GO DOWN TO 3% OVER TIME. HE RECOGNIZES THAT THE LEVEL OF DEBT IS HIGH AND DEBT SERVICE COST IS HIGH, AND THAT IS IN

19:29 HIS RESPONSIBILITY, OF COURSE, BRINGING OTHERS ON BOARD. WHEN WE TALK ABOUT GOVERNOR WARSH, HE HAS HIS JOB VERY CLEARLY DEFINED, PRICE STABILITY. AND I WANT TO PRAISE HIM FOR TAKING THAT QUITE SERIOUSLY. HE SENT A VERY CLEAR SIGNALED A PRICE STABILITY IS A PRIORITY FOR THE FED AND THE FED WILL PURSUE IT. NOT ONLY WITH WORDS, BUT ALSO WITH ACTIONS.

20:01 WHAT IS REALLY DIFFICULT IS TO GET THE PUBLIC TO ACCEPT THAT THERE HAS TO BE SOME TIGHTENING. AND WHY IS THAT SO? WELL, COMES COVID, GOVERNMENTS SPENT. COMES THE WAR IN UKRAINE, GOVERNMENTS SPENT. COMES NOW THE WAR IN THE MIDDLE EAST, THE GOVERNMENTS HAVE PRESSURE FROM THE PUBLIC, DO SOMETHING FOR ME. I THINK IT IS TIME TO RECOGNIZE

20:32 THAT THIS STAIRWELL THAT HAVE BEEN STEPPED UP AND UP AND UP DOES NOT LEAD TO HEAVEN. >> DO YOU THINK DEVELOPED MARKETS ARE ACTING LIKE EMERGING MARKETS FISCALLY? IT LOOKS THAT WAY. KRISTALINA: THERE IS A LITTLE BIT OF THIS. IT USED TO BE AN EMERGING MARKET PROBLEM. EMERGING MARKETS OVER THE LAST DECADE HAVE TIGHTENED THEIR FISCAL POSITION IS QUITE STRONG.

21:05 AND NOW, THEY SEE THE SPREADS, THEY SHRINK – THE SPREADS THEY SHRANK STILL STAYING RELATIVELY TIGHT BUT THE BASE IS GOING UP. AND I THINK THE EMERGING MARKETS ARE STILL A BIT MORE VULNERABLE BECAUSE THEIR ABILITY TO HANDLE THAT KIND OF PRESSURE, OF COURSE, IS NOT UNLIMITED. SO, ADVANCED ECONOMIES NEED TO TAKE RESPONSIBILITY FOR THEMSELVES, BUT ALSO FOR THE REST OF THE WORLD. SO, PLEASE DO YOUR JOB.

21:37 >> AT THE LAST PRESS CONFERENCE, YOU TALKED ABOUT HOW THE BOND MARKET IS ACTING NORMALLY. IS IT NOW? KRISTALINA: YOU KNOW, STEP BACK. WE HAVE SEEN THESE KINDS OF JUMPS IN YIELDS IN THE PAST, AND ACTUALLY SOME MUCH HIGHER THAN TODAY. >> IT IS ALSO THE PACE OF THE JUMP. KRISTALINA: YES. WHAT YOU NEED TO LOOK INTO HIS, WHY IS THIS HAPPENING? IT IS HAPPENING BECAUSE OF FUNDAMENTALS. WHEN YOU’RE IN A SITUATION OF INFLATION GOING UP AND STAYING

22:08 HIGH, AND THEN INTEREST RATES NEEDING TO TIGHTEN. AND IN ON THE OTHERS, GOVERNMENTS WITH – AND THEN ON THE OTHER, GOVERNMENTS WITH HUGE AMOUNTS OF DEBT, THEY NEED TO REFINANCE, AND THEN COMES THE NEW KID ON THE BLOCK, AI. THAT PUTS PRESSURE AND THIS IS WHY YIELDS HAVE GONE UP. IT IS A RESPONSE TO FUNDAMENTALS. AND IN THAT SENSE, WE ALSO DO NOT SEE ANY, IT IS MORE EXPENSIVE TO BORROW, BUT YOU CAN BORROW. THE MONEY IS THERE.

22:43 WHERE OUR ATTENTION IS IS NOT THE FUNDAMENTALS AS THEY WERE DEFINED IN THE PAST, IT IS THE ACTIONS TODAY AND THE SIGNALS FOR THE FUTURE. >> YOU HAVE ALWAYS CONSIDERED YOURSELF AN OPTIMISTIC PERSON. ARE YOU LESS OPTIMISTIC VERSUS A YEAR AGO IN 20 SECONDS? KRISTALINA: NOT AT ALL. I THINK THE WORLD ECONOMY HAS HELD WELL DESPITE OF THE MULTIPLE SHOCKS. AND WE HAVE A NEW DRIVER OF

23:15 GROWTH THAT HAS LIFTED UP A NUMBER OF ECONOMIES AND THAT IS AI. >> THANK YOU SO MUCH FOR YOUR TIME. BACK TO YOU. FRANCINE: HASLINDA, GREAT JOB, AS ALWAYS AND THANKS TO THE IMF MANAGING DIRECTOR. COMING UP, BRACING FOR THE BUDGET. WE WILL DISCUSS WHAT THE FINANCE INDUSTRY WANTS WITH THE CHIEF EXECUTIVE OF THECITY U.K., A FOCUS ON U.K. AND U.K. FINANCIAL SERVICES. THAT IS NEXT AND THIS IS

23:55 >> GOOD MORNING AND WELCOME TO “THE PULSE.” THESE ARE YOUR TOP STORIES. ANOTHER RECORD RALLYING WALL STREET PUSHING THE S&P 500 AND NASDAQ TO ALL-TIME HIGHS. SPACE X IN TALKS TO BORROW $40 BILLION TO BUY NVIDIA CHIPS. IRAN INCREASES SHIP ATTACKS IN THE STRAIT OF HORMUZ APPROACHING TOUCH WITH OIL FLOWS APPROACHING PREWAR LEVELS. WHAT THE SHOCKS MEAN FOR U.S. MIDTERMS.

24:29 APOLLO LOOKING TO PLAY BIGGER ROLE. PRESENT JIM SELTZER SAYS GOVERNMENTS INCREASINGLY SEE PRIVATE CAPITAL AS PART OF THE SOLUTION TO MOUNTING DEBTS. APOLLO EXPLORING WAYS GOVERNMENT BACKED CAN RAISE LONG-TERM CAPITAL. WE SPOKE EXCLUSIVELY WITH SELTZER ABOUT OPPORTUNITIES IN EUROPE AND FUNDING OUT THE AI BUILDOUT. >> THERE ARE THREE OR FOUR THINGS THAT NEED TO HAPPEN FOR

25:00 THE FINANCING NEED TO BE A LONG-TERM SOLUTION. 383 PROPOSALS I THINK I READ RECENTLY 60% HAVE BEEN PUT IN PLACE. IF YOU LOOK AT WHERE SECURITIZATION IS THE TYPICAL U.S. OR WESTERN INSURER VERSUS THE EUROPEAN INSURER THERE’S A GREAT DIFFERENCE IN TERMS OF THE ACCEPTANCE RATE. THERE NEEDS TO BE SOME WORK ON CAPITAL MARKET SHARE AND FINALLY IF YOU LOOK AROUND EUROPE THERE IS REAL INEQUALITY

25:38 IN TERMS OF THE ROLES PENSIONS, GERMANY HAS SMALLER ASSETS. A COMBINATION OF THOSE FOUR WE WANT TO SEE ENGAGE DIALOGUE. FRANCINE: IS THAT, AND GIVEN THE POLITICS AND POSTURING? JAMES: IT’S SLOW BUT THE BEST ANTIDOTE FOR US IS TIME. YOU SEE THE BENEFIT OF PRIVATE CAPITAL WHETHER IT’S INVESTMENT GRADE DEBT AND THIS RENAISSANCE IF YOU ARE THERE CONSTANTLY HAVING CONVERSATIONS YOU WANT TO BE ON THE RIGHT SIDE OF HISTORY. FRANCINE: WHAT’S YOUR TAKE ON THE U.K.?

26:13 JAMES: WHEN WE FIRST OPENED THE OFFICE THE FIRM’S ASSETS WERE ABOUT 25 BILLION AND YOU LOOK TODAY EUROPE WOULD HAVE ABOUT 250 BILLION IN ASSETS IN ITS ENTIRETY. WE HAVE BEEN BULLS ON THE U.K. FOR A LONG TIME. THE PURCHASE LAST YEAR PIC THE PENSION SYSTEM PLAYER, WE BELIEVE THAT WILL BE A BIG FOOT FOR US GOING FORWARD. I ALSO SAY THAT GOVERNMENTS IN TRANSITION RIGHT NOW.

26:44 THE NEW ADMINISTRATION AND LEADERSHIP HAS PUT TOGETHER SOME BOLD IDEAS. WE WANT TO BE PART OF THOSE CONVERSATIONS. FRANCINE: U.S. MIDTERMS IN A COUPLE OF WEEKS, INFLATION THERE’S A LOT OF QUESTIONS BUT AI KEEPS ON SUPPORTING EVERYTHING. JAMES: PEOPLE WRING THEIR HANDS ABOUT THE RISING AND RATES. IT’S HAPPENED BECAUSE WE HAVE A GREAT ECONOMIC CYCLE RIGHT NOW THE REST OF THE WORLD WOULD LOVE TO HAVE THE GROWTH AND CAPEX, WE HAVE A RISK ON MENTALITY WE HAVE A MENTALITY

27:16 OF PRIVATE CAPITAL AND ENTERPRISE GROWING COMPANIES INFLATION HAS BEEN UNNERVED A LITTLE BIT HIGHER BUT CERTAINLY NOT OUT OF CONTROL BY ANY MEANS. SO AS A CREDIT INVESTOR FOR A LARGE PORTION OF OUR PORTFOLIO THIS IS THE ENVIRONMENT YOU WANT TO BE IN. A PRO-ECONOMIC GROWTH ENVIRONMENT, A BIG CAPEX CYCLE POSITIVE M & A FROM THE ADMINISTRATION, A RISK ON APPETITE AND FINANCIAL PERFORMANCE IS PRETTY STRONG. WE LOVE THE U.S.

27:46 OBVIOUSLY THAT IS OUR HOME AND WHERE THE MAJORITY OF OUR ASSETS ARE TODAY CERTAIN PLACES, CERTAINLY THE U.S. IS A PRIMARY MARKET FOR US. FRANCINE: WE SAW THIS AI INFRASTRUCTURE SPENDING FRENZY IN THE LAST 12 MONTHS. JAMES: THERE’S A NARRATIVE THE RENAISSANCE IS A I AM TECH ONLY. IT’S TAKEN A LOT OF AIR IN THE ROOM AND A LOT OF FINANCING AND FOCUS BECAUSE OF THE SHEER SIZE. WHETHER ITS DEFENSE,

28:18 INFRASTRUCTURE, ENERGY SUPPLY OR TRANSMISSION. THOSE ARE ALL VERY ACTIVE. I SUSPECT THAT HOW WE FUND AND FINANCE THE DEFENSE BUDGET GOING FORWARD I THINK THERE WILL BE THE ACQUISITION PROGRAMS AND SUPPLY PROGRAMS, THE PRIVATE CAPITAL PLAYS A BIGGER ROLE IN THAT. ACROSS THE U.S. AND EUROPE AS WELL. WE HAVE BEEN INVESTING A LOT OF TIME WITH LEADERSHIP IN D.C. AND OTHER GREAT CAPITAL AROUND THE GLOBE TO BE PART OF THAT CONVERSATION. FRANCINE: DO YOU HAVE TO TAKE A BET ON

28:51 REGULATION IN AI OR THE PRICE OF ENERGY WHICH LOOKS THROUGH THESE WEEKLY CONCERNS. JAMES: TORSTEN SLOK HAS DONE A LOT OF GREAT WORK SEEING WHERE THE PROFITABILITY IS IN THE WHOLE TECHNOLOGY CHAIN. AND CERTAINLY IF YOU LOOK AT THE GROWTH MARGIN CONTRIBUTION FROM THE LANGUAGE MODEL TO THE DATA CENTER, OF THE CHIP MANUFACTURING OR THE ECOSYSTEM IT INCREASES DRAMATICALLY. WE HAVE BEEN VERY ACTIVE IN FINANCING GP USE WITH A LOT OF

29:22 THE GREAT OFF TAKES AND THE COMPANIES THAT ARE MAKING THEM. WE BELIEVE THOSE ARE WAYS FOR US TO BE ABLE TO BE A THOUGHTFUL INVESTOR IN CAPTURING GREAT SPREAD. IT WILL BE INTERESTING TO SEE WHAT THE REGULATORY BACKDROP DOES WITH DATA CENTERS. YOU COULD BE RIGHT FOR THE WRONG REASONS. IF THERE ARE MORE SEVERE RESTRICTIONS ON BUILDING NEW FACILITIES OR SOURCING ENERGY BECAUSE OF THE CONCERNS OF THE

29:57 COMMUNITIES, THE FACT THAT YOU HAVE THEM UP AND GOING IS A VALUABLE ASSET. SO NO DOUBT IN ANY SCENARIO COMPUTE AND ENERGY WILL BE BOTTLENECKS AND THE MANNER IN WHICH YOU DO THAT ON THE FLEXIBILITY AND BREADTH OF YOUR CAPITAL, OF THE BIG LESSON ON ANY CAPEX CYCLE IS NOT TAKING EQUITY RISK FOR A FIXED RATE OF RETURN. FRANCINE: THAT WAS THE APOLLO PRESIDENT JAMES SELTZER SPEAKING TO ME EARLIER. THE U.K.

30:29 CHANCELLOR HAS TOLD THE HEAD OF BRITAIN’S BIG BANKS THAT HE HAS NOT YET DECIDED WHETHER TO INCREASE TAXES IN THIS MONTH’S BUDGET. SOURCES SAY JOHN HEALEY MET YESTERDAY AND THIS COMES AS BANK LENDERS AND LEADERS FEAR OF GOVERNMENT IS CONSIDERING EXTRA TAXES ON DOMESTIC TO HELP RAISE REVENUES. WE ARE DELIGHTED TO BE JOINED BY THE CHIEF EXECUTIVE OF THE CITY U.K. WHICH REPRESENTS FINANCIAL AND RELATED PROFESSIONAL SOURCES IN THE U.K.. THERE ARE SO MANY QUESTIONS

31:00 AHEAD OF THE OCTOBER 28 BUDGET. FIRST OF ALL WHEN YOU LOOK AT THE U.K. POSSIBLY PROPOSING HIS WINDFALL TAX ON BANKS, GOOD OR BAD IDEA? MILES: ULTIMATELY THIS IS A HUGELY COMPETITIVE MARKET AND THIS IS NOT JUST THE SORT OF USUAL STANDARDS WE’VE SEEN OF THE U.K. MEASURING ITSELF AGAINST NEW YORK OR FRANKFURT OR PARIS, ALL OF WHICH HAVE LOWER LEVELS OF TOTAL TAX CODE TO WORK THE FINANCE BANKING BODY FOR MANY YEARS. BUT IT’S ALSO HOW DOES THE CHANCELLOR ACHIEVE THE GROWTH

31:33 AND THE INVESTMENT TARGETS HE’S GOT IF HE IS CUTTING OFF ONE OF THE CORE MEASURES THAT ALLOWS YOU TO FINANCE TO SCALE AND TO CREATE JOBS. FRANCINE: ARE THEY REALLY, IS THE MESSAGE MILES: WE HAVE CONTACT WITH OFFICIALS THE ECONOMIC SECRETARY THE CITY MINISTER. THEY HAVE HEARD THIS FROM THEM CONSISTENTLY. THE TYPE OF RAISE IT WILL BE

32:09 AND THE CONSEQUENCES THEY ARE COUNTING ON. I WOULD SAY RACHEL REEVES WAS DECIDUOUS IN GAINING THE INDUSTRY. MAYBE THEY WERE A BIT SPOILED BY HER TIME IN OPPOSITION IS CHANCELLOR THERE’S BEEN LESS FACE-TO-FACE ENGAGEMENT. SO THE MEETING YESTERDAY WAS VERY WELCOME FOR BANK CEOS TO BE ABLE TO INDICATE WHY THIS IS A BAD IDEA. FRANCINE: HOW COULD THE GOVERNMENT AND BUSINESS BE WORKING HAND IN HAND. MILES: INDUSTRIAL STRATEGY PUT IN

32:40 PLACE BUT JOHNNY REYNOLDS WITH A CORE ELEMENT OF FINANCIAL SERVICES. RECOGNIZING THE ROLE OF FINANCIAL SERVICES WHEN IT COMES TO INNOVATION INVESTMENT AND JOB CREATION IN THE DELIVERY OF THE DEVOLUTION AGENDA. OUR VIEW IS THERE NEEDS TO BE A PARTNERSHIP BETWEEN BUSINESS GOVERNMENT AND THE REGULATORS. IT’S ALSO ABOUT MOVING TO A DIFFERENT APPROACH ON RISK. WAY TOO RISK AVERSE FOR FAR TOO LONG. FRANCINE: WHAT WOULD CHANGE TODAY? JAMES: WHAT WE LIKE TO – MILES:

33:11 WILL BE LIKE TO SEE SOME REGULATORS IT’S NOT JUST YOUR RESPONSIBILITY TO STOP THINGS THAT GO WRONG IT’S HELP THINGS GO RIGHT. REALLY GOOD WORK CLEARING AIR COVER ON WHAT THE GOVERNMENT’S RISK TOLERANCES ARE. THE GUIDANCE NOT UNREASONABLY IS NOT BE GIVEN A CLEAR ANSWER WITH US FOR BUSINESS OR THE TREASURY SELECT COMMITTEE. IT NEEDS POLITICAL LEADERSHIP BUT ALSO A WHOLE OF SOCIETY EFFORT. THAT INCLUDES NOT TERRIFYING CUSTOMERS WHEN IT COMES TO MAKING INVESTMENTS. WE GOT A SAVINGS RATE IN THE U.K. WHICH IS GOING UP.

33:45 THAT’S GOOD, PEOPLE SHOULD BE SAVING MORE BUT THEY SHOULD BE INVESTING EVEN MORE. FRANCINE: EXECUTIVE SO TRY TO FIGURE OUT THIS ADMINISTRATION. LOOKING AT WHAT KIND OF RELATIONSHIP THEY SEE WHAT HER CHIEF EXECUTIVES ASKING YOU. >> THE CONVERSATIONS WE ARE HAVING SHOW FIRSTLY THE GOVERNMENT IS LEANING VERY HEAVILY ON PEOPLE LIKE JOHNNY REYNOLDS TO DO ENGAGEMENT WITH BUSINESS.

34:16 THEY ARE DOING GREAT JOBS. IT FEELS BUSINESS ENGAGEMENT IS GONE DOWN A GEAR. THERE ISN’T A SENSE OF FINGERTIP UNDERSTANDING OF BUSINESS NOT JUST LIMITED TO THE LABOUR PARTY. IT DOES FEEL PARTICULARLY PERTINENT IN DEALING WITH THIS HAVING TO HAVE SUCH A CONSEQUENTIAL ECONOMIC DECISION. FRANCINE: IS IT MORE BECAUSE THEY’RE FOCUSED ON POLITICS RATHER THAN BUSINESS? MILES: IF YOU LOOK AT THE BACKGROUND OF PEOPLE WHO HAVE GONE INTO

34:48 POLITICS. IT’S THE KIND OF OXFORD PPE FOLLOWED BY SPECIAL ADVISOR ROLE THERE ARE VERY FEW PEOPLE IN POLITICS WHO HAVE GONE IN BUT THEN EQUALLY BUSINESS IS NOT ENGAGED WITH POLITICS AS MUCH OF IT HAS OVER THE LAST 30 YEARS OR SO. FRANCINE: YOU ARE AT BOTH PARTY CONFERENCES AND PERFORM ALL THREE PARTY CONFERENCES WITH YOUR MAIN KEY TAKEAWAY? MILES: REFORM ARE RATCHETING UP THEIR POLICY ENGAGEMENT BUT THAT FEELS MORE LIKE A CELEBRATION THAN A PARTY CONFERENCE.

35:22 LABOUR FELT LIKE TO CONFERENCES PUT TOGETHER. THERE WAS REAL CONFIDENCE IS THE PRIME IS TO PUT IT. BUSINESS REPRESENTATIVE’S WERE A MORE ANXIOUS WITH MORE TREPIDATION ABOUT WHAT THE BUDGET MIGHT HOLD. CONSERVATIVES THERE WAS A REAL SENSE OF A SPRING IN THEIR STEP SO THEY WERE VERY KEEN TO ENGAGE . LAUNCHING HER RIGHT WAY DOCUMENT IN TERMS OF HER ECONOMIC POLICY SPEECH SHE GAVE IT OUR CONFERENCE EARLIER THIS YEAR SENDING OUT A MORE

35:53 PROGRESSIVE APPROACH ON TAX AS IN TERMS OF POTENTIAL CUTS LOOKING AT PUBLIC EXPENDITURE CUTS WERE THOSE MAKE SENSE AND LOOKING AT LABOR LAWS. FRANCINE: AS ALWAYS THANK YOU FOR JOINING US MILES. COMING UP WE GO BACK TO GEOPOLITICS WHEN THE PRESIDENT AND FOUNDER OF EURASIA GROUP COMES ON DISCUSSES THE UPCOMING MIDTERM ELECTIONS. THAT’S COMING UP NEXT AND THIS IS BLOOMBERG. ♪

36:37 FRANCINE: PRESIDENT TRUMP IS TRYING TO REINVIGORATE HIS BASE AHEAD OF THE MIDTERM ELECTIONS IN NOVEMBER. WITH FUEL PRICES SKYROCKETING AND HIS APPROVAL RATING AT A HISTORIC LOW, HIS PARTY IS IN DANGER OF LOSING CONGRESS’S IN POLLS SUGGEST AMERICANS DISAPPROVE OF TRUMP’S HANDLING OF THE ECONOMY OF THE IRAN WAR. WE WILL DISCUSS THE POLITICAL CLIMATE AND WHAT IT MEANS FOR GLOBAL AFFAIRS. IT IS SO GOOD TO HAVE YOU IN PERSON.

37:11 WHAT HAPPENS IN HUMAN TERMS? IS EVERYTHING WE ARE SEEING WITH IRAN AND RUSSIA AND AI LINKED TO THE MIDTERMS OR IS PRESIDENT TRUMP NOT THINKING MUCH ABOUT THE MIDTERMS? >> HE KNOWS HE IS LOSING THE MIDTERMS. SENIOR REPUBLICANS ARE ANGRY AT TRUMP BECAUSE THEY FEEL LIKE HE DOES NOT REALLY CARE, CERTAINLY MAKING THIS CONVENTION IN TEXAS ALL ABOUT HIM WAS NOT WHAT THEY WANTED BECAUSE HE IS AN ANCHOR AT THIS POINT. HE IS DRAGGING THEM DOWN SO THEY ARE GOING TO LOSE THE HOUSE BY A SUBSTANTIAL MARGIN AND AT THIS POINT IT LOOKS LIKE THEY ARE GOING TO LOSE THE

37:45 SENATE, TOO AND THAT – THREE MONTHS AGO THAT WOULD HAVE BEEN AN ASTONISHING THING TO SAY AND WHAT IS INTERESTING IS THEY WILL START RUNNING AWAY FROM HIM AFTER THE MIDTERMS ARE OVER BECAUSE TRUMP IS 80 YEARS OLD AND HE IS ONLY AROUND FOR A COUPLE YEARS. THEY HAVE ALREADY STARTED TO APPEAR IN IDEA OF A PAST PEAK TRUMP, THERE ARE MANY IN THE WORLD UNDERSTAND THIS. CERTAINLY MARK CARNEY UNDERSTANDS IT AND HE IS ACTING THAT WAY IN CANADA. HE IS AT 70% APPROVAL AND HAS A LONGER RUN IN OFFICE.

38:23 I THINK THE PEOPLE ON GREENLAND UNDERSTOOD THIS. XI JINPING HAS UNDERSTOOD IT FOR OVER A YEAR NOW AND THE IRANIANS UNDERSTAND IT SO ALL THESE AREAS WERE TRUMP IS HITTING HARD BUT HIS ABILITY TO FOLLOW THROUGH IS VERY LIMITED AND WE ARE STARTING TO SEE THAT DOMESTICALLY AS WELL. FRANCINE: I’M SURPRISED MORE REPUBLICANS DID NOT FOR SOME OF THE THINGS HE SAID AND I HAVE BEEN TOLD IT IS BECAUSE THEY FEAR HIM. IF YOU FEAR SOMEONE COULD LET YOU DO NOT SPEAK UP. WHY DO THE MIDTERMS CHANGE?

38:53 >> AT THAT POINT, WE ARE LOOKING AT A NEW ELECTION. WE’RE LOOKING AT WHO THE REPUBLICAN NOMINEE WILL BE AND IS IT REALLY THE PERSON TRUMP PUTS FORWARD OR DOES HIS APPROVAL RATING CONTINUE TO TANK? IT IS AT 37 NOW AND IT IS NOT LIKE HE GETS TO RUN AGAIN. HE IS OUT AND HIS LEGACY IS NOT ALL THAT ATTRACTIVE. RUNNING ON TRUMP’S RECORD IS NOT SOMETHING MOST REPUBLICANS WANT TO DO. THEY WOULD RATHER RUN ON THE INCOMPETENCE OF THE DEMOCRATS. FRANCINE: IF HE LOSES THE HOUSE AND SENATE, WILL HE ADMIT DEFEAT?

39:28 >> NO, IT IS NOT WHAT HE DOES, BUT THAT DOES NOT MEAN DEFEAT WILL NOT HAPPEN. HE IS GOING TO LOSE AND HE DOES NOT HAVE THE ABILITY TO EFFECTIVELY CONTEST THE OUTCOME. HE CAN SAY HE ACTUALLY WON. I’M NOT SURE HE WILL DO IT THIS TIME AROUND BECAUSE IT IS NOT ABOUT HIM. IT IS NOT LIKE HE IS A REPUBLICAN. HE IS THE PARTY OF TRUMP. HE WILL SAY THESE CANDIDATES WERE NOT ANY GOOD AND THEY ARE THE REASON WHY WE ARE LOSING. HE WILL BLAME SOMEBODY ELSE FOR THE OUTCOME. IT IS NOT LIKE WHAT HAPPENS IN – WHEN HE LOSES TO BIDEN

40:01 BECAUSE THAT IS HIM. THAT HE CANNOT ACCEPT SO I THINK THIS IS LESS OF A CONCERN. FRANCINE: TO THE DEMOCRATS START THE IMPEACHMENT PROCESS? I HAVE HEARD THEY CAN GO AFTER HIM. IS THAT BAD FOR THE COUNTRY? IAN: IT IS NOT USEFUL BECAUSE YOU ARE NOT GOING TO GET A CONVICTION. YOU CAN SPEND THAT TIME AND THERE WILL BE A LOT OF PEOPLE THAT STILL SUPPORT TRUMP EVEN IF THEY DO NOT SUPPORT HIM STRONGLY. THAT HELPS HIM TO A DEGREE. THERE WILL BE LOTS OF

40:34 INVESTIGATIONS INTO CORRUPTION, AS THERE SHOULD BE, AND OF COURSE THEY WILL IGNORE SUBPOENAS. THE ATTORNEY GENERAL IS NO LONGER INDEPENDENT. TRUMP’S FORMAL – FORMER PERSONAL ATTORNEY. I DO THINK THERE IS A WORRY THAT THE UNITED STATES IS PIVOTING TOWARD A GOVERNMENT SITUATION WHERE EVERY ELECTION WE ARE GOING TO GO AFTER AND BLAME THE OTHER GUY AND IT CONTINUES TO BECOME MORE AND MORE DYSFUNCTIONAL IN THE EYES OF THE AVERAGE AMERICAN VOTER. BUT THAT IS THE WAY A LOT OF

41:08 AMERICAN VOTERS PRESENTLY FEEL AND HOW YOU GET PEOPLE LIKE MAMDANI. FRANCINE: DO AMERICANS CARE ABOUT THE POTENTIAL INVESTIGATIONS AND CHARGES AGAINST PRESIDENT TRUMP? IAN: I THINK AMERICANS CARE BECAUSE THEY REALLY WANT TO THE SWAMP DRAINED. THAT WAS HOW HE WON. THEY WANTED THE FOREVER WARS ENDED. THAT WAS HOW HE WON. YOU HAVE SO MANY AMERICANS, ESPECIALLY MEN, THAT WITHOUT

41:40 ADVANCED DEGREES FEEL LIKE AMERICA HAS BECOME A TWO TIER SYSTEM AND WRITES ONLY MATTER IF YOU HAVE MONEY, POWER, INFLUENCE. AND THAT TRUMP WAS GOING TO BREAK THAT, THAT HE WAS SOMEONE WHO WAS GOING TO LOOK OUT FOR THEM AND IT TURNS OUT NOT ONLY DID HE NOT DO THAT, AND THEY HAVE REASON TO BE ANGRY, DEMOCRATS AND REPUBLICANS ARE NOT DONE A GREAT JOB MAKING THE AVERAGE AMERICAN FEEL LIKE THEY CARE ABOUT THEM. TRUMP HAS ONLY LEANED INTO THAT. TRUMP IS WILDLY MORE PERSONALLY CORRUPT. HE HAS STARTED A NEW WAR OF CHOICE WHICH – HE IS NOT

42:13 SENDING TROOPS BUT IT IS GOING BADLY FOR THE UNITED STATES AND HIS INTERESTS AND POCKETBOOK INTERESTS OF THE AVERAGE AMERICAN. THE STRAIT OF HORMUZ WILL NOT BE CLOSED, WERE NOT FOR TRUMP TO SIDING ALONG WITH THE ISRAELIS TO GO AND ASSASSINATE THE IRANIAN LEADERSHIP SO THEY ARE HAPPY ABOUT BORDER SECURITY. THAT HE HAS BEEN SUCCESSFUL ON. THAT IS THE ONE PART OF THE WORLD HE HAS A GOOD RECORD TO RUN ON BUT THAT IS NOT WHAT PEOPLE ARE FOCUSED ON TODAY SO THE REPUBLICANS ARE GOING TO GET HAMMERED BECAUSE TRUMP HAS PROVEN TO BE UNDISCIPLINED AND INCOMPETENT ON POLICY.

42:49 FRANCINE: WHAT HAPPENS IN THE MIDDLE EAST? WE ARE HEARING THE HOUTHIS ARE TRYING TO STRIKE SAUDI ARABIA. IT KEEPS GETTING MESSIER. >> IS IT? TRUMP IS TALKING A BIG GAME ABOUT ANNIHILATING THE IRANIANS AND TAKING THE OIL AND YET WHAT WE HAVE SEEN IS CONSTRAINED ON WHAT THE AMERICANS ARE WILLING TO DO MILITARILY ADD TO THE IRANIANS AND HOUTHIS ARE TALKING BIG. THE HOUTHIS ARE STRICTLY SAUDI

43:22 SHIPS. THE IRANIANS ARE NOT GOING AFTER CRITICAL INFRASTRUCTURE. BECAUSE THEY DON’T WANT THAT ESCALATION TO COME BACK AGAINST THEM. SO WHAT WE ARE SEEING IS ESSENTIALLY PRICE DISCOVERY. WE HAVE TWO PARTIES THAT WANT MORE LEVERAGE OVER AN OUTCOME, CONTROL OVER THROUGHPUT AND SHIPPING LANES FROM THE MIDDLE EAST, AND THEY WANT TO SHOW THEY HAVE MORE INFLUENCE. OVER THAT OUTCOME. IF YOU ARE CONSTRAINED IN WHAT YOU ARE WILLING TO DO TO SHOW THAT LEVERAGE, IT TAKES A WHILE AND THAT IS WHY THIS WAR IS NOT

43:58 ENDING EVEN THOUGH IT IS MUCH MORE FROZEN. THEN PEOPLE HAD ANTICIPATED. FRANCINE: HOW DOES IT END? IAN: I THINK IT ENDS WITH A SERIES OF BILATERAL AGREEMENTS BETWEEN THE GULF STATES, SO IN DOHA AND ABU DHABI, WITH TEHRAN, AND THE AMERICANS ESSENTIALLY BLESSING THOSE OUTCOMES AND NOT WITH A BANG BUT A WHIMPER AND SO WE ALREADY HAVE ABOUT THE LEVEL OF

44:28 OIL PASSING THROUGH THE STRAIT AS WE DID BEFORE THE WAR AND PRICES REFLECT THAT. BUT WE HAVE REFINED PRODUCT ISSUES. WE HAVE SHIPS GETTING SHOT AT BY THE IRANIANS AND PROXIES. WE NEED AN END TO THAT PEER THAT DOES NOT END UNTIL THERE IS SOME FORM OF AGREEMENT WITH COUNTRIES WHO HAVE THE MOST TO LOSE. THE SAUDI’S IN THE MIDDLE. THOSE DEALS HAVE TO HAPPEN. WE ARE NOT THERE YET. FRANCINE:

45:00 WHAT IS YOUR TAKE ON CHINA AND AI? I DO NOT KNOW HOW GEOPOLITICAL THIS IS, THE PRESIDENT NOT WANTING TO BACK DOWN EVEN WHEN WE SAY THIS COULD BE A CONCERN FOR HUMAN CIVILIZATION. IS IT BECAUSE HE WANTS TO WIN THIS WAR WITH CHINA? IAN: IF YOU LOOK AT HIS RELATIONS WITH CHINA, VERY SHORT-TERM AND TRANSACTIONAL. HE WANTS TIKTOK, CONTROL OVER THAT. THAT IS NOT ABOUT WINNING THE WAR WITH CHINA. SO HE HAS DONE A LOT AFTER FAILING ON LIBERATION DAY TO

45:32 FORCE THE CHINESE TO CAPITULATE ON TARIFFS AND TRADE, HE HAS DONE A LOT TO SHOW HOW MUCH HE RESPECTS XI JINPING AND HOW MUCH HE WANTS TO ENGAGE THE IDEA OF A G2 IS SOMETHING HE HAS PUT FORWARD. THE CHINESE HAVE NOT EVEN ACCEPTED THAT. I THINK ON AI TRUMP’S PRINCIPAL ISSUE IS ENSURING THAT NOBODY INTERFERES WITH THE GOOSE THAT LEADS THE GOLDEN EGG FOR MARKETS SO THAT MEANS WE WILL MAKE DECISIONS. IF THERE IS A CRISIS, I WILL

46:04 HAVE AN EXECUTIVE ORDER THAT WILL RESPOND TO THE CRISIS BUT WE ARE NOT GOING TO SLOW THIS DOWN. WE ARE NOT GOING TO REGULATE IT. WE DO NOT CARE WHAT AI CEOS SAY. FRANCINE: SO THIS IS TO PROP UP THE U.S. ECONOMY RATHER THAN MAKE SURE DEEPSEEK DOES NOT HAVE OPENAI’S LUNCH. IAN: I’M SURE THERE IS ALSO A COMPETITIVE IMPULSE BUT I DO NOT THINK THAT IS WHAT IS EXERCISING TRUMP BECAUSE THAT HAS NOT BEEN WHAT HAS ON OTHER ISSUES INCLUDING TAIWAN AND IF YOU LOOK AT AI, WE CLEARLY NEED

46:36 SOME LEVEL OF GOVERNANCE BECAUSE THESE ARE INCREDIBLY POWERFUL TECHNOLOGIES THAT EVEN THE CEOS OF THE TOP HYPERSCALERS, LIKE MICROSOFT AND GOOGLE ON THE REST, ARE SAYING THAT SCIENCE IS MOVING FASTER THAN OUR ABILITY TO UNDERSTAND HOW THESE MODELS WORK AND THEREFORE HOW TO CONTAIN THEM AT THE FACT THAT PRESIDENT TRUMP IS UNINTERESTED IN EXPLORING THAT CHALLENGE AND THE CHINESE ARE PRINCIPALLY EXERCISED BY LET’S LET THE AMERICANS MAKE MISTAKES AND EACH OTHER SO WE CAN CATCH UP, THAT IS A RECIPE FOR CRISES TO

47:09 COME FROM AI AND MY CONCERN IS WHEN YOU DON’T PROACTIVELY GOVERN YOU WILL INSTEAD RESPOND SPECIFICALLY TO WHAT THE CRISIS IS, WHICH IS WHAT HAPPENED AFTER 9/11. FOR YEARS WE HAD TO TAKE OUR SHOES OFF GOING THROUGH TSA BUT THAT IS NOT THE KIND OF REGULATORY RESPONSE YOU WANT FOR AI. FRANCINE: WHERE’S IS YOUR UP IN ALL OF THIS? THEY ARE TRYING TO BE MORE COMPETITIVE. THEY HAVE A HUGE ENERGY CRISIS AND THEY ARE STUCK IN THE MIDDLE. IAN: THEY HAVE A COMMON MARKET AND TREAT CAPABILITIES AND PEOPLE

47:42 WANT ACCESS TO EUROPE SO THE MORE CONSOLIDATED THE EUROPEANS ARE THE MORE LEVERAGE THEY END UP WITH OUTCOMES AND IF YOU ASSUME THE ONLY THING THAT MATTERS IS THAT THEY BUILD BIG NEW AI COMPANIES THEN, OK, THEY HAVE BIG PROBLEMS. IF IT IS ABOUT HOW SOCIETY FUNCTIONS AND DEMOCRACY FUNCTIONS AND RULE OF LAW FUNCTIONS – A LOT OF AMERICANS ARE NEGATIVE ABOUT AI, NOT JUST DATA CENTERS BECAUSE THEY DON’T TRUST THEIR OWN LEADERS TO EFFECTIVELY GOVERN AND TAKE CARE OF THEM.

48:16 SO ULTIMATELY IF YOU ARE A LITTLE SLOWER AND LESS PRODUCTIVE BUT YOUR PEOPLE ARE BEING BROUGHT ALONG WITH YOU THAT DOES COUNT FOR SOMETHING. MAYBE NOT AS MUCH ON BLOOMBERG BUT BROADLY SPEAKING. BECAUSE IT IS NOT A SHORT-TERM MARKET ISSUE. THIS IS SOMETHING THE EUROPEANS MATTER FOUR AND WE SHOULD BE PAYING ATTENTION TO IT. FRANCINE: YOU ARE INVITED BACK.