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the Bloomberg Terminal, and the Bloomberg Business App. Widely anticipated. Thank you for your comments out on YouTube, and I've seen an email as well. Joining us in his busy day Gene Munster right now on Nvidia. He is with Deep Water Asset Man Management Gene. Right before the earnings idiocy yesterday afternoon, the pro stepped in Gene Monster with
I think the absolute smartest insight I've seen. We mentioned it earlier with Man Deep Sing and that the purchasing transaction people for Nvidia are not so much going to play hardball, but they're going to say to their customers, don't give me this you're not going to buy the next revenue stream of older chips waiting for the new chip.
You don't get the new.
Chip unless you buy the old chip. Expand on that, gene Monster.
The Osborne effect, and that of course is when you have an existing product that is going to be replaced by a new product, that new product is not yet available, and historically that causes the existing product sales to dip significantly. We see that companies over the years, they'll blow up ahead of a new product cycle. In the case of Nvidia, they were really astute in terms of how they have been communicating this to customers over the past three months.
That was the time three months ago when they announced this new Blackwell chip and they said, exactly like you mentioned, if you guys want the new chip of this fall, you got to keep buying ours seeing Hopper chip. And that in fact did happen.
It worked. And I want to point out here because gene Monster's far too young, Lisa Matteo's grandfather probably had one the Osborne effect. It's not some NBA at Northwestern. The Osborne effect is the Osborne computer that I spent two four hundred and ninety five dollars on forty fifty years ago, and Gene Muster knows that's probably fifteen thousand dollars. I'm the only one in the world still alive actually bought an Osbourne computer.
Gene Muster.
I went over to Nvidia yesterday and I mentioned this to Paul Sweeney earlier that what I sense here radically different is I don't sense ego driven tech boy in the leadership of Nvidia. They're CFO statement, they're accounting clarity, the stock split, the dividend lift and all that. Are they rapidly trying to be a mature company to join something like the Dow Jones Industrial Average.
Absolutely, I mean they are a mature company. They're going to do over one hundred billion revenue this year, call it. It's going to be approaching the three trillion dollar market cap, one of the top three companies. And they're acting like it. They do not act like people who are trying to pump up a theme. They're being the results are backing it up. The guidance is backing it up. They beat a high bar by six percent, they guide it up July by five percent, and those guidance and I think
this is a sign of a mature management team. They keep exceeding. Over the last four quarters, they've been exceeding those expectations, and so that discipline around guidance is yet another example I think of how they are being mature about this, and they got good reason to be feeling
good about things for for two reasons. One is that they've got products that no one else has, and separately is they're still in the early innings of what is going to be the most breathtaking shift in technology that we've seen in the past one hundred years.
Gene, you've been so out in front of this. You know a lot of what I know about this AI business I learned from you. But talk to us about the competitive environment here. I mean, I was going to say, they're not I mean, where are the competitors here? Can't they come up with a chip that's comparable to compete with these guys.
I remember, we're invested in a deep water investing with private and public companies, and one of our private companies builds chips, and we invest in this company, in AI chip company, it's called Rain in twenty eighteen. And when we think about their business, they do not sip Capex they gulp Capex and when you think about the competitive set here, it is really limited to a small number of companies that can invest tens of billion dollars, billions
of dollars a year in two building these applications. And so I think that that's one big piece. There are kind of some glimmers of competition, most of those coming from the hyperscalers like Google and Microsoft are working on their own chips. But for the most part, Paul, they're running the table. And just one more piece on the
competitive threat. Please, three years ago, Elon must talked about their Dojo chip, their Dojo computer that was going to power autonomy on Tesla, and yesterday during the call, the cfo's lead comments led with both Tesla and Xai. Of course, both my Elon companies, those embracing the Nvidia chips, and so even the companies that want to compete with them realize that the return on investment for video's highest.
Geane would get a really good comment, a respectful comment out on our live chat on YouTube. Ryan, thank you so much, and Ryan says it's a great comment. Please move on from Nvidia. There is other news except gene Monster. There isn't explain to Ryan and me the Nvidia effect on everything else out there, not what it means for Microsoft, not what it means for some tech fanboy in some cappuccino place with.
You out on the West Coast.
What does Nvidia mean for Lisa Matteo, Ryan or Tom Keane.
In Vidia's current trajectory of the business, the just reported April quarter means that we are moving more quickly to artificial general intelligence. And when we hit that, the game changes for all companies. Every information worker, every technical worker is going to be impacted by this. And so the reason why we're so hyper focused on what Nvidia is doing is that they are really the leading, the very tip indicator in terms of the speed and the rate
of change that we're going to see around AI. And that's why it matters.
Should they replace I'm just picking the names Cisco or Intel in the Dow Jones Industrial Average?
Is it now? This is the moment where in video is like a doubt stock.
It should be.
I mean, this is the guard I think has changed a couple or a year or so ago, And I think the bigger question is do you think that this will continue? I absolutely believe what we saw last night as an indication that this is going to continue. I still believe we're in the front of a three to five year bull market powered by AI that's going to end in a spectacular bubble. But the front end of that that bull market is going to be quite exciting.
Let us know when the bubble's near. Geane call back. Please let us please help Lisa with the bubble.
Gane monster out front of the bubble. Thank you so much.
With deep water asset, Benjamin, let's talk to an adult here, Yes, particularly with.
All that's going on with nvidiot.
The new highs Nastak futures up two hundred and eight points. Amy was Silverman is expert. I'm trying to explain the dynamics in the nuances expectations. Amy was silverman on the Bloomberg where we on the high ground on this. I bring up ENVDA equity, OVDV and I can look at the SKEW, I can look at the term, I can look at the three D service and.
I'm really not sure what it says.
Could you use your tools to glean a nuance of the expectations of nvidio?
Sure, good morning guys. So look, you know in video is one that we've been watching with baited breath, obviously, And the super interesting thing was going into earnings last night, the options market was implying about an eight and a half percent move. So far, we actually they haven't beaten that,
but you know, the day is young. And the second thing I'd say was we didn't have much right tail tom which is super interesting for in Vidio because that's one where we've seen a lot of right tail chase. That sentiment wasn't there. What I think we really need to watch today is that that right tail is game on because of everything we saw during earnings last night.
Does it fold over into the rest of the magnificent forty two or the nastic one hundred. I mean, folks, I think we all understand left tails gloom, right tails a certain confidence. Does this a new regime of confidence from the Nvidia announcement?
Yeah? Look, you know one thing we've talked about is not just looking at the kind of OGAI names like in Vidio, but to look at the adjacent names because in some cases that ball is still less expensive and
you still get that right tail chase. So you know, one thing we've been talking about is don't just look at Nvidia, look at the other names like ADI or AMD, Microsoft others that also have AI conference is going on, because a lot of times you'll see that proxy correlated move Tom of the right tail spot up volatility of not just for Nvidia, but for that entire space when the enthusiasm starts to bubble.
Tom Amy Moosilverman is a graduate of Prince University, So I'm dying to ask her what her favorite sandwich is at Hogi Haven, but I'm gonna be professional and not go there. Amy, can you just define for this non derivatives person what right tail and left tail is?
Sure, Okay, I have to say it's the meatball sub. I just have to put it in there because Princeton Princeton Reunions are this weekend, so I definitely have tigers on my mind. But look, right tail is the idea normal distribution of that reach for upside. You know, that's where we see the fomo and the momo. That's where we see the call demand. And the left tail, which unfortunately has been dead for quite a while, is your
equity skew. It's that demand for downside protection, which apparently these days nobody seems to want, Hey.
Amy, I'm just looking at the you know, Tom forces us on a daily basis to look at the VICS, and it's now below twelve, firmly below twelve. What does that tell you?
Yeah, I think, yeah, we hit sub twelve. We're circling eleven. You know, I'd say, look, there's two things. One, index volatility has been quite low for some time. There are some artificial reasons why this is happening, and there's just some economic reasons because things look okay, because the breadth of the market still, you know, is very much mag
seven driven, even if the breath that's doing okay. But look the rise of zerodte, the idea that almost fifty percent of all SPX volume these days is zero day to xpray trading. Look, that does matter, and that is influencing these headline numbers, because VIX is just a thirty day weighted average of imply volt across calls and puts.
Is how do you define exuberance? I mean, financial media people toss around exuberance. We read it from Schiller, we read it from green Span. How does Amy wouse over and measure exuberance?
I can actually give you the technical definition that we use it's twenty five delta put minus twenty five delta call implied ball over at moneyball. If that number, if that number is inverted, right, if it goes negative, it means that the call implied volatilities outwighing put demand. It's something we actually look at quantitatively on a systematic basis for signals.
Okay, what you.
Just got there, folks, is an insight into the adult world of derivatives. They take the enthusiasm of the call up, they take the enthusiasm of the put down, and then they compare it to the enthusiasm at the point the center point. I do, okay there, I think it is Sheldon. Sheldonnatenburg's in Chicago, going time. Just shut up and let
Amy talk. Amy, what when you write your research note for Monday or frankly to get into June thirty, what are you going to say about the signals you see of expectation.
You know, one thing I'm going to be running the numbers on today is how much of that coll exuberance which we just defined there is going skew inverted again? Because when we get into these cycles of momentum, begets momentum. It's very hard to stop that train. That's why it was super interesting to me that we didn't see it coming into Nvidia. The question now is if it will start to inflect because you know that stock split it really gets the retail going. It doesn't seem like it
would from a corporate finance one oh one. But we saw the same thing happen with Tesla because you start to get new periods of participation too.
Amy for better or worse, this is an election year. Do you see trading patterns in your derivatives market pick up change more for a little bit here in an election year? Because boy, you know, depending upon who wins in November can have an impact on financial markets broadly defined.
Yeah, look, I'll tell you one scenario that investors have started to toss around as an exogenous risk. So it's not the idea of if Trump or Biden wins, it's basically the idea of a contested election. This is something our chief strategist has talked about as well. But the issue is when you get an actual contested election where it is unclear who the winner is come November, then essentially your Vick's term structure isn't pricing that right it's
pricing a hump for elections itself. It's not pricing a two thousand style question mark. And that's where I think we could see a pocket of volatility that isn't baked into the left tail, and that could be concerning to investors.
Amy with Silverman, thank you so much, greatly, greatly appreciate it this morning to reset folks. For those of you who just joining us on applecarplay on YouTube around the nation, Good morning, Bloomberg Radio eleven three to zero, the Vicks under twelve eleven point six one.
That's an HOLU with Silverman number.
Wendy Schiller from Brown University joins us right now. Wendy's a cottage industry figuring out how the Conservatives ran to the middle to finally get elected. And it basically, you know, back in ancient history, very old water down in flames. And then Reagan went out anything and he lost to Gerald Ford, and I remember that clearly. And then all of a sudden, Reagan defeats Carter, and the whole mood was to go out and find the Reagan Democrats for the president. Where are the Biden Republicans?
Well, I mean the Biden Republicans are people who now call themselves independents because they don't want to be associated with Donald Trump. I mean, so you know, we had independence before. We always have people who switched their votes, but that number has grown over time, not that much, but maybe five to eight percent. And that five and eight percent is really after twenty sixteen, where they can't
go back and vote for Trump in twenty twenty. So they call themselves independence, but they vote for Republicans for Senate and House and at the state level. So that's the bubble of people who formerly known as Republicans that Biden wants to remind that they rejected Trump a couple of times already our Trump want to be used in twenty twenty two, and therefore if they should come back to him. And you know, this is such a precarious election in the sense that really we don't know what
it will actually hinge on in October November. Right, the economy is generally very good, except for inflation, but very good, and we don't see a lot of indicators that's going to change a lot between now and November, at least with the unemployment. Right, So what is going to be the issue or is there even a single issue? Is it just now multiple issues to different groups of voters.
Can you imagine Nicky Haley falls on the sword ye decides she's going to vote for Trump. But can you imagine, Professor Schiller, that the people that support Nicky Haley will then go over and support President Biden.
Can you make that leap?
It all depends on how this summer unfolds with Donald Trump. I mean, Donald Trump has been relatively restrained, either either by court order or because his campaign is doing a good job of that. But you can image it. That's certainly at the convention and afterwards he's going to let loose because he's already won the nomination again and he thinks he's going to win. He's up in the polls.
He's not going to be controllable. And the question is how bad does that get and what kind of vision does that present for the future for anybody who didn't vote.
For him before?
I mean, do you really want him back? So to me, they're still unknown. I think they're going to be the undecided in the polling in October November, and it's undecided about whether they're going to vote, not who they're going to vote for. They're not going to vote for Trump. They're not going back to Trump. So that's the thing for Biden. But again, things like forgiving more student loans when there are student protests is bad politics. That's just
bad politics. But Biden has not seemed to care about that much in the last couple of years. He just does what he thinks is the right thing to do.
So, Wendy Hear, here's a question. It's just a really broad question. Where are the pre twenty fifteen I'm thinking the day before former President Trump came down the escalation at Trump Ploset. Where is that Republican Party today?
I think as a party, that party is gone. That party is erased as a sort of functioning powerful party. It doesn't dictate policy at the state level anymore in state legislatures. It doesn't control the House of Representatives anymore. There are a few holdouts in the Senate, but you can hear the voices of the most conservative senators in Bolden. Rick Scott just announced senator from Florida who's running for reelection.
He must be quite confident that he's going to win that race, that he's going to put in for a Senate majority leader against John Cornyn and John Thune are not liberal, but they're considered more mainstream established a Republican. But he's going to run as kind of a Trump guy. And you can see how the Trump wing of the party is taking over all of the mechanisms of government. And when parties cease to control government, they cease to be able to function and deliver for their constituents. So
that wing of the party functionally is dying. It's not dead. So that's the big question mark whether that happened, you know. So that's the thing that Republicans have to ask themselves. If Trump wins again, it's the nail in the coffin for the establishment Republican party. And that's just a fact. So how do they how boil are they to that version of the party. And I don't think they even know the answer that question, all right.
So for former President Trump, it doesn't seem like any of his legal issues, including the case in New York City at the moment, has any real impact on his political standing. It's just shocking to me. But is that kind of where we are?
Well, I mean, you know, even after January sixth, I mean, his own party sort of got mad at him, for two weeks and then they all went tomorrow Largo and many of them, Kevin McCarthy included, to say, okay, we forgive you. And now they're showing up in New York to say we're standing by you. I mean, it's a new age of politics where there doesn't seem to be a limit on what a politician can do without penalty
in the polls at least. But remember Donald Trump lost the election in twenty twenty and his surrogate lost the election in twenty twenty two, and we're forgetting that history. So you know, the idea that he's going to win again easily or his surrogates are going to win again easily. That defies the last couple of years of history in terms of our elections.
Why can't we have an election length? Like the British professor Schiller. There's got to be some thesis at Brown University over how do we take a three year extravaganza and dash it down to six, seven, eight weeks?
How do we do that?
Well? So the reason I think you probably already know the answer. I think it's rhetorical, is that the development of mass based political parties, starting with Andrew Jackson, but going all the way and then have parties controlling government. As government gets bigger, there's more to control, more to give out to your loyal, loyal people. So parties become a business and organizations and primaries are good for the business because then people stay in the organization.
Parties.
You know, parties say, oh you lost control, but they control the primaries. So it builds up the party to have the primary system. And that's why we have such a long long campaign with Martin van Buren ran today.
Would he be a Republican or a Democrat?
Well, you know he was. It's funny because in those days they were Democrat Republicans. So it's very confusing. But you know, in the meantime, let's look at the signals that we're getting from these state the state Senate races, in other words, that US Senate races in the swing states. Watch those and watch the poll numbers over the summer and see if those Democrats are holding on. And if they're holding on, there's more hope for bidden.
Wendy Schiller of Brown University truly one of our definitive textbooks.
On civics in America.
Wendy Schiller from Brown University joins us right now, Wendy's a cottage industry figuring out how the Conservatives ran to the middle to finally get elected. And it basically, you know, back in ancient history, Barry Goldwater down in flames, and then Reagan went out anything and he lost to Gerald Ford, and I remember that clearly. And then all of a sudden, Reagan defeats Carter, and the whole mood was to go out and find the Reagan Democrats for the president. Where are the Biden Republicans?
Well, I mean the Biden Republicans are people who now call themselves independents because they don't want to be associated with Donald Trump. I mean, so you know, we had independence before. We always have people who switched their votes, but that number has grown over time, not that much, but maybe five to eight percent. And that five and eight percent is really after twenty sixteen, where they can't
go back and vote for Trump in twenty twenty. So they call themselves independence, but they vote for Republicans for Senate and House and at the state level. So that's the bubble of people who formerly known as Republicans that Biden wants to remind that they rejected Trump a couple of times. Already our Trump want to be is twenty twenty two, and therefore if they should come back to him. And you know, this is such a precarious election in the sense that really we don't know what it will
actually hinge on in October November. Right, the economy is generally very good, except for inflation, but very good, and we don't see a lot of indicators that's going to change a lot between now and November, at least with the unemployment. Right, So what is going to be the issue or is there even a single issue? Is it just now multiple issues to different groups of voters.
Can you imagine Nicky Haley falls on a sword ye decides she's going to vote for Trump. But can you imagine, Professor Schiller, that the people that support Nicky Hayley will then go over and support President Biden?
Can you make that leap?
It all depends on how this summer unfolds with Donald Trump. I mean, Donald Trump has been relatively restrained, either either by court order or because his campaign is doing a good job of that. But you can imagine that's certainly at the conven and afterwards he's going to let loose because he's already won the nomination again and he thinks he's going to win. He's up in the polls. He's
not going to be controllable. And the question is how bad does that get and what kind of vision does that present for the future for anybody who didn't vote for him before? I mean, do you really want him back? So to me, they're still unknown. I think they're going to be the undecided in the polling in October November, and it's undecided about whether they're going to vote, not who they're going to vote for. They're not going to vote for Trump. They're not going back to Trump. So
that's the thing for Biden. But again, things like forgiving more student loans when there are student protests is bad politics. That's just bad politics. But Biden has not seemed to care about that much in the last couple of years. He just does what he thinks is the right thing to do.
So, Wendy Hear, here's a question. It's just a really broad question. Where are the pre twenty fifteen I'm thinking the day before former President Trump came down the escalator at Trump Play, is it? Where is that Republican Party today?
I think as a party. That party is gone. That party is erased as a sort of functioning, you know, powerful party. It doesn't dictate policy at the state level anymore in state legislatures, it doesn't control the House of Representatives anymore. There are a few holdouts in the Senate, but you can hear the voices of the most conservative senators in Bolden. Rick Scott just announced senator from Florida
who's running for reelection. He must be quite confident that he's going to win that race, that he's going to put in for a Senate majority leader against John Cornyn and John Thune. No, not are not liberal, but they are considered more mainstream established a Republican. But he's going to run as kind of a Trump guy. And you can see how the Trump wing of the party is taking over all of the mechanisms of government. And when parties cease to control government, they cease to be able
to you know, function and deliver for their constituents. So that wing of the party functionally is dying. It's not dead. So that's the big question mark whether it happened, you know, So that it's the thing that Republicans have to ask themselves if Trump wins again, it's the nail in the coffin for the establishment Republican Party. And that's just a fact. So how do they how weil are they to that version of the party? And I don't think they even know the answer that question.
All right.
So for former President Trump, it doesn't seem like any of his legal issues, including the case in New York City at the moment, has there any real impact on his political standing. It's just shocking to me. But is that kind of where we are?
Well?
I mean, you know, even after January sixth, I mean, his own party sort of got mad at him for two weeks and then they all went tomorrow Largo and many of them, Kevin McCarthy included, to say, okay, we forgive you. And now they're showing up in New York to say we're standing by you. I mean, it's a new age of politics where there doesn't seem to be a limit on what a politician can do without penalty
in the polls at least. But remember Donald Trump lost the election in twenty twenty, and his surrogates lost the election in twenty twenty, and we're forgetting that history. So you know, the idea that he's going to win again easily or his surrogates are going to win again easily. That defies the last couple of years of history in terms of our elections.
Why can't we have an election length like the British professor Schiller. There's got to be some thesis at Brown University over how do we take a three year extravaganza and dash it down to six seven, eight weeks?
How do we do that?
Well? So the reason I think you probably already know the answer. I think it's rhetorical, is that the development of mass based political parties, starting with Andrew Jackson, but going all the way and then have parties controlling government. As government gets bigger, there's more to control, more to give out to your loyal, loyal people. So parties become a business and organizations and primaries are good for the
business because then people stay in the organization. Parties, you know, parties stay, Oh you lost control, but they control the primaries. So it builds up the party to have the primary system. And that's why we have such a long, long campaign with Martin van Buren.
Ran today, would he be a Republican or a Democrat?
Well, you know, it's funny because in those days they were Democrat Republicans. So it's very confusing. But you know, in the meantime, let's look at the signals that we're getting from these the state Senate races, in other words, that US Senate races in the swing states. Watch those and watch the poll numbers over the summer, and see if those Democrats are holding on. And if they're holding on, there's more hope for Buddy.
Wendy Schiller of Brown University. Truly one of our definitive textbooks on civics in America. This is a Bloomberg Surveillance podcast, bringing you the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten am Eastern from our global headquarters in New York City. Subscribe to the podcast
on Apple, Spotify, or anywhere else you listen. And always I'm Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App.