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Let's head out to DC for the latest. When it comes to the potential budget. House Republicans past a budget blueprint on Tuesday, still has to go to the Senate. It looks like tax cut chances are rising, although it doesn't come without cuts to some major programs potentially. Eric Watson is a Bloomberg congressional reporter and joins us now. So first, Eric, just give us the lay of the land. What did the House pass yesterday?
So this is a four point five trillion dollar tax cut blueprint. It calls for two trillion dollars and cuts to mandatory programs such as Medicaid and food stamps, and would raise the debt ceiling by four trillion dollars. This is the first step after it's if it was adopted by the Senate, then they would have to produce a bill that actually details the cuts. And as long as that bill adhere to the budget. It can pass the Senate with just fifty votes instead of sixty. This is
called budget reconciliation. It's the way Obamacare was passed. It was the way the Inflation Reduction Act Green subsidies under Biden were passed. So it was really an achievement for Speaker Mike Johnson. The House Republican Conference has been very divided. You have moderates who are very worried about Medicaid cuts. You have conservatives who at the last minute put their votes and allow the bill to the budget to pass, but wanted even deeper cuts. They wanted to see this
budget fully paid for itself. But Trump lobbied them and was back calling them at the last minute to get them to flip in a dramatic scene here last night. So this is a positive I will basically say, my assumption has been that the Trump tax cuts of twenty seventeen do get extended, but I was thinking it could be more like December, right up against the dead line. This makes it more likely that happens in May. We'll give businesses and individuals better heads up as far as
tax planning. It's just a positive sign for the tax cuts overall.
What are next steps?
Eric, You know, the Senate is not really going to just put this House budget on the floor and pass it. They want to actually make larger tax cuts. They want to basically do something which is assume that the Trump tax cuts four trillion don't cost anything. This is called
a baseline shift. That's very technical, but it would be kind of a budget gimmick, and then add a lot of things like a state tax repeal, you know, fullsome no tax on tips, no tax on overtime, you know, probably trying to make the tax cuts permanent rather than eight or nine years, which is what my estimate is of what the House bill would do as far as individual rate cuts. So they're going to make those changes.
There's also more squeamishness among senators for actual spending cuts such as to medicaid, so they may bring that down. So I'm expecting substantial chain will be the backdoor negotiations, a compromise will emerge, and then we'll see if it can pass both the House and the Senate.
Matt from Westchester writes in and asked, how about the salt tax deduction.
There's you know, there's there's some runway to do that you know, on the House side. But I think that you know, basically the Senate would have to create more room or they would have to find deeper cuts. Now, there's a lot of options they can do in order to allow for salt. You know, you could do things on the tax side, make it more difficult to apply for a child tax credit, for example, or do a stock buyback tax increase. But you know, it's all going
to be very controversial and create winners and losers. But certainly there's a group within the House Republican Conference from New York, New Jersey, and California that will not vote for a tax bill without some kind of salt. You know, tax cap change. Right now, it's limited to ten thousand dollars. That applies to a couple as well as an individual. They may double it allowed to be twenty need for a couple. We could see another type of rise. I
don't think it's going to be completely uncapped. It just costs too much.
So how hard was it to get this done? Like how much corraling did President Trump have to do over House Republicans relatively united?
You know, it was the House Freedom caucuss is often up pinned as being a big obstacle to leadership. They came out early on as long as they got this two trillion in cuts, so that's a big chunk of what the conservative But they're what they call the affiliates, people like Victorious Bart's, Thomas Massey, Tim Burchett, and Warren Davidson, who at the last minute were saying, we are not voting for this, We'll never vote for this. They were
really dug in. In fact, there's a scene I've never seen in my almost twenty years up here where they sent everybody home. Lawmakers got in their cars, were leaving the capitol, and eight minutes later they said everyone come back. So in that was minutes I think President Trump got to some people, they started to flip and they ended up passing it. But it's a very dramatic scene here.
In fact, even saw some Democrats coming, one who had just had a baby and one who had just had surgery coming with Walker to try to put the pressure on Republicans to get every vote that they needed.
Eric got about thirty seconds left. But this seems like a real big win for President Trump. Does this signal even additional momentum for his agenda?
It does, but you know, there's a lot of hurdles when right now a lot of moderates voted for this saying it's just a plan, there are no real cuts. But if you see an eight hundred billion dollar cut to medicate that goes beyond work requirements for able bodied adults, that goes beyond you know, improper payments, that's things like capping you know, Medicaid, a block granting into the states where you'll see actual you know, impoverished people go without healthcare.
And that's going to cause I think an uproar probably that a lot of swing district monits are not prepared for. So you know, it's going to be very difficult to get something through because if they don't make those cuts, those conservatives that they also need will not vote for the bill.
All I really appreciate that. Thank you so much for joining us, great reporting. Eric Watson, a Bloomberg Congression reporter, literally joining us in a hall somewhere.
Yeah.
No, that's the capital rotanda underneath the Trumbelt chaining.
Okay.
My point was that he's like in the in the weeds, is my point.
That's the surrender a morning's.
On the ground.
He's that kind of waning.
Is the painting of the surrender of General We're Goyne.
Thank you.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple, Coarclay, and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
All right, I'm Alexey alongside dun Tucker and Paul Sweeny. This is Bloomberg Intelligence Radio. We bring you all the top news and business, economics and finance through our lens of our Bloomberg Intelligence folks. They cover two thousand companies and one hundred and thirty industries all around the world.
We also love checking in on some of the companies that are basically running the show when it comes to us being able to turn on our lights, or when it comes to us turning on our cars, or actually like starting our cars maybe a different way.
To say it.
And of those companies is American Superconductor. The ticker is AMSC. That's on the Nasdaq. You can find it there. The stock is currently up by almost six percent. It currently It recently announced it's fiscal third quarter results and the CEO Daniel McCann joins us. Now, So, Daniel, you basically make all the stuff that allows us turn on lights. Is that a fair way of saying it.
Yeah, we don't really make the power move the power, but we make sure that the power is where it is when it's needed.
So what does that wind up meaning? So you can tuck to the electricity basically?
Yeah, So if it's an industrial site in a manufacturer that needs power at a certain level of certain frequency, we modulate that and make it the right way for that factory. Same thing if you're trying to deal with bringing generation onto the grid or even different spots within the grid itself, to bolster and make sure that the power can go where it's needed.
All right, that sounds critical, sounds important, but it doesn't sound sexy. But your stock is up seventy eight percent over the past twelve months.
Why do you think that is?
Are you guys getting caught up in an AI and the need for energy?
And I don't.
I think we're getting caught up in the need for energy. I think there's a lot of drivers that are changing our need for power. If you think about everything you do in your day now requires electricity, and that could be from healthcare to data to semiconductor manufacturing and everything in between. So power it becomes more and more critical. We're becoming more dependent upon it. And the grid really wasn't built for the modern era of electricity.
And from that perspective, I mean, just for a super nerdy moment. You guys also make the conductors, right, like the thing that so if you have a wind farm and you need attached to a grid, there's like a piece of equipment that you need to attach it. You make those and those are in super super super tight demand like tons of demand, not on a supply it doesn't matter what kind of power source that is. Am I accurate?
Yeah, And many of the suppliers are from overseas as well, So we're kind of unique also being an American company making product in America with Americans, and I think that fits very well in today's climate where we're trying to push the country.
So what are the drivers for your company right here right now? I know you recently reported are things. What did you identify as the drivers for your business?
A lot of it is this further in the need for demand. A lot of it. We're seeing our business start to ramp really with the reshoring of manufactured capacity and capability in America. All those operations need power, so we see expansion in manufacturing that's starting to happen critically in these critical elements if you want to deal with cars and chips and AI and all those things. We sit kind of secondarily that we help enable the power
to be there. But more and more operations are becoming more dependent upon electricity.
So from that perspective, does it matter to you where the electricity comes from? In that does the policy from a Biden administration and transition to a Trump administration on say energy and climate, does that matter?
Well, I'll say something that may not be popular, but I'll still say it.
I think that.
The end result and desire from both are the same. We want to make sure that we're building an economy in America for Americans. I think that was insistent with the last administration. It's definitely consistent with the current administration. The question is the policy and how how do we help enable it. Are we trying to create a market that people want to companies want to invest in, or is the government trying to help foster that through money
and through through policy that is more economic. At the end of the day, for us, it doesn't quite matter. The problem is still the problem. The grid needs to be improved. Utilities are working on that, but as more manufacturing capacity comes online, there's there's need for higher quality power and that's where we come in and help solve those problems. Who do you compete against a lot of the big guys from Europe?
And what we found is that like Semens, it could be.
Semens or ABB locally here in the US a small company called General Electric. But what we've found is over the past several years, our largest competitors have become very good customers. And what we've found is what we offer, the uniqueness of what we do and the service that we provide, it complements their offering. And I think they're starting to understand that we're not really a threat per se to their business. We're a helpful solution to the end customer.
What inputs do you need for your business? So? What things are tight for you? What things do you want to help change?
When you say inputs, I think supply chaining.
That's what I'm and that's what I'm trying to get at. So is it like the raw materials that you need to build stuff in the US to them sell.
Yeah, almost everything.
That we make in the US. So probably eighty five percent of our businesses here home in the US, manufactured here. Almost all of our supply chain, probably more than ninety five ninety six percent, is sourced in the US. So the current ap climate really puts us in a unique opportunity that we may have unique opportunities presented to us because we are American, American, made by Americans, supplied mostly
by American suppliers. When people talk about tariffs and these kind of external policies, they don't have a great impact on what we do now. They may how things are going to sort out. There's a lot of rhetoric and then we'll see how reality translates from that reetarc and really what gets put in place. But a lot of this is trying to push the country in a certain direction, and I think that general direction is good for us.
So are you having conversations with your customers now?
They may be calling you and saying, hey, Dan, we're a little nervous about what might be happening over the next three, six, twelve months in terms of terrors. Are they are you seeing that in your order flow or are you seeing that maybe just in conversations you're having.
We're seeing that from companies in Canada, Mexico, we're seeing that to some extent some companies on the continent of Europe, but certainly in the US they're comforted by the fact of where we make it and how we make it, and where we source products from.
Some of the headlines over the last couple of days have evolved around tariffs on things like steel, aluminum. Copper was thrown into the mix yesterday. If that winds up denting demand as and we're not going to build as much manufacturing or industrial sites because it's just really expensive, how does that trickle to you?
Well, I think the opposite's going to happen. The need is going to persist. The question is can it absorb the cost, And there's gonna have to be a way to figure that out and find that out. But I think all of the things that go into the electric grid use all those materials, so they're gonna have to get sources. And if it makes American sourced product more competitive,
then so be it. From my standpoint, it doesn't directly affect us because we're already sourcing most of our principal equipment from the US.
Interesting, all right, Dan, great, thanks for joining us. Really appreciate it.
Dan again, a MSc. That's American Semiconductor Corporation. They're up there in Massachusetts.
It's a public trading company. On this deck.
AMSC is the ticker I put in there. So we appreciate that. Dan coming into our Bloomberg Interactive Brookers Studio in New York City, Red Sox.
Fan of course.
Oh jeez, all right, what are you gonna do?
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Applecarplay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your pod, or watch us live on YouTube.
Alex Steel here alongside Toal Sweeney. This is Bloomberg Intelligence Radio. We are broadcasting to live for Interactive Broker Studio right here in midtown Manhattan. You can also check us out on YouTube as well. Obviously, the main event here is
going to be in Vidia at the closing bill. The options market is looking for anywhere from about an eight to nine percent move to the upper of the downside, which could equate to something like three hundred billion dollars in market cap, so that could be a very sizeable event. So I want to get you a preview here of that kind of what to expect in a broader sense. Joining us as Matt Stucky, chief portfolio manager of equities at Northwestern at Mutual Wealth Management. Matt, good to see you,
all right, do my homework for me. What am I looking at for Nvidia?
Well, certainly is the event of the day. Look, it's an interesting report that we're going to get after the close, and specifically to the company. You know, you're looking at a ramp up in Blackwell production as well as Blackwell revenue, but that needs to offset a deceleration in Hopper revenues.
And is of Q three of Navidia's fiscal year that was twenty seven billion dollars worth of revenue in terms of Hopper sales, and by the end of this fiscal year it should be down to minimal levels relatives to Navidia's revenue base. And so this product transition, I think is one of the reasons behind kind of why the implied move is as high as what it is.
So talk to us about valuation. How do you think about valuation for this name. I mean, you look at the growth and I know a lot of folks are saying this, this is actually a name that can grow into its valuation.
How do you feel about that?
Well, I think I think Navidia's valuation has never been a reason why, you know, the stock has done what it's done. And what I mean by that is, you know, the multiple expansion hasn't been the driver of the stock.
It's been earning's growth. In fact, I think most Byside investors expect calendar or twenty twenty six earnings to be in the neighborhood of six dollars a share, and at today's price, you know, that's just a modest mind, just premium to the S and P five hundred, despite you know, much better growth, much better margins, much better kind of end market health relative to the rest of both technology
as well as the overall market. So you know, to me, evaluation has never really been you know, the the kind of headwind to kind of buying the video. You know, really, I think the question a lot of investors have is, you know, does this investment wave from hyperscalers, does that persist? Can you underwrite a long term revenue base that grows from this kind of high levels that exists today.
And just in breaking news for you guys kind of in this vein is Amazon announcing a rebuilt Alexa assistant with generative AI. It will be renamed Alexa Plus. So just you know, creative, right, we call ours Echo because Alex Alexa it can get confusing.
In our household.
Oh yeah, yeah, so it's fair enough. Okay, So back to Nvidia for a moment. You talk about the product transition. This is also happening at a time when Nvidia is reporting earnings for the first time in twenty twenty two that shares are down and kind of into the report. So I'm wondering what we're going to hear that on the deep seek side potentially, which is what we really set things off.
Yeah, I think that you're going to probably hear Jensen talk about this as being a catalyst for a more broad based AI adoption and not necessarily a headwind to Navidia's business, you know, Looking at DCK specifically, I think it's pretty clear by now that they didn't build their own foundational model. They optimize what was out there, and it's not slowing down importantly what hyper skills are doing in terms of investing. You know, a lot of hyper
scale investments end up being revenues for Navidia. And if you look at what was expected in terms of CAPEX from you know, the likes of Microsoft, Amazon, Google Meta or from the start of the year Tilt today, it's been revised higher by twenty percent and year on your growth of capex is in the area code of around thirty three percent per year over year every year. So it's still a very healthy spending and investment investment environment.
And you know a lot of those dollars again find their way over to the video.
So I'm just going at the Bloomberg terminal here.
The consensus for the quarter in terms of revenue is about thirty just a little more than thirty eight billion. Is there a whisper number out there, Matt that you're looking for both for this quarter and maybe for guidance for the next quarter.
Yeah, I think the whisper is around forty where the where the buy side sits. And then if you look out to guidance around forty two and a half. You know, n Video got it to thirty seven and a half for the fourth quarter, and they only guy one quarter at a time, and so you know, looking at kind of where that sits relative to sell syde consensus, that's
a little bit higher. But again you're in the midst of this product transition, and so the historical pattern of the video delivering two billion above the current quarter and guiding to two billion in excess of seal side consensus, you might be a little bit questionable here just given you know, they're in black welve. It's just more of a complex product and it's taking a little bit longer to ramp up the supply chain there.
What's going to be the read through for Nvidia on some of its peers, and I use peers a little loosely here.
Well, certainly a healthy na Vidia report is going to translate into likely a move higher. As well as to some of the video's competitors. You know, I think if you're looking at direct competitors to the video, you know, broadcome comes to mind, Marvel comes to mind. They do operate in a little bit different, a little bit different segment of artificial intelligence because they're you know, the customer basic manufacturers for the lesive Google as well as for
UH as well as for Amazon. You know, I think those are those are a little bit different than the video because it's the merchant GPU provider, and let's not forget you know, the video does own ninety percent of this market, so they're the big gorilla in.
The room for sure.
Exactly all right, Matt, thanks so much for joining us.
Really appreciate giving us a little preview there of Nvidia Air for the clothes, Matt Stuckey, he's a chief portfolio manager filling the equity stuff for Northwestern Mutual Wealth Management out there in Milwaukee, Wisconsin.
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