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This is the Blueberg DAYBAQ podcast, available every morning on Apple, Spotify or wherever you listen. It's Thursday, the twenty seventh of February in London. I'm Caroline Hepka coming up today and Video delivers results that underwhelm high expectations after years of blowouts. President Trump says the EU was created to screw the United States, as he proposes twenty five percent tariffs on the block plus doing it for the gram. Why more and more central bankers are posting on the
social media site. Let's start with a roundup of our top stories. Shares in Nvidia fell in after hours trading as the AI Darling delivered good but not great results in Video. Says that quarterly sales will be slightly above analyst estimates at about forty three billion dollars, but gross profit margins will be tight to than expected. We got reaction from Angelo Zeno, vice president of Equity Research at CFRA.
The gross margin number was probably the one black eye as far as where we kind of were looking at the guidance side of things. It was definitely a disappointment. I think when you kind of especially look at the trajectory of gross margins over the last couple of quarters. It kind of hit a peak run rate of about seventy eight percent in the first half of.
Calendar twenty twenty four.
So the margins continue to compress here going into the April quarter. The good news is we do expect that to essentially be the trough of the cycle here in the April quarter.
Angelo Zino speaking there as concerns about slowing spending have continued to weigh on the artificial intelligence industry. Chinese art up Deep Seek has also sparked fears that chatbots can be developed at a cheaper rate, potentially reducing the need
for Nvidia's powerful chips for AI. President Donald Trump says that tariff's on products from the European Union will be twenty five percent, announcing the changes during a cabinet meeting yesterday, he went on to use strong language to attack the block.
It was formed in order to screw the United States.
I mean, look, let's be honest, the European Union was formed in order to screw the United States.
That's a purpose serve and they've done a good job of it. But now I'm.
President, well, Trump's proposal for a twenty five percent tariff on the EU is new officials later clarified that all options are being considered on whether those would affect all exports from the block or only certain products or sectors. An EU commissioned spokesperson said that the block would act quote firmly and immediately against unjustified barriers to free and
fair trade. Bloomberg Economics has calculated that if the EU did face a blanket twenty five percent US tariff, the hit to GDP could be as much as one and a half percent, with Germany most badly hit. Trump's comments on the eukme as he gave a series of apparently contradictory answers about his plans for tariffs twenty five percent tarifs on Canada and Mexico. The US president said that he's not stopping the tariffs, due to come into force on the fourth of March, but then he later mentioned
the second of April as the implementation date. White House officials were forced to later clarify that deadline is still next Tuesday, although Trump is still undecided on granting another extension. UK Chancellor Rachel Reeves says that the British government wants
to boost to trade with the US. Total trading goods and services between the two countries was worth two hundred and ninety four billion pounds in twenty twenty four, and in an exclusive interview with Bloomberg the G twenty meeting in Cape Town, Rachel Reeves made the case for even closer economic ties with the UK's biggest single country trading partner.
In terms of the future trading relationship between the UK and the US. Last time that President Trump was in the White House, trade and investment between our two countries increase, and I have every confidence that that can happen.
Again, Chancellor Rachel Reeves, speaking there as the Bank of England policy maker Swati Dingra warned yesterday that world trade appears to be heading for an orderly fragmentation. Well, the UK Chancellor's call for closer economic ties comes just as Prime Minister Kis Starmer heads to Washington as the latest anxious ally hoping to sway the US president's stands towards Ukraine. It's the first face to face meeting of the two
leaders since Trump's election. Bloomberg's James Walcock reports, now.
The UK has always wanted to be seen as the bridge between the US and Europe, with leaders scrambling to change Ukraine's fate. Kiss Starma is stressing that's so called a special relationship.
We share fundamental values of openness, of democracy, freedom of speech, a freedom which this week we've shown our willingness to defend with the biggest sustained increase in our defense spending since the Cold War.
The UK Prime Minister faces a potentially career defining test. Will you have any purchase on a US president who has been willing to upend transatlantic relations. Starmer's aids tell Bloomberg they would be delighted if they can get through the week without any public disagreement with Trump in London. James Wilcock Bloomberg Radio.
Now to another story of interest. The US Director of National Intelligence Tarlsi Gabbard has called for an investigation into the UK ordering Apple to give access for the global data of its customers. Gabbart said that the decision could leave American encrypted data at risk of being exposed. So far, instead of complying with the UK, Apple has removed its most advanced encrypted security features in Britain that will potentially make it easier for the government or outside hackers to
obtain UK user data. Months after Chancellor h Vve's crackdown on the UK's so called non dom tax regime, wealthy foreigners are making their concerns known more now from Bloomberg's team at Adebayo.
The UK government is having open conversations with wealthy overseas nationals about tax that's according to Investment Minister Poppy Gustafferson, who says there's a collaborative dialogue between the two groups as the Treasury tries to troubleshoot issues. The news comes after a decision to scrap a preferential tax scheme which allowed foreign residents to avoid levies on UK earnings for up to fifteen years, a move which provoked the ayre
of the ultra rich. Now, Gustafferson says the Chancellor is trying to create a tax structure which will be viewed as fair by the general public but prevents talented foreigners from shunning the UK in London. To you at a Bayo Bloomberg Radio.
And those stories, Let's get to the markets this hour. Europeans stop future sinking half of one percent. This morning they dropped one percent yesterday after President Trump's threat of twenty five percent tariffs against the EU. So interesting the impact via stocks. The Euros also weaker this morning in terms of the trade. Now we're down two tens of one percent one spot zero four six seven. US stop futures are high for the S and P five hundred
up by three tenths of one percent. We saw Nvidia shares falling one and a half percent in ex traded in extended trading yesterday. The stock did rise though before the earnings release, up three point seven percent, sort of ahead of the release. Asian stocks though, did fall because of the underwhelming seen as underwhelming results from en Video or not quite as as amazing as people had been
hoping for. So you've got the MSCI Aged Pacific Index down by three tents of one percent, Hank saying Tech index dropping two percent. Tenny US treasury yield so yesterday dropped four basis points. They're up to basis points this morning. So we're trading at four twenty seven on that ten year yield. In a moment, we are going to bring you more details in fact, on Nvidia's first set of earning since the emergence of deep seek But first, more
on this story that's come high today. Recruitment firms are noticing that junior bankers are using AI to draft their resumes, but beware if you don't properly proofread the application and errors creep in. It's raising red flags for potential investment banking employers. Of course, they are focused on the detail that apparently you need in those junior banking jobs. Bloomberg's Georgia Hill has the story and the details on this
about the proliferation of AI assisted resumes. Her point essentially is that it is slowing the hiring process down because everybody has to actually spend more time thinking about whether the applicant is really as amazing as the AI. You know, maybe AI assisted a CV might demonstrate, which is interesting and also a bit ironic given that some recruiters are also using AI to help filter applicants. Anyway, we could all see the kind of arms race in terms of
AI generated cvs and AI generated readers of cvs. But it's a really nice piece on the Blueberg terminal. I think if you're out there looking for a job, one to think about now. In Nvidia reported results which were tinged with a touch of disappointment yesterday after two years of blockbuster results and stratospheric stock price gains in twenty twenty three and twenty twenty four. Joining us this morning, it's been big intelligence. Is senior analyst Robert Lee to
discuss this. Robert, great to have you with us this morning. A lot has been written on the Bloomberg terminal, on the website about the Nvidia results. Everybody's got a view because this company is so important. It's been the dominant seller of processes that create and run AI software. Just firstly, on the out for the first quarter, what have they said.
Okay, thanks very much for having me on. I guess investors have become used to, or you know, being fed a diet of continual Beaten rays with the company, and you know it's got a long track record of doing that, running over multiple quarters. So I think, first of all, the stop price reaction, you saw the rate of incremental
beaten raises diminishing. Maybe part of that reflects the higher base, but also reflects, I think a change in narrative with investors focusing more on the potential risks that in video faces in the short to medium term and not just the positive you know underlying story which is very well known. So the Q one guidance to answer your question came. There's something referred to with in markets as whisper numbers.
I mean, there are official consensus numbers, but there is always a view that, you know, a company may beat or or miss those. So I think there was some disappointment and there was a hope within some sections of investors that the company's revenue and gross margin guidance could come in a little bit better than it actually did. So I think that's one short term trigger. But as
I said, I think the narrative is changing. One of the major focuses on the risk front is obviously the scope for further tariffs.
So obviously with.
A new administration in place, that remains a very real threat to them because China is still a very material part of their business.
So that just unpacked. You talk about beaten rays, explain that to the audience.
Well, I guess stock market's run and many different things, but in short term, it's all about expectations and about the incremental performance or it's you know, for a stop price to go up in the near term. Then the guidance that a company sets and the numbers they report on their earning state ideally would need to come ahead of what was expt So there's an incremental positive surprise and obviously the reverse you know, disappointment if as we've
seen with in video on the Q four numbers. So in absolute terms, these are still good numbers, but they beat the actual reported numbers, and more importantly, the guidance didn't quite meet the very highest of expectations, So there was incremental disappointment even though the numbers themselves were good.
Yeah, understood good. In terms of the CEO, Jensen Wang, he talked about demand for Blackwell is amazing. Now of course there's a new model deep Seek. How did the CEO's have come across given that there is this new competitive landscape, as you say, you know, it does look like things are quite different now for in video.
Yeah, well, Jensen Wang is not just a CEO, and you know and played an instrumental role in the you know, the humongous growth that this company has seen in recent years. He's their chief farc detect, their chief evangelist, their chief cheerleader. So you know, he's very good at setting out the stall and giving the sels pitch, which is what he
continues to do. Again, I think the narrative is changing and more with a focus on these software companies and big tech platforms that are ultimately buying these chips, are installing it in the data centers. You know, a point I've tried to repeatedly make, but both in our little chats and then the publish research we have in the terminal.
It's monetization because again, if we did a straw pole of listeners on this call at the moment, how many of us are actually putting our hand in our pocket and paying.
For these services?
And if we did, probably the chances we just switched to another service because there are many, many alternative supplies out the moment. The majority of AI bots or AI tools are available for free. There is a low level of product differentiation, you know, in many respects, or you go back to textbook definitions, it is a commoditize sector.
So again I'm not referring to the hardware side. Obviously in Nvidia is the global leader and what they do, they're effectively and monopoly at the moment, But the monetization of the software companies, you know, the US tech platforms due to spend around three hundred and fifty billion US dollars this year, So I would argue that the rate of monetization is not coming through anywhere fast enough to justify these very high levels of CAPEX.
Right, Robert, thank you so much for your time this morning. This is such an interesting space. Bloombig Intelligence is senior analyst Robert Lee.
Thank you.
Okay, let's dive into another interesting story. So central bankers are trying their hand at marketing and influencing on social media. This is in order to reach gen z and millennials in the wake of an inflation crisis in many countries and also the surprising issue of conspiracy theories around policy making. Joining us now is our UK economy reporter, Arena and girl who's been writing about why something like one hundred central banks have actually established a presence on Instagram. Arena.
It's a great story, great tale. What are central banks doing with their Insta accounts?
Hi, Caroline? Well, you know they're trying to meet.
Gen zs where they are, and that is on social media. So most gen zs get their news on social media, and central banks are trying to go there speak in their language, so trying to keep the talk of basis points down to regain their trust, counter misinformation and educate.
And what does that look like, Well, you know those videos of celebrities showing a day in their life on social media, So for example, some central bankers are trying to do that as well, and you know, you can imagine with various degrees of success.
And I think the Bank of Canada its own videos are.
Seemingly ai narrated, so they can look clumsy sometimes.
And then there are all sorts of funny posts.
D e c B has young people explaining it's decisions, it's industrate decisions. And for Valentine's Day they had this photo of the eurosymbol made of chocolate hearts captioned with roses are red, violets are blue inflations on track to settle around too, and.
So that's it's also very cheesy then as well, exactly exactly and a.
Bit you know, poking fun at themselves as well. And I mean maybe the most striking for me was the Bank of Jamaica. And the Bank of Jamaica has this lunchtime concerts at the Central Bank, these reggae concerts, and on its Instagram account you can find videos of people in the central bank, just random people dancing to the reggae music. So yeah, that's that was the funniest example and probably the most successful. You know.
Yeah, So this the central bankers sort of needing to reach out to the public is very interesting obviously because you know, they're officials with such importance, but they're not elected, so you know, they're kind of interactions with the public. It's quite interesting. What do you think of the aim of all of this is then? And also, I guess
what does success look like? I mean, some of what you outlined, yes is perhaps sounds a bit a bit cheesy or not as glamorous as the successful Instagram posts that you might expect. But what are what is the aim?
That's a great question, and I think many people are still trying to answer the questions. So the big aim is, you know, to to engage to educate the public, because central banker's decisions on interest rate policies they affect everyone. You know, we can just think of mortgage rates as the main example, but most people don't understand how it
works or how it affects them. So central bankers have to be out there and they have to set the narrative and often they have to be a bit cheat because that's what people consume on social media, or that's what central bankers think people consume on social media. But I think there is a limit to how successful they can be. As someone put it to me, central bankers have to be on Instagram, but they won't be effective.
But they still have to be there, and.
That's because there's this trade off between precision and accessibility that they have and politicians, for example, don't have this.
So central bankers are technocrats.
They are precise, and this is what makes them good at their job to set interest rates, but that is also what makes them a bit less accessible to the general public, a bit clumsier when trying to explain interest rates to an average person.
I also thought it was interesting that it's the central banks that you pick out, as you know, having an Instagram feed. There aren't that many individual policy makers who do. But there is a big exception of course, that's the ECB's Christine Legarde. What is she using her Instagram feed for?
Well, that's right, and you know, Christine la guard ironically has twice as many Instagram followers as the as the ECB. And you know, I should add that the ECB is one of the most active central banks on Instagram, So you know the fact that Christine la Guard is more successful than her own bank is quite telling. You know, she's one of those rare central bankers that commands attention to herself. She's not camera shy. She invites the camera.
So she has all these videos where she talks to the camera and she, you know, says I met with this friend and colleague of mine, or you know, I'm in Lithuania right now for x or for for y, and she you know, sometimes she would also post stuff like a photo of the Notre Dame after the reopening, so trying to give a bit of a glimpse into
her life as well. And I think that one of the more telling examples of Christine La Guard's sort of social media presence and relateationship with the media and with the public is when she decided when the ECB decided to cut interest rates for the first time in the cycle last summer, and she wore a golden necklace saying in spelling out in charge at the press conference when she was announcing this decision, which obviously attracted lots of
cameras and a lot of people were speaking about this afterwards, so I guess that was a successful, successful attempt to reach the public.
This is Bloomberg Daybreak Europe, your morning brief on the stories making news from London to Wall Street and beyond.
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I'm Caroline Hepca and I'm Stephen Carroll. Join us again tomorrow morning for all the news you need to start your day. Right here Bloomberg day Break Europe.
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