>> NEWSMAKERS AND MARKET
MOVERS, THIS IS "THE PULSE" WITH FRANCINE LACQUA. FRANCINE:
GOOD MORNING AND WELCOME TO "THE PULSE,"
I'M FRANCINE LACQUA IN LONDON WITH THE CONVERSATIONS THAT
MATTER. ASML AND TSMC HAVE WAYS TO
DISABLE THE WORLD'S MOST SOPHISTICATED CHIPMAKING
MACHINES IN THE EVENT THAT CHINA INVADES TAIWAN.
EUROPE IS DIVIDED OVER A REQUEST BY THE INTERNATIONAL
CRIMINAL COURT TO ISSUE ARREST WARRANTS FOR BENJAMIN NETANYAHU
AND THE COUNTRY'S DEFENSE MINISTER.
JP MORGAN BOSS JAMIE DIMON IGNITE SUCCESSION TALK AT
AMERICA'S BIGGEST BANK, SIGNALING HIS RETIREMENT IS
CLOSER THAN EVER. WE DID HEAR THAT FOR QUITE SOME
YEARS AND HE STILL SAYS THERE IS A LOT OF ENERGY.
SPEAKING OF ENERGY, LET'S HAVE A LOOK AT WHAT MARKETS ARE
TELLING US. WE HAVE SEEN STOCKS SLIPPING
ACROSS THE BOARD, OPENING WEAKER , PULLING BACK RECENT
RECORD HIGHS. INVESTORS RETREATING TO THE
SIDELINES TO WAIT FOR RESULTS FROM NVIDIA.
WILL WE SEE THAT AI RALLY CONTINUING?
THIS IS A BELLWETHER FOR THE ARTIFICIAL INTELLIGENCE FRENZY
OVER THE PAST YEAR WHICH HAS POWERED A LARGE CHUNK OF THE
S&P 500 EARNINGS. BOND YIELDS BROADLY EASING.
THIS IS ON A VIEW THAT THE FED AND OTHER MIDDLE CENTRAL BANKS
ARE ON TRACK TO CUT INTEREST RATES THIS YEAR A D.C.
GOLD AT 2419, AND WE ALWAYS LOOK AT COPPER BECAUSE IT IS
ABOVE 10,000, STILL AT A RECORD HIGH.
BACK TO OUR BIG STORY OF THE DAY.
BLOOMBERG LEARNED ASML AND TSMC HAVE WAYS TO DISABLE THE
WORLD'S MOST SOPHISTICATED CHIPMAKING MACHINES SHOULD
CHINA INVADE TAIWAN. WE ARE JOINED BY BLOOMBERG'S
TOM MACKENZIE, WHO HAS THE DETAILS.
THIS IS A HUGE PIECE OF NEWS. THIS IS MONTHS OF BLOOMBERG
TRYING TO FIGURE OUT WHAT WAS GOING ON.
WHAT HAVE WE LEARNED FROM THE SCOOP? >> PAINSTAKING REPORTING FROM
THE TEAMS, AND THE NETHERLANDS AND THE U.S. REPORTING THIS.
ESSENTIALLY THIS IS A KILL SWITCH THAT WOULD BE APPLIED TO
ASML MACHINES, THESE EXTERNAL ULTRAVIOLET FOG OF THE MACHINE
THAT ARE ESSENTIAL TO THE PRODUCTION OF MOST
SOPHISTICATED CHIPS. TSMC, THE MAKERS OF THE BIGGEST
FOUNDRY IN TAIWAN, IS DEPENDENT ON THE BIGGEST BUYERS THAT ARE
MADE BY ASML. ESSENTIALLY THEY CAN REMOTELY
SHUTDOWN THESE MACHINES IN THE EVENT OF FOR EXAMPLE AN
INVASION OF TAIWAN BY CHINA. THIS COMING OUT AS A RESULT OF
PRESSURE FROM THE U.S. TO MY CONCERNS FROM OFFICIALS
THAT SHOULD CHINA INVADE TAIWAN, THEY MIGHT GET ACCESS
TO THESE MACHINES AND PUSH UP THEIR ABILITIES.
THE NETHERLANDS HAS BEEN GAMING OUT WHAT WOULD HAPPEN AND
TESTING RISK SCENARIOS IN THAT KIND OF EVENT.
ASML AND TSMC SHORING OFFICIALS IN THE U.S.
BUT THEY HAVE THIS ABILITY TO REMOTELY SHUTDOWN THESE
MACHINES. FRANCINE: REMOTE SHUT OFF FEELS LIKE A
JAMES BOND FILM. WHAT DOES IT MEAN FOR
U.S.-CHINA RELATIONS? TOM: THESE ARE SOFI STADIUM MACHINES
WITH THOUSANDS OF COMPONENTS, YOU NEED ENGINEERS IN CLEAN
ROOMS TO CHECK ON THEM EVERY COUPLE OF MONTHS ANYWAY IF ONE
COMPONENT GOES MISSING, THAT IS A PROBLEM FOR THE MACHINE.
NOW THEY HAVE THIS ABILITY TO REMOTELY SHUT THEM DOWN.
IT POINTS TO THE URGENCY WITH WHICH OF THE U.S.
IS LOOKING AT THIS AS A RISK FACTOR.
IT UNDERSCORES HOW CONCERNED THEY ARE ABOUT CHINA GETTING
HOLD OF THE MOST SOPHISTICATED MACHINES.
CHINA ALREADY HAS ACCESS TO SOME OF THE OLDER ULTRAVIOLET
LITHOGRAPHY MACHINES. WE HAVE SEEN HUAWEI BEING ABLE
TO PRODUCE SOPHISTICATED CHIPS FOR THEIR SMARTPHONES.
THE CONCERN FOR U.S. OFFICIALS IS NOT SO MUCH THE
SMARTPHONE INDUSTRY, IT IS WHETHER THOSE CHIPS END UP IN
THE SOPHISTICATED MISSILE SYSTEMS OF THE PLA, CLEARLY
THAT IS WHERE THEIR FOCUS IS. SOME GENERALS WITHIN THE U.S.
MILITARY SUGGESTED CHINA COULD BE PREPARED TO INVADE TAIWAN BY
2027. THERE IS URGENCY BEHIND THIS.
FRANCINE: DOES THIS COME FROM THE U.S.
SIDE? THE COMPANY IS EXPECTING AS
MUCH AS 15% OF THE YEAR'S SALES TO CHINA WILL BE AFFECTED BY
THE LATEST. TOM: CHINA IS STILL A MAJOR MARKET
FOR ASML. THEY ARE ABLE TO SELL INTO THE
CHINESE MARKET A NUMBER OF THEIR LEGACY ASML LITHOGRAPHY
MACHINES, BUT NOT THE MOST CUTTING-EDGE ULTRAVIOLET
MACHINES, WHICH BY THE WAY ASML IS ONLY THE -- IS THE ONLY
PRODUCER OF IN THE WORLD. IT IS NOT JUST THE U.S.
WASHINGTON PERSUADED THE NETHERLANDS AND JAPAN TO GET ON
BOARD WITH THESE RESEARCHES SURGEONS AS WELL. FRANCINE:
WE WILL SEE WHAT CHINA SAYS IN RESPONSE.
TOM MACKENZIE WITH THE VERY LATEST ON THESE EXTRAORDINARY
CHIPMAKING SCOOP FROM OUR TEAM. U.S.
PRESIDENT JOE BIDEN DEFENDED ISRAEL AGAINST WAR CRIME
CHARGES SOUGHT BY THE INTERNATIONAL CRIMINAL COURT'S
CHIEF PROSECUTOR. HE IS SEEKING ARREST WARRANT
FOR THE ISRAELI PRIME MINISTER AND HAMAS LEADER YAHYA SINWAR.
THE MOVE HAS DIVIDED EUROPEAN LEADERS. THE U.S.
IS CALLED THE DECISION TO TARGET ISRAEL'S LEADERS
DANGEROUS. PRES. BIDEN: WE REJECT THE ICC'S APPLICATION
OF ARREST WARRANTS AGAINST ISRAELI LEADERS.
THERE IS NO EQUIVALENCE BETWEEN ISRAEL AND THOMAS. -- HAMAS. FRANCINE:
WHEN THE NEWS BROKE, I WAS NOT SURE WHAT TO MAKE OF IT.
IS THIS JOE BIDEN TRYING TO GIVE BENJAMIN NETANYAHU SUPPORT?
IF YOU REALLY GOING TO BE ARRESTED OR IS THIS JUST
POLITICS? >> THERE IS SOME STEPS TO GO
YET. THIS IS THE PROSECUTOR SAYING
HE WILL SEEK APPROVAL TO GET THESE ARREST WARRANTS ISSUED
AGAINST BOTH OF THE LEADER OF HAMAS AND THE ISRAELI PRIME
MINISTER NETANYAHU, AND SOME SENIOR OFFICIALS IN ISRAEL.
THERE IS GOING TO BE APPLICABLE OF TIME WHERE THAT GETS
CONSIDERED. WE DON'T KNOW WHAT THAT FINAL
DECISION WILL BE BUT CERTAINLY THE PROSECUTOR HAS MADE THE
CASE FOR IT. IT IS A SENSITIVE ISSUE
OBVIOUSLY FOR ISRAEL BECAUSE NORMALLY THE KINDS OF LEADERS WHO HAVE ARREST WARRANTS ISSUED.
THERE IS ONE FOR PUTIN AND CERTAIN AFRICAN LEADERS OVER
TIME. IS THIS A SENSE OF EQUIVALENCE
WITH ISRAEL,,'S AND --, US AND LETTER -- VLADIMIR PUTIN. IT JUST ADDS TO THAT SENSE THAT
ISRAEL IS UNDER PRESSURE GLOBALLY OVER ITS ACTIONS
INSIDE GAZA. BUT THE IDEA OF PUTTING
BENJAMIN NETANYAHU UNDER AN ARREST WARRANT HAS THE U.S.
AND OTHERS CONCERNED. DOES IT LEAD ISRAEL TO SAY
FINE, WE WILL JUST GO INTO ROUGH -- RAFAH, DOES IT HARDEN
SUPPORT FOR AROUND NETANYAHU AT HOME? IT IS THAT IDEA WE CAN
CRITICIZE EACH OTHER BUT WE CANNOT BE CRITICIZED FROM THE
OUTSIDE. DO YOU SEE A COALESCING OF
SUPPORT INSIDE ISRAEL AROUND THEN YAHOO! AS A RESULT?
FRANCINE: WHAT DO YOU THINK IT DOES?
THERE HAS BEEN PUBLIC OUTCRY ABOUT THE NUMBER OF CIVILIAN
CASUALTIES IF THE INCURSION INTO ROUGH IT CONTINUES. >> IT REALLY IS THAT CREEPING
OFFENSIVE IN RAFAH, NOT THE FULL-BLOWN THING WE THOUGHT
MIGHT COME. THAT MAY STILL COME, BUT THEY
TEND TO BE GOING PRETTY CAREFULLY AT THIS POINT.
WE ARE AWARE OF SOME OF THE CRITICISM THEY HAVE BEEN
GETTING FROM OVERSEAS. ISRAEL IS A SIGNATORY AND
NEITHER IS THE U.S., EVEN IF THAT ARREST WARRANT DOES COME,
HE IS NOT ABOUT TO GET ARRESTED BY ANYBODY.
IF YOU TRAVEL TO A COUNTRY THAT IS A SIGNATORY, THERE WOULD BE
THAT AWKWARD QUESTION OF WHETHER THEY DO ABOUT THAT?
BUT IT IS REALLY KIND OF THEORETICAL IN A WAY.
IT IS SENDING A SYMBOLIC SIGNAL OF CONCERN ABOUT THE WAR.
THE QUESTION IS HOW MUCH DOES ISRAEL TAKE THAT ON BOARD?
DOES IT SLOW DOWN FURTHER WHAT THEY'RE DOING IN RAFAH?
BUT IT SEEMS TO BE A SLOW WALK ALREADY REGARDLESS OF THAT.
FRANCINE: WE'RE TALKING ABOUT A POSSIBLE
POWER VACUUM IN IRAN AFTER THE DEATH OF THE PRESIDENT IN THE
HELICOPTER CRASH. 48 HOURS LATER, WHERE ARE WE? >> WE ARE GOING INTO ELECTION
WITHIN JUNE. WITHIN 50 DAYS THEY HAVE TO
HOLD THAT VOTE. THEY HAVE THE INTERIM PRESIDENT
AT THE MOMENT. THE QUESTION IS DOES HE BECOME
THE LEAD CANDIDATE FOR THE ADMINISTRATION? DO THEY ALLOW A PSEUDO-REFORMIST CANDIDATE TO
RUN TO GET TURNOUT? THE LAST ELECTION, TURNOUT WAS
LOW. THEY ALLOW THE SENSE OF COMPETITION EVEN THOUGH IT IS A
TIGHTLY MANAGED PROCESS TO ENCOURAGE PEOPLE TO VOTE?
THE QUESTION LONG-TERM IS NOT SO MUCH THE ELECTION IS
LONGER-TERM SUCCESSION FOR THE SUPREME LEADER KHAMENEI,
BECAUSE PRESIDENT RAISI WAS SEEN AS ONE CANDIDATE TO
SUCCEED HIM, NOW IS THE SUPREME LEADER'S SON WHO IS THE SOLE
CANDIDATE AND THAT RAISES AWKWARD QUESTIONS FOR ANDRE THE
LONGER-TERM QUESTION IS THE BIG ONE FROM IRAN INVERTED GOES
DOMESTICALLY AND IN THE REGION, AND THAT IS WHO WOULD BE THE
SUPREME LEADER. FRANCINE: WE ARE LOOKING AT LIVE PICTURES
OF THE FUNERAL OF IRAN'S LATE PRESIDENT NOW UNDERWAY.
IS IT GOING TO BE THE SAME KIND OF HARDLINER THAT WOULD TAKE
OVER BOTH THE AYATOLLAH AND THE PRESIDENT WHEN THE AYATOLLAH
GOES? >> THAT IS THAT SENSE OF
CONTINUITY AND CONTROL FROM THE VERY TOP.
THE PRESIDENT HAS SOME POWERS BUT IT IS LARGELY CEREMONIAL.
THE BOSS IS THE SUPREME LEADER. YOU WANT TO SEE THAT CONTINUITY
AND CONTROL FOR IRAN. THERE IS FOOT IS SHOWING LARGE
OUTPOURINGS OF GRIEF AT THE FUNERAL GOING ON.
THE FOOTAGE OF PEOPLE GATHERING. THERE IS ALSO A SENSE AMONG
SOME IN IRAN, RAISI WAS NOT A POPULAR FIGURE, DOES THIS ALLOW
ROOM FOR DISSENT TO BUBBLE UP? THE ONLY WAY YOU SEE THAT HIS
PEOPLE DO NOT TURN OUT TO VOTE. IT WILL BE A SILENT PROTEST
VERSUS MASSES COMING OUT TO THE STREET.
YOU MIGHT SEE SOME OF THAT ON ELECTION DAY, PEOPLE SIMPLY
DON'T TURN OUT TO VOTE. FRANCINE:
OUR BLOOMBERG EMEA NEWS DIRECTOR ROSALIND MATHIESON .
INVESTORS WAITING ON THIS WEEK'S RESULTS FROM NVIDIA FOR
THE LATEST GAUGE OF THE AI RALLY. THIS IS BLOOMBERG. >> I WAS ON THE RECORD BEFORE
SAYING I WAS AT THE MEDIAN, WHICH WAS THREE, THAT OF
ELEMENTS I HAVE SEEN IN THE ECONOMY RIGHT NOW I WOULD NOT
THINK THAT IS STILL APPROPRIATE BECAUSE THE INFLATION RISKS
HAVE MOVED UP IT IS TOO SOON TO TELL WHAT PATH INFLATION IS ON
SO WE NEED TO COLLECT MORE INFORMATION.
THE FIRST PART OF THE YEAR WHAT WE SAW WAS THE REST THAT WE
WERE TOO RESTRICTIVE. LAST YEAR PEOPLE WERE WORRIED
ABOUT THE FED GETTING TOO RESTRICTIVE THEREFORE IT WILL
DAMPEN THE ECONOMY, THOSE RISKS WENT DOWN TO HIM AT THE SAME
TIME, THE RISKS TO INFLATION ARE TILTED TO THE UPSIDE.
THAT IS THE BALANCING WE HAVE TO DO AS WE SET POLICY GOING
FORWARD. >> OUR NEW STEADY STATE IS
LIKELY TO BE HIGHER THAN WHAT PEOPLE HAVE KNOWN OVER THE LAST
DECADE. MAYBE BACK TO WHERE WE WERE IN
THE 1990'S AND 2000'S BUT ANYTHING COULD HAPPEN.
MY OUTLOOK IS THAT INFLATION WILL CONTINUE TO FALL THROUGH
THIS YEAR AND INTO 2025. IT WILL TAKE QUITE A WHILE TO
GET TO 2% BUT I DO THINK WE WILL GET THERE. FRANCINE:
THE ATLANTA FED PRESIDENT RAFAEL BOSTIC, CLEVELAND'S
LORETTA MESTER SPEAKING EXCLUSIVELY TO BLOOMBERG.
LET'S BRING IN GRACE PETERS, GLOBAL HEAD OF INVESTMENT
STRATEGY AT JP MORGAN. I LOVE LISTENING TO THESE MY
NEW SHOW -- MINUTIA ABOUT WHAT THEY'RE INSPECTING BECAUSE WE
USED TO SUPPORT SPORTS TEAMS, NOW IT IS ALL ABOUT WHAT
HAPPENS TO INFLATION, THERE IS AN INTERNATIONAL OBSESSION.
I DON'T KNOW WHETHER IT IS HARDER TO UNDERSTAND WHAT THE
FED DOES NEXT THAT IT WAS FIVE YEARS AGO? GRACE:
IT DIFFERENTLY IT FEELS LIKE THERE IS AN OBSESSION WITH THE
FED. IT IS IMPORTANT BECAUSE IT TELLS A SOMEWHAT AROUND THE
GROWTH AND INFLATION MIX IN THE ECONOMY.
BY OVERLY FOCUSING ON IT, INVESTORS RUN THE RISK OF
MISSING OUT. IF WE JUST THINK ABOUT THE HUGE
CHANGE IN MARKET PRICING WE HAVE SEEN THE LAST 10 MONTHS,
AT ONE POINT SIX CUTS BEING PRICED, NOW AROUND TWO, WHO
WOULD'VE THOUGHT THE EQUITY MARKET NOW SITS AT 5300?
IF YOU ARE FOCUSED TOO MUCH ON WHETHER IT IS 5, 4, 3 YOU COULD
MISS OUT ON THE EQUITY RALLY. THAT IS OUR POSITION.
WE BELIEVE THERE IS STILL DISINFLATION IN THE SYSTEM.
THAT GROWTH IS SLOWING. WE THINK THE CENTRAL BANKS CAN
CUT. PROBABLY IT WILL BE THE ECB AND
BANK OF ENGLAND BEFORE THE FED, BUT THAT IS A HEALTHY
ENVIRONMENT FOR RISK, AND THERE IS SO MUCH BELOW THE SURFACE,
Q1 EARNINGS AS AN EXAMPLE THAT WE SHOULD BE DEDICATING MORE
TIME TO RATHER THAN JUST CENTRAL BANK SPECULATION.
FRANCINE: I DON'T KNOW IF I WOULD CALL IT
AN UNHEALTHY OBSESSION BUT THE ECONOMY IN THE U.S.
IS SLOWING, SO IT IS UNCLEAR WHEN THE FED BECAUSE, THIS IS
NOT SLOWDOWN, OR BECAUSE INFLATION IS UNDER CONTROL AND
THAT CHANGES THE DYNAMIC OF FUTURE CUTS. GRACE:
WHEN IT COMES TO INVESTING, YOU CAN'T ASSUME THERE IS ONLY ONE
PATH FORWARD, YOU HAVE TO LOOK AT THE TAIL RISKS.
ONE OF THOSE RISKS WOULD BE RE-ACCELERATION IN INFLATION.
WE HAVE A SIGNED A 20% PROBABILITY TO THAT.
AND AN EQUAL PROBABILITY TO THE FACT THAT GROWTH SLOWS MORE.
WE HAVE SEEN U.S. GDP FLOWED FROM 5% THIRD
QUARTER OF LAST YEAR TO 2.5 FOR THE SECOND QUARTER THIS YEAR.
WE THINK THAT WILL TREND TO 2%, BUT A 20% PROBABILITY THAT IT
GOES LOWER, AND WE END IN THE RECESSION EVERYBODY BELIEVED IN
A YEAR AGO, BUT THAT STILL LEAVES OUR CENTRAL CASE 60%
THAT WE SEE CONTINUED ECONOMIC AND CORPORATE GROWTH. FRANCINE:
WHAT DOES THAT MEAN FOR EARNINGS?
A LOT OF THE FOCUS ON MARGINS. ARE YOU STILL CONSTRUCTIVE ON
EQUITIES? GRACE: WE HAVE BEEN CONSTRUCTIVE ALL
YEAR, WHICH FELT LONELY A FEW MONTHS AGO, BUT THERE HAS BEEN
A HUGE CHANGE IN SENTIMENT OVER THE LAST THREE MONTHS. -- FEW MONTHS PRAY THE FOCUS
WILL TURN TOWARDS 12 ONCE OUT. AT THE MOMENT, MANY PRICE
TARGETS EXIST ON THE STREET FOR DECEMBER OF THIS YEAR, WE ARE
PUTTING TOGETHER OUR MIDYEAR OUTLOOKS THAT WILL SEE US LOOK
THROUGH TO THE SUMMER OF NEXT YEAR.
I STILL THINK THERE IS UPSIDE, PROBABLY LESS SO THAN IN RECENT
MONTHS, BUT IF WE WERE TO THINK ABOUT IT BEFORE HUNDRED, 5500
ON THE S&P OVER THE NEXT 12 MONTHS, IT IS A RANGE-BOUND TO
DRIFTING HIGHER, WHICH WE THINK IS A CONSTRUCTIVE ENVIRONMENT.
FRANCINE: YOU ARE GOOD AT BREAKING DOWN
SECTORS. WE ARE EXPECTING NVIDIA LATER
ON, WHICH WILL BE THE OTHER NATIONAL OBSESSION, WE USED TO
JOKE IT WAS TAYLOR SWIFT AND NVIDIA THE PROPS UP THE U.S. ECONOMY, BUT IS IT GOING TO BE
AI, IS THERE JUSTIFICATION IN VALUATION FOR THE MAGNIFICENT
SEVEN? GRACE: IT IS A BIT OF BOTH.
USING NVIDIA AS AN EXAMPLE, THE MAGNIFICENT SIX I WOULD CALL IT
MORE BROADLY, YOU HAVE SEEN DESPITE
TREMENDOUS SHARE PRICE GAINS, YOU HAVE SEEN SOME STOCKS
GETTING CHEAPER BECAUSE THE EARNINGS HAVE SURPASSED
EXPECTATIONS. I THINK THAT WILL CONTINUE.
30% EARNINGS GROWTH FOR THE MAGNIFICENT SIX THIS YEAR WILL
PROBABLY BECOME MORE LIKE 16% NEXT YEAR BUT ON THE FLIPSIDE
YOU HAVE THE BROADER S&P, THE OTHER 493 GOING FROM SIX TO 13,
THAT IS TELLING YOU GROWTH IN THE MAGNIFICENT SIX IS STILL
VERY GOOD BUT THE REST OF THE MARKET IS CATCHING UP, SO
BROADENING ACROSS SECTORS, AND LIKELY ACROSS MARKET CAPS.
DON'T FORGET NON-US MARKETS WHERE WE THINK EARNINGS ARE
PICKING UP. EUROPE, FOR A SIMPLE. FRANCINE:
DO YOU WORRY ABOUT MID-CAPS IN THE U.S., IF YOU HAVE A
SLOWDOWN IN CONSUMER SPENDING, IF THE BIG ONES CAN RELY ON
INTERNATIONAL MARKETS, WHAT HAPPENS TO MIDDLE AMERICA?
GRACE: THERE IS A STRONG SLOWDOWN IN
CONSUMER SPENDING, YOU WOULD NOT WANT TO BE IN MID-CAPS.
OUR EXPECTATION IS GROWTH TRENDS DOWN TO 2%.
THEN MID-CAPS SHOULD SEE DISPROPORTIONATE IMPROVEMENT.
THEIR EARNINGS PROFILE IF WE LOOK AT THE S&P 400, THE
EARNINGS PROFILE IS FOR A DECENT PICKUP TO MID TEENS
EARNINGS GROWTH OVER THE NEXT 12 MONTHS. THAT BROADENING THEME BY MARKET
CAP SECTOR AND GEOGRAPHY WILL BE IMPORTANT. FRANCINE:
GRACE PETERS FROM J.P. MORGAN PRIVATE BANK STAYS WITH
US FOR MORE ANALYSIS. WE WILL TALK ABOUT EUROPEAN AND
U.K. VALUATIONS. THIS IS BLOOMBERG. FRANCINE:
STILL WITH US, GRACE PETERS, GLOBAL HEAD OF INVESTMENT
STRATEGY AT JP MORGAN. WE TALKED ABOUT THE U.S.
AND THE FED. WE TALKED ABOUT THE MARKET
FORCES AND AI STOCKS. YOU SAY THERE IS QUITE A LOT OF
OPPORTUNITIES IN EUROPE. DO YOU BREAK IT DOWN BY SECTOR
OR IS IT EXPOSURE TO INTERNATIONAL? GRACE:
FOR EUROPE SPECIFICALLY, THE INTERNATIONAL EXPOSURE IS FIRST
AND FOREMOST WHAT WE'RE AFTER. THERE ARE TECHNOLOGY BUSINESSES
WITHIN THAT. THERE IS ALSO LUXURY GOODS,
CONSUMER COMPANIES, MINING THAT WE THINK ARE INTERESTING IN
THEIR OWN RIGHT. THERE IS ALSO A DOMESTIC
EUROPEAN STORY THAT HAS BEEN BUILDING OVER THE LAST FEW
MONTHS. IT DOES FEEL LIKE THE WORST OF
THE GROWTH SHOCK IS BEHIND US. INFLATION IS COMING DOWN, WE
THINK THE ECB WILL CUT IN JUNE, AND THAT SUPPORTS THE DOMESTIC
PLAYERS WHICH ARE THIS AUGUST EXAMPLE BECAUSE THEY ARE
DELIVERING SHAREHOLDER RETURNS, WHICH IS UNPRECEDENTED. 10 YEARS AGO, WHEN THE BANKS
WERE BIG NET ISSUERS, SO THERE IS QUITE A LOT TO LIKE IN
EUROPE. FRANCINE: A LOT OF INDEXES ARE SUPPORTED
BY SHARE BUYBACKS OR DIVIDENDS. YOU HAVE CONCERNS THAT IS GREAT
FOR NOW BUT THERE IS LACK OF INVESTMENT FIVE YEARS FROM NOW?
GRACE: WHEN YOU THINK ABOUT CAPITAL
ALLOCATION, IF THERE ARE GROWTH OPPORTUNITIES, YOU SHOULD BE
SPENDING ON THAT. THE POSTER CHILD FOR THAT IS
THE AI EXPENDITURE FROM THE HYPER SCALARS. AMAZON, META, THE GOOGLES,
THESE BUSINESSES COLLECTIVELY WILL BE SPENDING $200 BILLION
IN 2025. GREAT AVENUES FOR GROWTH, SPEND
ON GROWTH. IF YOU DON'T HAVE THOSE
AVENUES, THEN RETURNING MONEY TO SHAREHOLDERS AT A TIME THAT
YOUR SHARE PRICE FEELS DEPRESSED IS A SENSIBLE
STRATEGY. IN THE U.K. MARKET, THERE IS A LOT OF
BUSINESSES, THE MINING SECTOR IS AN EXAMPLE THAT WOULD FALL
INTO THAT CAMP, OIL AND ENERGY MORE BROADLY AS WELL.
THAT OFFERS GOOD OPPORTUNITIES FOR INVESTORS. FRANCINE:
THAT WAS GRACE PETERS. GLOBAL HEAD OF INVESTMENT
STRATEGY AT JP MORGAN PRIVATE BANKRATE PRESIDENT BIDEN SLAMS
THE INTERNATIONAL CRIMINAL COURT'S DECISION TO SEEK ARREST
WARRANTS FOR ISRAELI LEADERS OVER ALLEGED WAR CRIMES IN GAZA.
THE LATEST FROM THE MIDDLE EAST NEXT. THIS IS BLOOMBERG. FRANCINE: BLOOMBERG CLARENCE ASML HAVE
WAYS TO DISABLE THE CHIPMAKING OFFENSE IN THE EVENT THAT CHINA
ATTACKS TAIWAN. EUROPE IS DIVIDED BY THIS
REQUEST TO ISSUE ARREST WARRANTS FOR BENJAMIN NETANYAHU
AND THE DEFENSE MINISTER. JAMIE DIAMOND SIGNALING
SECESSION TALK. DELL CHIEF EXECUTIVE SAYS THEY
ARE RELEASING A NEW LINE OF COMPUTERS.
AT THE LOW SPOKE WITH MICHAEL DELL AT THE DELL WORLD
CONFERENCE. >> ALL OF OUR PCS WILL BE AI
PCS ANYTHING YOU HAVE THAT HASSAN EDIT PROMPT WILL BE SPED
UP BECAUSE EVERY SOFTWARE DEVELOPER IS FIGURING OUT HOW
TO USE ALL THIS NEW POWER IN THE GPU'S, NP USE IN THESE NEW
AI PCS. SO THAT EXPERIENCE WILL BE
BETTER. WHEN YOUR PC IS FOUR YEARS ALL
THIS TIME TO GET A NEW ONE. YOU WANT ONE THAT SPEEDS UP
THOSE CAPABILITIES ENABLE ONE IT MAKE SURE -- THEY DON'T WANT
YOU TO BUY A MACHINE THAT DOESN'T HAVE THE CAPABILITY. ED:
WHERE IS NVIDIA'S PLACE IN THIS SPHERE? >> COME BACK NEXT YEAR. THERE ARE A BUNCH OF NVIDIA HAS
WAS RUNNING THROUGH THE H 100S. AI IS GOING TO TRANSPORT GAMING.
ALL THE PCS. CREATING WORLDS WILL BE EASIER. INSTEAD OF INSTRUCTIVE COMPUTING IS CREATIVE COMPUTING.
VIDEOCONFERENCING WILL BE BETTER. ED: WITH BLACK WHILE YOU INNOVATED
BY COMBINING, IS THAT THE NEXT GENERATION FOR YOU? >> WE WANT TO SUPPORT EVERY CPU
THE WORLD MAKES AND THERE ARE PLACES THAT HAVE X 86 AND SOME THAT PREFER ARM.
SUPERCOMPUTERS ARE POWERED BY GRACE HOPPERS.
WE WILL SUPPORT THE RIGHT CPUS. FRANCINE: THOSE WERE EXECUTIVES FROM
NVIDIA SPEAKING DIRECTLY TO OF THE LOW.
JAMIE DIMON SAYS THE SUCCESSION PLANS ARE UNDERWAY.
THE TIMETABLE IS NO LONGER JUST FIVE YEARS. >> I HAVE THE ENERGY I HAVE
ALWAYS HAD WHICH I THINK IS IMPORTANT. THE BOARD, WILL I STATE THE
CHAIRMAN FOR A WHILE? WE WILL SEE. FRANCINE: HE WAS ON WHEN HE IS STILL LESS
ENERGY WE CAN VOUCH FOR THAT. FOR MANY YEARS HE HAS SAID HE
WILL RETIRE IN FIVE YEARS. >> THIS WAS ONE OF THE FIRST
TIMES WHERE HE IS ADMITTING THAT HIS TIME AT THE TOP OF JP
MORGAN MAY END SOON. NOTHING CONFIRMED OR CONCRETE.
HE HAS A LOT OF POSITIV ITY AROUND HIS ROLE. FRANCINE:
WHO SHOULD WE LOOK OUT FOR OUR SUCCESSORS? >> RIGHT NOW IT SEEMS TO BE A
THREE-WAY RACE. EARLIER THIS YEAR THEY DID
MANAGEMENT SHUFFLE WITH TWO PEOPLE IN CHARGE OF CORPORATE
BANKING INVESTMENT IN MARION LAKE AT CFO BUT NOW LEADING
CONSUMER. YOU CAN SEE HIM PUT KEY DEPUTIES OVER BUSINESSES THEY
HAVEN'T HAD EXPERIENCE IN IN THE PAST SO IF IT DOES COME TO
PASS WHERE THEY NEED TO BE ELEVATED TO THE TOP ROLE THEY
HAVE SEEN ALL SIDES OF THAT BEHEMOTH. FRANCINE:
HE'S A TOUGH ACT TO FOLLOW. I DON'T KNOW WHETHER IT'S ALSO
BASED ON PERSONALITY? >> IT'S HARD TO KNOW HOW MUCH
OF IT IS HE IS JAMIE DIMON OR THE JP MORGAN CEO HAS TO HAVE
THAT KIND OF PERSONALITY TO HAVE THE LOUDEST VOICE IN THE
ROOM FROM REGULATION TO WALL STREET, CONSUMER BANKING AND
ECONOMY. NO ONE COMING UP BEHIND HIM IS
SOMEWHAT LIKE JAMIE BUT YOU FRANCINE: U.S.
PRESIDENT JOE BIDEN HAS DEFENDED ISRAEL AGAINST WAR
CRIMES CHARGES SOUGHT BY THE INTERNATIONAL CRIMINAL COURT. ICC IS SEEKING ARREST WARRANTS.
THERE IS NO EQUIVALENCE BETWEEN ISRAEL AND HAMAS. LET'S GET TO THE CHAIR OF THE
MIDDLE EAST AT THE LONDON SCHOOL. IN THE AUTHOR OF "
WHAT REALLY WENT WRONG. THE COURTS HAVE PUT THESE CHARGES IN FRONT OF THE ISRAELI
LEADER DESPITE . >> THIS IS AN EXCUSE THAT THE
USS USED FOR MONTHS. THE U.S. AND THE U.K.
HAVE REPEATEDLY CLAIMED THAT ANY KIND OF AN IMMEDIATE
CEASE-FIRE IN ANY KIND OF A DECISION BY AN INTERNATIONAL
COURT. WHETHER AN INTERNATIONAL COURT
OR CRIMINAL COURT WILL HAVE AN IMPACT ON WHAT IS HAPPENING IN
GAZA. IN GAZA, SEVEN MONTHS WITH THE
GREAT TRAGEDY WITH THE KILLING CONTINUES. THERE IS NO DEAL. ISRAELI PRIME MINISTER DOES NOT
REALLY WANT TO END THIS WAR BECAUSE IT WOULD MEAN THE END
OF HIS POLITICAL FUTURE. FRANCINE: IT WILL HAVE AN IMPACT ON
NETANYAHU'S PSYCHE AND ON WHAT HE DOES IN TERMS OF DEFENSE IN
RAW FILE? >> IT WOULD BE DANGEROUS FOR
THE UNITED STATES AND ISRAEL NOT TO TAKE THE DECISION BY THE
INTERNATIONAL CRIMINAL COURT SERIOUSLY.
THINK OF WHAT IS HAPPENED IN THE PAST 24 HOURS AND ISRAEL?
A BLINK OF AT THE INTERNATIONAL CRIMINAL COURT. PRESIDENT BIDEN SAID THE
DECISION WAS OUTRAGEOUS IN THE U.K. SIDE IT WAS NOT USEFUL.
THE QUESTION FOR YOUR AUDIENCE IS THE FOLLOWING, WHY SHOULD
THE WEST IN THE U.S. AND U.K. CELEBRATE AN ARREST WARRANT FOR
PUTIN AND THEN WHY SHOULD THEY DENOUNCE THE CRIMINAL COURT
WHEN TRYING TO HOLD ISRAELI/HAMAS LEADERS TO THE
SAME LEGAL STANDARDS. IT TELLS YOU A GREAT DEAL ABOUT
THE WORLD. FRANCINE: THERE HAVE BEEN HEADS OF STATE
TRYING TO MINIMIZE CASUALTIES IN GAZA ESPECIALLY IN RAW FOLK WHICH IS URBAN AND DENSE.
WHAT IS THE RIGHT WAY TO SPEAK TO ISRAEL TO CONVINCE THE PRIME
MINISTER TO SLOW DOWN TO LIMITED CASUALTIES.
WHO IS THE RIGHT COUNTRY TO DO THAT? >> YOU'RE ASKING A RATIONAL,
HUMANE QUESTION. THE ENTIRE INTERNATIONAL
COMMUNITY HAS BEEN ASKING THE ISRAELI WAR CABINET TO NOT
CARRY OUT AND ALL OUT ASSAULT YOU HAVE 1.3 PEOPLE DISPLACED
IN RAFAH BUT THEY INSIST AND IS ATTACKING SOME PARTS OF RAFAH.
I THINK IS THE DECISION OF THE UNITED STATES.
THEY PROVIDE THE WEAPONS, THE AMMUNITION AND POLITICAL
SUPPORT. USB ABOUT THE INTERNATIONAL
CRIMINAL COURT. LOOK HOW PRESIDENT BIDEN IS
GOING OUT OF ITS WAY UNDERMINING LEGAL PRECEDENT
TRYING TO SHIELD THE ISRAELI PRIME MINISTER.
WITHOUT THE AMERICAN LEVERAGE. YOU HAVE TO STOP THE FLOW AND
PROVISION OF ARMS AND ACCEPT THE DECISIONS MADE BY
INTERNATIONAL INSTITUTIONS AND STOP USING U.S. VETO IN ORDER TO PREVENT THE
STABILIZATION OF A PALESTINIAN STATE. FRANCINE: WHAT DOES THE DEATH OF THE
IRANIAN PRESIDENT MEAN FOR STABILITY AND THE REASON GIVEN
THE CONTRA WARS WHERE RAN IS INVOLVED? >> THE DEATH OF THE IRANIAN
PRESIDENT WILL BRING ANY CHANGES IN
IRAN'S FOREIGN POLICY BECAUSE HE WAS NOT THE
COMMANDER-IN-CHIEF OF IRAN. IS THE SUPREME LEADER H HOMEINI.
THERE IS A NATIONAL SECURITY COUNCIL IN IRAN. EVEN THOUGH RAISSA PRESENTS A
MAJOR LOSS OF WILL NOT HAVE ANY CRITICAL OR SIGNIFICANT IMPACT
ON IRAN'S REGIONAL OR INTERNATIONAL PROBLEMS.
FRANCINE: THE LATE PRESIDENT WAS MOOTED
AS A PROMINENT SUCCESSOR SO IF NOT HIM, WHO? >> IT WILL HAVE A MAJOR IMPACT
ON THE POLITICAL BALANCE OF POWER WITHIN IRAN ITSELF BECAUSE OF YOU HAVE SAID,
RAISSA WAS TO FILL THE VACUUM OF KHOMEINI.
IT'S NOT JUST ABOUT THE IDENTITY OF THE NEW PRESIDENT
BUT A REPLACEMENT FOR THE SUPREME LEADER BECAUSE HE IS 85
YEARS OLD, HE IS SO THERE IS A GREAT DEAL OF COMPETITION
BETWEEN CONSERVATIVES AND ULTRACONSERVATIVES BECAUSE
WHOEVER IS ELECTED WILL MOST LIKELY BECOME THE SUPREME
LEADER OF IRAN AND THE NEXT FEW YEARS. FRANCINE: I WAS GOING TO ASK YOU IF THERE
WAS A CHANCE OF MODERATE LEADERSHIP?
DO YOU THINK IT WILL BE CONSERVATIVE OR
ULTRACONSERVATIVE? >> OPPONENTS HAVE BEEN EXCLUDED AND MARGINALIZED AND PREVENTED
FROM RUNNING IN THE PAST FEW YEARS SO THE ULTRACONSERVATIVES
ARE PUTTING PEOPLE IN CHARGE WHICH IS WHY WE NEED TO FOCUS AND PAY ATTENTION TO THE
PRESIDENTIAL ELECTIONS AT THE END OF JUNE TO SEE WHAT KIND OF
CANDIDATE IS SELECTED. WHETHER HE IS A MODERATE
CONSERVATIVE OR A HARDLINER LIKE PRESIDENT ABRAHAM RAISSA.
I THINK THE NEXT PRESIDENT WILL BE A SIMILAR CHARACTER TO THE
PRESIDENT THAT DIED TWO DAYS AGO. FRANCINE:
THANK YOU SO MUCH FOR JOINING US THAT WAS THE CHAIR OF THE
CONTEMPORARY MIDDLE EAST AT THE LONDON SCHOOL OF ECONOMICS. FRANCINE: STANDING BY FOR IDEA EARNINGS
TOMORROW MEANWHILE OPENAI HAS SOME THE HOTLINES AFTER BEING
CRITICIZED BY SCARLETT JOHANSSON.
THERE ARE MANY STORIES WHERE HOLLYWOOD IS NOT HAPPY WITH
OPENAI. THEY USED A VOICE THAT WAS
FAIRLY CLOSE TO HERS AND SHE TOOK ACTION. >> SHE SAYS THAT OPEN AI TALKED
ABOUT LICENSING HER VOICE AND SHE DECIDED NOT TO DO THAT AND
THE INTERESTING THING IS SHE BOYS THE AI ASSISTANT IN THE PH
FILM "HER." AND THE VOICE SAID THIS
DEMONSTRATION WAS SIMILAR TO THE VOICE IN "HER"
IN THE WAY SHE INTERACTED WITH THE INTERLOCUTOR. FRANCINE: WE HAVE ALL THE STORIES ABOUT
BEING ABLE TO FAKE YOUR VOICE AND CONCERNS ABOUT KIDNAPPING
OR KIDS CALLING THEIR PARENTS ASKING FOR MONEY IN THE REALM
OF IN THE FUTURE, THIS IS WHAT THE BUMBLE FOUNDER IS SAYING.
YOU DON'T HAVE TO DATE PEOPLE BUT DATE AVATARS ONLINE. >> THEY REFERENCE BEING A CONCIERGE WHERE YOU SET YOUR AI
UP YOU BRING A SCHEDULE AND SEE IF YOU MATCH UP.
THERE IS A FILM WITH JACK WHITE HALL WITHOUT PREMISE AND HER IS
DYSTOPIAN IN THE END SO MANY OF THESE PEOPLE REACH OUT TO
HOLLYWOOD AND THERE'S A TOUCHSTONE FOR WHAT THEY'RE
DOING BUT THE MESSAGE WITH THEIR FILMS ISN'T NECESSARILY
POSITIVE IT DOES FEEL A LITTLE DISTURBED HIM. FRANCINE:
HOW DO YOU SEE IT EVOLVING? IT'S SINGLE-HANDEDLY PROPPING
UP THE U.S. ECONOMY IN THIS INCREDIBLE
STORIES THAT ARE FAR-FETCHED OR 10 YEARS AWAY? >> SPENDING ALL THIS MONEY ON E
NVIDIA CHIPS THEY NEED TO MAKE THOSE PAY FOR THEMSELVES TO
MAKE A BUSINESS CASE FOR THEM. PARTICULARLY, THE PC MAKERS ARE
LOOKING FOR AN UP CYCLE. FRANCINE:
THANK YOU SO MUCH, ALEX WEBB. NEVER A DULL MOMENT WHEN YOU
COVER AI OR ELON MUSK. TESLA REJECTING ELON MUSK'S 36
BILLION PAYBACK. THEY SAY THAT HE IS DISTRACTED
BY HIS DESIRE TO FIGHT OTHER COMPANIES. LET'S BRING IN BLOOMBERG'S CRAG
SHE DON'T. TRUDELL. >> THEY TAKE ISSUE WITH THE
PERFORMANCE OF THE COMPANY IN THE STOCK PRICES PERFORMED
SINCE THE DAY HE DISCLOSED TAKING A STAKE IN TWITTER,
TESLA IS SIGNIFICANTLY LACKING. DID HE ACCOMPLISH THINGS LAID
OUT IN THIS PAY PACKAGE? BUT HAS HE SHOT HIMSELF IN THE
FOOT BY THE WAY HE HAS RUN THE COMPANY IN THE YEARS SINCE HE
ACHIEVED THESE THINGS? THAT IS ALSO TRUE IN WHAT
THEY'RE TAKING ISSUE WITH. THE RULING IN DELAWARE THAT
THROUGH THIS WHOLE PAY PACKAGE OUT THE WINDOW AND FORCE THE
BOARD SAND TO TRY AND ADJUST AND OFFER THIS BACKUP TO
INVESTORS. FRANCINE: 56 BILLION IS A LOT OF MONEY
YOU WOULD IMAGINE HE'D BE ABSENT FROM BEING CHALLENGED? >>
BEFORE THE DELAWARE COURT MADE THIS RULING THIS NOT SO VEILED
THREAT THAT IF HE DOES NOT CONTROL 25% HE WILL TAKE HIS
WORK ELSEWHERE. YOU DO HAVE THIS EFFORT ON THE PART OF TESLA TO DRUM UP RETAIL INVESTORS IN THE LOUD VOICES ON
X HOLDING THE POTENTIAL THAT IF WE DON'T GIVE ELON THIS HE WILL
LEAVE.
