Chip Selloff Hits Kospi, BOK Begins Rate Hikes | The Asia Trade 7/16/2026

SHERY: THIS IS "THE ASIAN TRADE." ASIA SET FOR A CHOPPY START AFTER SOFTER THAN EXPECTED U.S. INFLATION FIGURES THROUGH WALL STREET HIGHER DESPITE A ROUTE IN CHIP STOCKS. OIL PRICE FALLOUT FROM THE WAR BOLSTERING THAT'S THE FED HAS ROOM TO DELAY HIKES. THE BANK OF KOREA EXPECTED TO RAISE RATES TODAY. THE KEY QUESTION IS HOW FAST, HOW FAR AND HOW LONG THE NEW TIGHTENING CYCLE WILL RUN. WE ARE LIVE AT THE ASPEN SECURITY FORUM, SPEAKING WITH EXECUTIVE DIRECTOR AND U.S. TRADE REPRESENTATIVE JAMIESON GREER. HAIDI: TAKE A LOOK AT THE SET OF RETRADING ACROSS ASIA. LOTS OF CROSSCURRENTS WHEN IT COMES TO WHAT INVESTORS ARE CONTENDING WITH. KOREA IS FRONT AND CENTER, NOT JUST THE BOK. WE EXPECT TO BE OK TO RAISE RATES ON HIGHER INFLATION OUTLOOK, THE GROWTH OUTLOOK. IT IS A WIDE EXPECTATION WHEN IT COMES TO THE POLICY RATE. ALL 25 SURVEYED BY US OF BLOOMBERG EXPECTING 2.75% RATE BY THE END OF THURSDAY. THERE'S ALSO INCREASING CONCERNS WHEN IT COMES TO THE SWINGS IN VOLATILITY WHEN IT COMES TO KOREAN MARKETS. EVEN THE PRESIDENT OF SOUTH KOREA SAYING THE STOCK MARKET IS QUITE UNSTABLE. WE ARE HEARING REPORTS IS A GATHERING AND DISCUSSIONS TAKING PLACE WHEN IT COMES TO VARIOUS GOVERNMENT ENTITIES AND REGULATORS ON THIS ISSUE OF LEVERAGED ETF'S. WATCHING THAT CLOSELY. PRETTY CHOPPY START IS THE PICTURE AS WE LOOK AT A PRETTY MIXED OPEN. THIS IS THE LAST TRADE WHEN IT COMES TO NIKKEI FUTURES, MODESTLY TO THE UPSIDE. SOUTH KOREAN FUTURES DOWN BY 4.5%. DOLLAR-YEN AT 162 LEVEL. WATCHING THE WON DEPENDING ON WHAT WE SEE OUT OF THE BANK OF KOREA. THE U.S. LAUNCHING FRESH STRIKES ON IRAN. THE PERIL IN THE STRAIT OF HORMUZ AND THE COMPLICATIONS OF OIL VESSELS TRAVERSING THE AREA IS REALLY CONTINUING TO ESCALATE. THE INTERIM PEACE DEAL SIGNED, THE AGO ALL BUT COLLAPSING. WE HAVE PERHAPS SOME SIGN OF POSITIVITY. PRESIDENT TRUMP SANK IRAN HAS RELEASED A U.S. CITIZEN. HE PRAISED THAT AS A GOODWILL GESTURE IN A TRUTH SOCIAL POST ABOUT THIS NEWLY RELEASED CITIZEN. WE ARE WATCHING THAT CLOSELY. OIL, BRENT CRUDE AT .3% HIGHER. CLIMBING FOR THE FOURTH DAY. ALL THIS FEEDING INTO THE INFLATION PICTURE. THAT SOFTER THAN EXPECTED U.S. INFLATION REPORT. ANOTHER READING STRENGTHENING THE CASE FOR THE FED TO HOLD. FEDERAL RESERVE AND ECONOMY REPORTER ENDA CURRAN JOINS US NOW WITH MORE. WE HAVE A COUPLE OF DATA POINTS THAT SUGGEST THE FED SHOULD BE COMFORTABLE WHERE IT IS AT. DOES THAT PUSH THE EXPECTATIONS BEYOND THE END OF THE YEAR NOW? ENDA: IT CERTAINLY WAS A GOOD WEEK ON THE INFLATION FRONT. WE HAD PRODUCER PRICES COMING IN TODAY SOMEWHAT SLOWER THAN EXPECTED. A LOT OF IT WAS BECAUSE THE ENERGY STORY. THAT FEEDS THROUGH TO THE LOGISTICS AND AIRLINE FUEL COSTS AND THE REST OF IT. IT WAS MORE BROAD-BASED. FOOD COSTS ARE COMING DOWN. THAT FEEDS INTO THE FED'S PREFERRED INFLATION GAUGE, SUGGESTING WITH CONSUMER DATA AND INFLATION DATA THIS WEEK IT DOES TAKE PRESSURE OFF THE FED. IT TAKES PRESSURE OFF THEM FOR THE JULY MEETING. WE HAD CHAIRMAN WARSH SPEAKING AGAIN TODAY. HE MADE THE POINT THAT YES, THE AI BOOM IS REAL AND PROBABLY NEAR TERM AND IMPACT ON PRICES. HE SAID THAT DOES NOT NECESSARILY EQUATE TO BROAD-BASED OR PERSISTENT INFLATION, HANDING A WILLINGNESS TO LOOK FOR WHAT'S HAPPENING WITH THE AI BOOM. THE NUMBERS THIS WEEK DO NOT ADD UP TO THE FED MOVING IN JULY. I THINK THINGS WILL GET MORE COMPLICATED IN SEPTEMBER AND OCTOBER WHEN WE START TO GET A NEW ROUND OF INFLATION DATA. THAT WILL BE CRITICAL HEADING INTO YEAR END. HAIDI: VERY DANGEROUS FOR MARKETS TO FIXATE ON THE IDEA OF TRANSITORY ENERGY INFLATION, PARTICULARLY WHEN WE SEE EVERY ESCALATION OF THE WAR WITH IRAN -- A RE-ESCALATION OF THE WAR IN IRAN. MARK: WE HAVE NOT REALLY CHANGED A GREAT DEAL. TRADERS ARE SKEWED TOWARDS THE IDEA THE FEDERAL RESERVE WILL RAISE INTEREST RATES, AT LEAST ONCE IN THE NEXT FEW MONTHS. THAT IS NOT TOO SURPRISING. IT IS NOT JUST ABOUT THE FACT THAT WTI IS BACKGROUND THE $80 MARK. IF YOU LOOK AT THE OTHER PRODUCTS, THINGS LIKE THE DIESEL FUEL, JET FUEL, THOSE ARE MUCH HIGHER. THERE ARE SHORTAGES UP IN THE OTHER OIL STOCKS AS WELL, WHICH HIT THE DIRECT ECONOMY. PEOPLE ARE RELUCTANT TO PRICE OUT THE IDEA THAT THE FEDERAL RESERVE CAN'T INCREASE INTEREST RATES BECAUSE WHAT'S HAPPENING ACROSS THE ENERGY SECTOR. IF YOU ARE IN A POSITION OF KEVIN WARSH, HE WILL PROBABLY TELL THE COMMITTEE THEY SHOULD TAKE MORE TIME. THEY SHOULD DELIBERATE FURTHER AND NOT RUSH TO ANY DECISIONS. IT IS A SPLIT FOMC. WE HAVE SEEN THIS YEAR THERE HAVE BEEN PEOPLE VOTING IN FAVOR FOR CHANGES MUCH EARLIER UNDER CHAIRMAN POWELL. IT WILL BE A VERY HOT MEETING WHEN THEY COME TOGETHER AND MARKETS WILL BE LOOKING FOR ANY SPLIT BETWEEN THE FOMC PEOPLE. EVEN IF RATES ARE HELD AT THE SAME LEVEL. LOOKING AHEAD, TRADERS ARE NOT GOING TO PUSH YIELDS DOWN VERY FAR WHEN THEY CAN SEE WHAT'S HAPPENING IN THE REAL WORLD. THEY CAN SEE THE IRAN CONFLICT IS GOING ON. THERE IS PLENTY TO SEE THE CHANCES ARE THAT BASE INFLATION WAS A RELATIVELY HIGH. PEOPLE LIKELY TO BE DEFENSIVE IN TERMS OF BONDS AND CURRENCIES AT LEAST. SHERY: WHEN IT CAME TO CHAIRMAN WARSH, HE DOES NOT NECESSARILY SEE THESE ONE TIME PRICE HIKES AROUND ARTIFICIAL INTELLIGENCE AS INFLATIONARY. YET WHEN IT COMES TO THE TECH SECTOR ITSELF, THE VOLATILITY HAS BEEN IMMENSE. MARK: I THINK HE'S BEING A LITTLE DISINGENUOUS. THE BUILDUP OF DATA CENTERS, THE HUGE AMOUNTS OF MONEY THE HYPERSCALERS ARE SPENDING RIGHT NOW ON THE BUILDUP OF CAPACITY TO PRODUCE AI PRODUCTS IS CLEARLY INFLATIONARY IN THE SHORT-TERM. THERE ARE SO MANY REPORTS ABOUT IT. BLOOMBERG HAS WRITTEN EXTENSIVELY. INVESTORS KNOW IT'S PUSHING UP PRICES IN THE NEAR TERM. FURTHER DOWN THE ROAD, JOB DESTRUCTION BECAUSE OF AI IS A MUCH MORE SERIOUS PROBLEM FOR THE U.S. ECONOMY AND GLOBAL ECONOMY. JOBS WILL BE LOST BECAUSE OF AI REPLACING THEM. THAT'S A MEDIUM TO LONGER TERM PICTURE AND PROBABLY WHY KEVIN WARSH IS TRYING TO TREAD CAREFULLY BETWEEN THE NOW AND THE LATER SCENARIOS. AS FAR AS INVESTORS ARE CONCERNED, THEY ARE INTERESTED WHAT HAPPENS OVER THE NEXT COUPLE OF MONTHS RATHER THAN FURTHER DOWN THE TRACK. THAT IS WHY YOU ARE SEEING THE VOLATILITY IN THE BIG NAMES IN THE TECH SECTOR. THAT'S ALREADY BEGINNING TO UNWIND TODAY. WE HAD AN INTERESTING DAY IN THE COSBY. HE REBOUND LATE IN THE SESSION. IT WILL BE A CHOPPY DAY. TSMC EARNINGS AS WELL. THERE'S A HUGE AMOUNT GOING ON IN THE BIG AMERICAN NAMES TO RELEASE OVER THE NEXT FEW DAYS AS WELL. THE EARNINGS SEASON IS VERY IMPORTANT FOR THE EQUITY MARKET AND THE SHORT-TERM VOLATILITY. ONCE WE GET THROUGH IT, WE MIGHT WELL LOOK BACK AND SAY ACTUALLY THESE COMPANIES ARE STILL MAKING HUGE PROFITS. THAT GIVES OPTIMISM FOR THE NEXT COUPLE OF MONTHS AHEAD IN THE EQUITY MARKETS. SHERY: WHAT IS YOUR TAKE ON THE U.S. ECONOMY SINCE WE ALSO GOT THE BEIGE BOOK? HOW ARE AMERICANS FEELING RIGHT NOW? ENDA: THE ECONOMY IS DOING FINE IN TERMS OF AGGREGATE DATA. INTERESTING FOR POLICYMAKERS THIS WEEK CONCLUDING -- INCLUDING GOVERNOR WALLER. THEY ARE MAKING THE POINT THAT THEY HAVE FLIPPED FROM WORRYING ABOUT THE JOBS MARKET. THE JOBS MARKET IS FINE. YOU CAN FIND A JOB. UNEMPLOYMENT IS LOW. WE HAVE NOT SEEN THE FLOW THROUGH THE AI DIFFUSION. YOU MIGHT BE HAPPENING IN SECTORS LIKE FINANCE BUT NOT BROADLY SPEAKING. THE STORY IS ALL ABOUT INFLATION. IT IS A CONFUSING STORY. IT IS WHIPLASH. WHEN THE IRAN PEACE DEAL WAS SIGNED, IT LOOKED LIKE MORE RELIEF IN THE MONTHS AHEAD WITH THE ENERGY STORY ALLOWING POLICY MAKERS TO DRILL INTO WHAT'S GOING ON WITH THE AI INFLATION STORY, TARIFFS OFF THE BOILED. HE LOOKED LIKE IT COULD BE EASING HEADING INTO THE BACK END OF THE YEAR. THEN WE ARE RIGHT BACK TO WHERE WE STARTED. THE CONFLICT IS RAGING AGAIN WITH IRAN AND THAT WILL HAVE CONSEQUENCES ON OIL, WITH DIESEL COSTS. THAT WILL HAVE SOME FLOW-THROUGH. THE AI STORY HAS NOT GONE AWAY EVEN THOUGH CHAIRMAN WARSH IS SAYING IN THE NEAR TERM YOU CAN LOOK THROUGH THAT. IT IS REAL ON THE GROUND TRYING TO BUY RAM OR MEMORY OR A LAPTOP. IT'S STILL AN ISSUE AND A TALKING POINT AMONG COMPANIES. THEY SAY THE COSTS ARE HIGH AS A RESULT OF THE TARIFF IMPACT. THE STORY IN THE U.S. IN THE MOMENT IS NOT ONE OF CONCERNED WITH GROWTH PER SE OR THE LABOR MARKET. IT'S ABOUT INFLATION AND HOW MUCH WILL IT ACCELERATE FROM HERE TO THE YEAR END. CAN THE FED KEEP A GRIP ON IT? CAN THEY STOP ACCELERATING FROM WHERE IT IS? THAT'S AN OPEN QUESTION THAT WILL BE A BIG TEST FOR CHAIRMAN WARSH HEADING INTO THE SECOND HALF OF THE YEAR GIVEN THE POLITICAL PRESSURE HE'S UNDER. SHERY: AND JOINING US FROM D.C. AND MARK CRANFIELD IN SINGAPORE. STILL AHEAD, EXECUTIVE DIRECTOR JOINS US LIVE FROM THE ASPEN SECURITY FORM. WE WILL ASK WHAT RECENT ATTACKS COULD MEAN FOR SHIPPING THROUGH THE STRAIT OF HORMUZ AND GLOBAL ENERGY SUPPLY. >> THEY WANT TO SETTLE SO BADLY. THEY DON'T LIKE WHAT WE ARE DOING AND THEY WANT TO SETTLE. WE WILL FIND OUT IF WE SET UP WITH THEM OR JUST FINISH IT OFF. HAIDI: TRUMP REITERATING CLAIMS IRAN IS SEEKING MORE TALKS AS THE USS STRIKES WILL CONTINUE UNTIL TEHRAN STOPS ATTACKING SHIPS IN THE STRAIT OF HORMUZ. AS THE WORLD ABSORBS THE SHOCKS OF CONFLICT IN THE MIDDLE EAST, ENERGY SECURITY REMAINS A KEY FOCUS OF THE ASPEN SECURITY FORUM. DAVID GURA JOINS US LIVE NOW FROM COLORADO WITH OUR NEXT GUEST. DAVID: GREAT TO HAVE YOU WITH US. LET ME GET YOUR SENSE OF WHAT IS HAPPENING IN AND AROUND THE STRAIT OF HORMUZ. WE HAVE BEEN WATCHING THE U.S. STRIKES. WE HAVE SEEN THE CEASE-FIRE DISSOLVE IN THE LETTER OF UNDERSTANDING THROWN OUT. WHAT HAVE YOU OBSERVED IN THE LAST 24 HOURS A WHAT'S HAPPENING IN THE REGION? DR. BIROL: BIG UNCERTAINTY. THE MARKETS ARE NERVOUS WHETHER OR NOT THERE WILL BE A LASTING SOLUTION TO THE PROBLEM. AT THE SAME TIME MANY COUNTRIES ARE TAKING SOME MEASURES FOR THE WORST CASE SCENARIO. DAVID: WHAT ARE THEY DOING EXACTLY? WE HAVE SEEN THEM DRAW FROM SUPPLIES ON AN EMERGENCY BASIS. DR. BIROL: FIRST WE SEE SOME COUNTRIES ARE USING THEIR STOCKS, SUCH AS CHINA AND OTHER COUNTRIES. NUMBER TWO, WE SEE THE PRODUCTION INCREASED SIGNIFICANTLY, FROM THE UNITED STATES, FROM BRAZIL AND KAZAKHSTAN. NUMBER THREE, SAUDI ARABIA, AS WELL AS THE UNITED ARAB EMIRATES, BYPASSING THE STRAIT OF HORMUZ OF THE REGION. ALL OF THEM ARE GOOD. BUT NONE OF THEM ARE ENDLESS. SO THEREFORE, I HOPE THIS CRISIS WILL BE SOLVED QUICKLY. OTHERWISE THE GLOBAL ECONOMY MAY HAVE SOME DIFFICULTIES. DAVID: I HEAR YOU USE THE WORD HOPE AND I WONDER HOW OPTIMISTIC YOU ARE -- HOW WORRIED YOU ARE ABOUT WHERE WE ARE NOW OVER THE LAST 24 HOURS. DR. BIROL: I AM ALWAYS WORRIED, I ALWAYS THOUGHT, WHAT COULD HAPPEN IF ONE DAY THE STRAIT OF HORMUZ IS CLOSED. DAVID: YOU'VE THOUGHT THROUGH THIS MANY TIMES. DR. BIROL: MANY TIMES WITH EXERCISES AND SO ON. IT IS ONE OF THE REASONS THAT WE RELEASED A HUGE AMOUNT OF STOCKS TO THE MARKETS IN A SEAMLESS WAY WHICH BROUGHT THE OIL PRICE $20 DOWN. NOW, THE PROBLEM IS, ONCE IT IS CLOSED, MANY PEOPLE THOUGHT IT MIGHT BE CLOSED AGAIN. SO COUNTRIES ARE NOT THINKING ABOUT WHAT MEASURES THEY CAN TAKE TODAY ONLY, BUT HOW THEY ARE GOING TO DEAL WITH SHORTAGES TOMORROW. DAVID: THEY HAVE 25% OF THE RESERVES AT LEAST. WHAT'S THE THINKING ON WHEN YOU MIGHT HAVE TO DEPLOY THOSE AGAIN? DR. BIROL: WHEN WE RELEASED STOCKS, IT WAS A HISTORIC 400 MILLION BARRELS. WHICH IS EQUIVALENT TO TODAY, 2.5 MILLION BARRELS FOR THE MARKETS. THIS WAS A HISTORIC RELEASE. ALL OF OUR GOVERNMENTS -- IT WAS A DECISION OF ALL OF OUR GOVERNMENTS. 80% IS WHAT I HAVE IN THE POCKET IF AND WHEN NEEDED. WE WOULD BE HAPPY TO RELEASE THOSE STOCKS. BUT I REALLY MUCH AGAIN HOPE WE WILL NOT COME TO THAT POINT. DAVID: EARLIER THIS SUMMER YOU WARNED OF OIL GETTING INTO THE RED ZONE, ARE WE THERE OR CLOSE TO IT? WHEN DO WE KNOW IF WE ARE? DR. BIROL: I WAS WORRIED AROUND THE END OF JULY, THERE WOULD BE NO SOLUTION TO THE PROBLEM. I SAID, IF STRAIT OF HORMUZ IS UP IN THE END OF JULY, THEN THE TRAVEL SEASON STARTS -- WHICH BASICALLY DEMAND GOES UP. THERE WAS A CEASE-FIRE AND SOME OIL WENT THROUGH THE STRAIT OF HORMUZ. WHICH IS GOOD NEWS. BUT IF IT LASTS LONGER AND THE STRAIT OF HORMUZ IS CLOSED, WE MAY AGAIN HAVE SOME DIFFICULTIES FOR THE GLOBAL ECONOMY INCLUDING THOSE IN THE REGION BUT ALSO DEVELOPING NATIONS AND IN ASIA. ASIA'S MUCH MORE AFFECTED THAN OTHER COUNTRIES IN THE REST OF THE WORLD. DAVID: I'M CURIOUS, CAN YOU PUT A DATE ON WHEN AND THIS CONTINUES TO X DATES, IT WILL BE GENETICALLY WORSE? DR. BIROL: I CANNOT DO THAT BUT IT IS NOT MONTHS, IT IS WEEKS. I HOPE IT WILL BE SOLVED, THE PROBLEM, IN A COMMENSURATE WAY. THAT THEY STRAIT OF HORMUZ -- THE STRAIT OF HORMUZ IS OPEN. UNCONDITIONALLY OPEN. AND I HOPE FOR THE NEXT FEW WEEKS I SHOULD SAY. DAVID: YOU'VE HEARD COMPLACENTLY SURROUNDING ALL OF THIS -- COMPLACENCY SURROUNDING ALL OF THIS. PRESIDENT SAYS OIL MIGHT GO TO $200 A BARREL. IT HASN'T. SHOULD THERE BE A LEVEL OF COMPLACENCY THAT THE ECONOMY WAS ABLE TO WHETHER THIS? DR. BIROL: WE HAD A LOT OF OIL IN THE POCKET -- SURPLUS. WE USED THAT OIL. WE ARE USING THAT OIL. AS WE MENTIONED, -- AS I MENTIONED, WE RELEASED HUGE AMOUNTS OF STOCKS TO THE MARKET HISTORICALLY. THIS IS ALSO GOOD. THE U.S., BRAZIL, THESE COUNTRIES INCREASE PRODUCTION. AT THE SAME TIME SAUDI AND THE EMIRATES WERE REROUTING THE OIL. BUT NONE OF THEM ARE ENDLESS. IF THIS CONTINUES LIKE THIS FOR A VERY LONG TIME, WE MAY HAVE DIFFICULTIES IN THE GLOBAL ECONOMY. DAVID: HAVE WE SEEN COUNTRIES CONTINUING TO REPLENISH THOSE SUPPLIES, IS THAT PERHAPS IMPACTED BY THEM DOING THAT OR IS THERE A LEVEL OF CAUTION WHERE THEY ARE NOT YET DOING THAT? DR. BIROL: THAT EVERYBODY IS DOING IT, BUT WHAT COUNTRIES ARE DOING IT, THEY ARE DRAWING A LESSON FROM THIS AND THEY UNDERSTAND THIS IS A DANGEROUS ROAD WE ARE IN. HOW THEY CAN HAVE STRATEGIES AND BE BETTER PREPARED FOR THE NEXT ENERGY SHOCK WE MAY FACE. REMEMBER ONLY FOUR YEARS AGO WE HAD A SHOCK AFTER RUSSIA INVADED UKRAINE. AND WHEN YOU LOOK AT THE MAP, FOUR YEARS AGO, THERE WERE TWO MAIN ARTERIES FOR ENERGY TO DIVERT -- ONE OF THEM IS FROM RUSSIA, TO EUROPE, WITH PIPELINES, THE OTHER ONE IS FROM -- THROUGH THE STRAIT OF HORMUZ. MIDDLE EAST TO ASIA AND THE REST OF THE WORLD. BOTH ARTERIES ARE DISRUPTED NOW. I TALKED WITH ALL GOVERNMENTS AROUND THE WORLD, MANY GOVERNMENT LEADERS, AND THE MOST SCARS COMMODITY -- SCARCE COMMODITY TODAY IS TRUST. PEOPLE ARE LOOKING TO TRUSTED PARTNERS TO DEVELOP ENERGY PARTNERSHIPS. DAVID: THERE WAS A PIPELINE FLOATED THAT COULD BE REINVIGORATED FROM NORTHERN IRAQ. HOW MUCH SHOULD WE BE COUNTING ON THAT TO EQUILIBRATE THE SITUATION? WOULD IT TAKE TIME TO BUILD NEW PIPELINES AND BRING THEM ONLINE? DR. BIROL: THE MOST ADVANCED ONES ARE WHAT THE EMIRATES ARE EXPANDING -- THE SAUDIS, THE EAST/WEST PIPELINES. EVEN IF THEY ARE FINISHED ON TIME, THEY WILL ONLY BE 50% OF THE STATE OF -- THE STRAIT OF HORMUZ. THERE ARE MANY OTHER COUNTRIES WHO NEED TO AT THE MOMENT SEND OIL THROUGH THE STRAIT OF HORMUZ . SO WE WILL BE VULNERABLE TO THIS ISSUE FOR SOME TIME. OF COURSE THERE ARE MANY NEW PROJECTS -- IRAQ IS ONE. AGAIN SAUDI, THE EMIRATES, KUWAIT, I HAVE DIFFERENT PROJECTS. WHAT IF IT TAKES SOME TIME -- BUT IT MAY TAKE SOME TIME TO REALIZE. THEY ARE LOOKING AT OTHER OPTIONS IN TERMS OF THE TECHNOLOGIES AND FUELS. DAVID: HOW TIGHT IS A MARKET WHEN IT COMES TO OIL AND REFINED PRODUCTS? AND AS YOU LOOK AT THIS ON A REGIONAL BASIS, WHICH REGIONS FACE THE BIGGEST RISK OF A SQUEEZE RIGHT NOW? DR. BIROL: NUMBER ONE, NUMBER TWO, AND NUMBER THREE IS ASIA -- BECAUSE BEFORE THE CRISIS THAT STARTED AT THE STRAIT OF HORMUZ, 80% TO 90% OF THE OIL AND GAS FOR ASIA CAME FROM THE STRAIT OF HORMUZ. THEY ARE VERY VULNERABLE. OF COURSE JAPAN AND KOREA BUT MAINLY DEVELOPING ASIAN COUNTRIES SUCH AS BANGLADESH AND PAKISTAN AND INDIA, THESE ARE VULNERABLE. ALSO EUROPE FOR EXAMPLE. WE DON'T TALK MUCH ABOUT EUROPE BUT EUROPE IS ALSO A BUYER OF THE PRODUCTS -- WITH THE ISSUE OF RUSSIA BEING A MAJOR EXPORTER AND RECENTLY UKRAINE -- RUSSIA ATTACKING REFINERIES, IT'S MADE IT MORE DIFFICULT. DAVID: MY LAST QUESTION IS ABOUT THE MAN. YOU MENTIONED PEAK DEMAND WILL DIMINISH THEM, HAVE WE REACHED PEAK DEMAND OR ARE WE GETTING CLOSER, WHERE WE IN THE STORY? DR. BIROL: THIS YEAR'S NOT A NORMAL YEAR TO HAVE JUDGMENT. WE HAVE MANY DISRUPTIONS BECAUSE OF THE STRAIT OF HORMUZ AND THE PRICES. BUT WHEN I LOOK AT IT GLOBALLY, OIL DEMAND IS STILL HEALTHY. BUT IN MANY PARTS OF THE WORLD, ELECTRIC CARS ARE COMING, ELECTRIFICATIO FR TRANSPORTATION IS COMING -- FOR TRANSPORTATION IS COMING. ESPECIALLY IN ASIA. THIS MAY IMPACT GLOBAL OIL DEMAND. DAVID: GREAT TO SPEAK WITH YOU. THANK YOU VERY MUCH. BACK TO YOU. SHERY: THANK YOU SO MUCH, DAVID, WITH THE LATEST ON THE GLOBAL ENERGY MARKETS. WE WILL HAVE PLENTY MORE COMING UP FROM THE ASPEN SECURITY FORUM IN COLORADO. IN THE MEANTIME WE ARE ALSO WATCHING OF COURSE THE ONGOING CONFLICT BETWEEN IRAN AND THE U.S.. WE TALKED A LITTLE BIT ABOUT THE IMPLICATIONS FOR THE ENERGY MARKETS BY THE U.S. CENTRAL COMMAND NOW CONFIRMING THAT IT LAUNCHED A SECOND WAVE OF ATTACKS ON IRAN WEDNESDAY. IRAN'S REVOLUTIONARY GUARD CORPS HAVE VOWED TO KEEP THE STRAIT OF HORMUZ CLOSE UNTIL THE U.S. END STRIKES AND THE NAVAL BLOCKADE. LET'S BRING IN OUR BLOOMBERG SENIOR WRITER DEREK WALLBANK. WE ARE SEEING PROGRESS WITH PRESIDENT TRUMP NOW SAYING IRAN RELEASED A U.S. CITIZEN AS WELL, WHERE ARE WE IN THE NEGOTIATIONS ? DEREK: WE WERE AT A FIFTH CONSECUTIVE DAY OF AMERICAN ATTACKS, WE HAVE A SITUATION RIGHT NOW WHERE THE INTERIM PEACE DEAL THAT WAS SIGNED ABOUT A MONTH AGO IS NOW BASICALLY COLLAPSE AT THIS POINT. YOU HAVE ATTACKS GOING ON AND COUNTERATTACKS THAT ARE GOING ON. BUT DONALD TRUMP DID IN THE LAST HOUR PUT OUT A VERY INTERESTING STATEMENT ON HIS TRUTH SOCIAL PLATFORM -- HE SAID IRAN HAD FREED AN AMERICAN WOMAN, DID NOT NAME WHO THAT WAS BUT SAID SHE HAD BEEN DETAINED SINCE DECEMBER OF 2024. HE PRAISED THE ISLAMIC REPUBLIC OF IRAN FOR WHAT HE CALLED "A GESTURE OF GOODWILL." YOU HAVE TO WATCH THE TO NATALIE -- TONALITIES HERE. WE HAVE SHIFTED TO TALKS ABOUT TALKS AND WE KEEP GOING BACK AND FORTH. IT CAN SEEM DIZZYING AT TIMES AND YOU DO SEE MARKET GYRATIONS AND A CERTAIN INOCULATION TO GOING BACK AND FORTH ALL THE TIME. WHAT YOU DO REALLY HAVE TO WATCH THE SENTIMENT IN ABSENCE OF SOMETHING MORE TANGIBLE. AND THE SENTIMENT IS, THE LAST H OUR, THERE IS A BIT OF A WINDOW OF AN OPENING, WHAT HAPPENS WITH THAT? TOO EARLY TO SAY. IS THAT A WINDOW, AN OPENING THEY CAN USE OF THE ESCALATE? WHO KNOWS? IT IS INTERESTING THE COMMENTS FROM THE PRIOR GUEST TALKING ABOUT HOW THE STRAIT OF HORMUZ IS SO CUTE OF NOT JUST IN THE SHORT TERM BUT IN THE MEDIUM-TERM TO ALL SORTS OF THINGS WE ARE SEEING IN THE ECONOMY, RIGHTFULLY POINTING OUT EVEN IF YOU ARE TALKING ABOUT INFRASTRUCTURE INVESTMENTS THAT ARE GOING ON, TO TRY AND DODGE OR GET AROUND THE LONG TERM, THAT IS NOT GOING TO DO ANYTHING IN THE SHORT-TERM. AND SO, THIS IS GOING TO BE A PRESSURE POINT IN THE IMMEDIATE FUTURE UNTIL THINGS EASE. SHERY: THE PRESIDENT HAS A LOT ON HIS MIND LATELY, WE ARE ABOUT FOUR MONTHS AWAY FROM THE MIDTERMS IN CONGRESS. A VOTE ON ISRAEL FUNDING IS SPLITTING THE DEMOCRATIC PARTY. WE ARE ALSO EXPECTING NETANYAHU TO VISIT THE U.S. OVER THE WEEKEND AS WELL. DEREK: YEAH. REALLY INTERESTING VOTE IN CONGRESS TODAY. U.S. TIME. IT WAS AN AMENDMENT THAT WAS NEVER GOING TO PASS. BUT THE IDEA WAS TO PUT DEMOCRATS ON THE RECORD AND EXPOSE THE GROWING RIFT IN THE PARTY. THE AMENDMENT WOULD HAVE SAID, LET'S CUT U.S. AID TO ISRAEL STARTING THE NEXT FISCAL YEAR. MORE DEMOCRATS VOTED FOR THAT THAN DIDN'T AND THIS FOLLOWS A COUPLE OF KEY PRIMARY CAMPAIGNS -- PRIMARY ELECTIONS THAT WE HAVE SEEN WHERE DEMOCRATIC MEMBERS LOST THEIR SEATS OR WORK FOR AN -- WERE PREVENTED FROM WINNING SEATS IN COLORADO AND NEW YORK. WE ARE SEEING ISRAEL STARTING TO BE A WEDGE ISSUE IN THE DEMOCRATIC BASE AND IT IS NOT CLEANLY -- ISRAEL HAS COUNTED ON BIPARTISAN SUPPORT FROM DEMOCRATS AND REPUBLICANS FOR A LONG TIME. YOU CAN SEE A GROWING BREAKING OF RANKS ON THE LEFT. IT WILL BE SOMETHING TO WATCH. HAIDI: BLOOMBERG'S SENIOR EDITOR DEREK WALLBANK. WE WILL BE SPEAKING WITH THE U.S. TRADE REPRESENTATIVE INVESTOR -- AMBASSADOR ON THE ISSUES FACING THE WASHINGTON AGENDA FROM THE ASPEN FORUM IN COLORADO. THIS IS BLOOMBERG. SHERY: HEIDI, WE ARE WATCHING A COURSE WHAT HAPPENS AROUND THE INFLATION PICTURE IN THE U.S. AS WELL, GIVEN THAT WE HAD POTENTIALLY MORE POSITIVE SENTIMENT AROUND INFLATION NUMBERS, BETTER THE CPI YESTERDAY WERE WE SAW THE FIRST DECLINE SINCE 2020 OR PPI JUST LAST NIGHT, ALSO SURPRISING LOWER. THE THING IS THAT ENERGY TO THE MOST OF THE WORK YEAR. GASOLINE FELL AND PULLED DOWN THAT MY FACE WITH TRANSPORTATION COSTS WHEN IT COMES TO PPI. THE LATEST FROM JUNE. WE ARE WATCHING WHAT HAPPENS. OIL PRICES, GIVEN THE ONGOING TENSIONS BETWEEN IRAN AND THE U.S., THE FACT REMAINS THAT WE DON'T KNOW WHERE THIS IS HEADED, RIGHT? WE ARE HEARING MORE POSITIVE, UPBEAT SENTIMENT FROM THE PRESIDENT, IRAN RELEASED A U.S. CITIZEN, BUT AT THE SAME TIME NOT NECESSARILY ANY PROGRESS ON NEGOTIATIONS THEMSELVES. HAIDI: EXACTLY. WE DON'T KNOW. IT REALLY UNDERSCORES THE CONUNDRUM THAT INVESTORS AND ECONOMISTS ARE IN AT THE MOMENT IN TERMS OF MODELING EXPECTATIONS FOR ENERGY SECURITY, RIGHT? WE JUST SPOKE WITH THE IAEA, WHO SET THE STRAIT OF HORMUZ MUST REOPEN WITHIN WEEKS TO AVOID A CRISIS AND WE DON'T KNOW HOW THAT TRANSIT IS GOING TO LOOK. WE KNOW THE U.S. PRESIDENT HAD BEEN REFRAINING FROM MAKING THE THREAT AGAIN BUT IT ADDED THAT EXTRA ELEMENT OF UNCERTAINTY IN AN ALREADY TENUOUS SITUATION AND AS YOU CAN SEE THERE WE CONTINUE TO SEE A FOURTH DAY OF GAINS WHEN IT COMES TO NEW YORK TRADED CRUDE. THIS AFTER WE SAW AN ERASURE OF THE WARTIME PREMIUM THAT HAVE BEEN BUILDING SINCE THE END OF FEBRUARY. WE ARE SORT OF IN THAT SPACE AGAIN. WHEN IT COMES TO BROADER EQUITIES IS ALSO THE TECH AND THE AI STORY AS WELL, THE NIKKEI HEADED TOWARDS A CHOPPY DAY OF TRADE. PARTICULARLY WHEN IT COMES TO KOREA, NOT JUST BANK OF KOREA DECISIONS, WHICH ARE MORE CUT AND DRY, BUT REALLY BEYOND MONETARY POLICY WE ARE WATCHING TO SEE THAT IMPACT OF THE BROADER VOLATILITY IS FOR THOSE MARKETS. THE CONVERSATION IS AT THE HIGH END OF GOVERNMENT REGULATION TAKING PLACE ON THESE LEVERAGED FUNDS. MARKETS ARE CLOSELY WATCHING FOR EARNINGS FROM TWO OF THE KEY NVIDIA SUPPLIERS. TSMC IS SET FOR THURSDAY. WHAT ARE WE LOOKING OUT FOR WITH THOSE NUMBERS? >> WHAT WE ARE REALLY LOOKING OUT FOR IS THE CAPITAL EXPENDITURE OUTPUT FOR NEXT YEAR AND WITH ASML, WHO MAKES THE BIG LITHOGRAPHY EQUIPMENT, THE EXTREME ULTRAVIOLET LITHOGRAPHY MACHINES. SO, THEY WERE OUT AND THEY GAVE SOME GOOD GUIDANCE FOR THE INDUSTRY AND REALLY, I THINK THAT THE TECH INDUSTRY AND THE NERVOUS ONES IN THE CHIP SECTOR ARE LOOKING AT THESE TWO COMPANIES FOR PROTECTED OUTLAYS ON SPENDING AMID OF COURSE WHAT SOME WOULD SAY IS A BIT OF A BUBBLE IN THAT KIND OF SPENDING WITH ALL INDICATIONS RIGHT NOW THAT MAYBE THIS WILL HELP TO PUT A FLOOR ON SOME OF THAT SINKING SENTIMENT. WE WILL HAVE TO SEE WHEN WE GET THOSE RESULTS LATER TODAY WHEN WE SPEAK TO THE CFO OF TSMC LATER TOMORROW. ESSENTIALLY, THE ASML NUMBERS WERE QUITE INTERESTING, AS THEY RAISE THEIR FULL-YEAR SALES OUTLOOK FOR THE YEAR FOR A SECOND TIME ALREADY THIS YEAR AND THEY ARE ALSO TALKING ABOUT THAT ABILITY TO ADD UPWARDS OF 30% CAPACITY ON THOSE MACHINES, UP TO 85. THEN THE BIG NUMBER POTENTIALLY FOR 2028, THERE COULD BE ANOTHER 30% INCREASE TO TAKE THE NUMBER UP TO 110. SENIOR MANAGEMENT AT ASML SAID THEY WILL HAVE TO SIGNIFICANTLY LOOK AT THAT AND INVESTIGATE THAT, IF THE DEMAND IS HOLDING UP. THESE NUMBERS, BUT WE GOT OVERNIGHT FROM ASML, THOSE WERE GOOD SIGNS BUT A TEPID RESPONSE ON THE MARKETS. AND THEN TSMC IS PERHAPS THE BIG ONE. SHERY: 10 IT IS RIGHT, THE BAR IS HIGH WITH THIS EXTRAORDINARY BUILDOUT. GIVEN THE OUTLOOK, COULD WE SEE TSMC INCREASED SPENDING BEYOND PREVIOUS GUIDANCE? >> THE PREVIOUS GUIDANCE WAS FOR NEAR RECORD OUTLAYS THIS YEAR OF 56 BILLION DOLLARS, BUT FOR ONE UBS SAYING THAT GIVEN THE DEMAND OUT THERE RIGHT NOW, THERE COULD BE A NUMBER RELEASE UPWARDS OF 60 BILLION. SO, THAT IS SOMETHING WE WILL BE LOOKING QUITE CLOSELY AT. WE ALSO GOT THOSE STORM DELAYED SALES FIGURES FOR THE SECOND QUARTER ON MONDAY THE SAW A 36% RISE IN SALES, INCLUDING A 68% JUMP IN JUNE ALONE. A GOOD HARBINGER FOR THE REVENUE SIDE. WE WILL HAVE TO SEE IF MARGINS ARE BEING SQUEEZED, THOUGH, AS THEY INCREASED RAMPED UP PRODUCTION OF NANOLITER TECHNOLOGY AND EXPANSIONS OVERSEAS. MOST SPECIFICALLY IN THE UNITED STATES AND ARIZONA. HAIDI: OTHER THAN CAPEX, WHAT ELSE ARE YOU LOOKING AT? >> WELL, THE AI DEMAND IS KEEPING UP. IT IS MORE THAN COMPENSATING FOR DEMAND WEAKNESS IN ANDROID SMARTPHONES AND PCS, SO ANY KIND OF OUTLOOK FROM THEM ON THOSE SIDES AND WHETHER THE AI SPEND IS MORE THAN ENOUGH TO OFFSET THAT, HERE IS THE B.I. TAKE. I WANT TO READ THIS QUICKLY. JUNE SALES REINFORCE SERVER PROCESSING DEMAND COMFORTABLY OFFSETTING SMART PHONE AND PC WEAKNESS, STRENGTHENING THE CASE FOR PRICE INCREASES THAT SHOULD LIFT GROSS MARGIN OUTLOOKS. AGAIN, IS THAT THE SIDE OF THE BUSINESS THAT IS GOING TO CARRY THE WAY, OR WILL BE GET A GLIMMER OF HOPE ON THE PC AND SMARTPHONES THAT HAVE NOW GIVEN NO INDICATION THAT THEY ARE GOING TO BE TURNING THINGS AROUND ANYTIME SOON. ANOTHER BIG QUESTION, I WANT TO GO BACK TO ASML. PRICING POWER MIGHT HAVE THAT IN THE EUV MACHINES. THAT IS SOMETHING WE WILL BE WATCHING OUT FOR WITH TSMC, THEY ARE ONE OF THE BIGGEST CUSTOMERS, IF NOT THE BIGGEST, OF THE LITHOGRAPHY MACHINES AND WE ARE GETTING INDICATIONS THAT THEY WOULD PUSH BACK IN AN INCREASE IN PRICES BY ASML. HAIDI: STEPHEN ENGLE JOINING US THERE FROM TAIPEI AND HE WILL BE BRINGING US MORE COVERAGE OF TSMC. IF YOU ARE IN ASIA YOU CAN CATCH THE INTERVIEW ON MONDAY. WE HEARD FROM THE NVIDIA FOUNDER, JENSEN HUANG, SAYING THAT HIS COUNTRY BECAUSE NEXT GENERATION AI ACCELERATOR SYSTEMS ARE IN PRODUCTION AND ON TRACK FOR DELIVERY TO CUSTOMERS AND RESPONDED TO REPORTS THAT MANUFACTURING SNAGS MAY DELAY ROLLOUT. >> NOT TRUE. COMPLETELY ON TRACK, NOT TRUE. >> IT'S ALREADY IN PRODUCTION. >> OK. >> THE PRODUCTION IS COMING. >> JENSEN HUANG SPEAKING THERE DURING A VISIT TO JAPAN TO TALK ABOUT HOW NVIDIA COULD AID THE COUNTRY'S SOVEREIGN AND PHYSICAL AI AMBITIONS. FOR MORE, LET'S BRING IN NICK TURNER. WE SAW THE MARKET REACTION WITH THE TECH SELLOFF WHEN WE GOT THAT ANALYSIS REPORT EARLIER THIS MONTH. HOW MUCH IS AT STAKE WHEN IT COMES TO IT? NICK: THIS IS OBVIOUSLY FLAGSHIP PRODUCT, THE LATEST GENERATION, IT IS SUPPOSED TO START BEING DELIVERED ESSENTIALLY THIS QUARTER CAN RAMPING UP PRODUCTION IN THE FOURTH QUARTER. EVERYONE IS IN THIS WAIT AND SEE MODE TO SEE PRODUCTION GOES AS SMOOTHLY AS EVERYONE HOPES. ANY SIGNS THAT THINGS MIGHT NOT BE GOING AS SMOOTHLY ARE ELEVATING PEOPLE, SCRUTINIZING IT, SO WHAT THE CEO SAID TODAY WAS THAT THINGS SEEM TO BE FINE, THE VOLUME IS BIG, WE ARE DOING GREAT. SO THAT'S KIND OF THE LATEST NEWS ON THIS. SHERY: HOW CONSEQUENTIAL IS IT FOR THE REST OF THE INDUSTRY? NICK: I MEAN, CERTAINLY IT'S VERY CONSEQUENTIAL FOR WHAT WE CALL THE HYPERSCALERS, THE BIGGEST DATA CENTER OPERATORS WANTING ACCESS TO THE CHIPS, THE BEST THEY CAN GET, THE FASTEST, AND NVIDIA IS THE GOLD STANDARD ON THAT FRONT. THOSE COUNTRIES ARE TRYING TO FIND SOURCING ELSEWHERE, WHETHER IT IS MAKING IN-HOUSE CHIPS, RELYING ON AMD, OR ANY OTHER COUNTRIES. DELAYS COULD PLAY OUT THE URGENCY FOR FINDING ALTERNATIVE SOURCES OF AI ACCELERATOR'S. BUT WE ARE STILL IN A MODE NOW WHERE PEOPLE WANT AS MUCH NVIDIA CHIPS AS THEY CAN GET. SHERY: WHEN IT COMES TO JENSEN HUANG BEING IN JAPAN, HOW DO ROBOTS FIT INTO THE NVIDIA STRATEGY? NICK: NVIDIA HAS BEEN TALKING UP ROBOTS FOR YEARS, BUT THEY HAVE REALLY STARTED TO INTENSIFY THAT DISCUSSION THIS YEAR AND ARE WORKING ON A LOT OF CHIPS, HARDWARE, AND SOFTWARE THAT CAN MAKE ROBOTS SAFER AND MORE PRACTICAL. YOU SAW THE ANNOUNCEMENT TODAY WITH TOYOTA WHERE THEY ARE REALLY WORKING TOGETHER ON A NUMBER OF THINGS IN ROBOTS WILL PLAY INTO THAT PARTNERSHIP. IN JAPAN, ROBOTS ARE ABOUT AS IMPORTANT AS THEY ARE ANYWHERE IN THE WORLD GIVEN THEIR USE IN MANUFACTURING, THE AGING POPULATION, IN THE NEED FOR POTENTIALLY ROBOTIC HELP ON THAT FRONT. IT IS AN IMPORTANT PLACE TO BE MAKING THOSE ANNOUNCEMENTS. SHERY: WE WILL BE FOLLOWING JENSEN HUANG'S TRIP IN JAPAN. NICK TURNER THERE, YOU CAN GET THE BIGGEST AND MOST EXCITING TECH STORIES ON THE HUB AND CHECK OUT OUR OTHER SHOWS ON BLOOMBERG.COM/VIDEOS. THIS IS BLOOMBERG. ♪ >> I'M REALLY QUITE BULLISH, ASSUMING THE ECONOMY AND BACKDROP CONTINUES TO BE FAVORABLE, THAT IN THIS TIME OF REGULATORY NORMALIZATION, GIVEN THE PENT-UP ELEMENT OF THIS THING, THAT WE ARE GOING TO SEE CONTINUED M&A ACTIVITY WITH GOOD COMPANIES LOOKING TOO GOOD BETTER BY ADDING OR PURIFYING. HAIDI: THAT WAS THE MORGAN STANLEY CHIEF SPEAKING THERE ABOUT THE OUTLOOK FOR M&A. HIS BANK AND WALL STREET PEERS HAVE BEEN MAKING FEES ON ADVANCING FROM DEALS AND MORGAN STANLEY HAD A BLOWOUT CALLING IN NEW ASSETS IN THEIR WEALTH MANAGEMENT BUSINESS IN THE SECOND QUARTER AND HALF OF THAT WAS TIED TO IPO'S, INCLUDING THE SPACEX RECORD-BREAKING LISTING. FOR MORE ON THE U.S. FINANCIALS, ANALYST NEIL JOINS US NOW. TAKE US THROUGH THE NUMBERS. HOW MUCH OF AN ANOMALY QUARTER WAS IT WITH SOMETHING LIKE SPACEX? >> YEAH, THERE'S NO DOUBT THAT SPACEX WAS A PRETTY SIGNIFICANT BENEFIT ACROSS A FRANCHISE LIKE MORGAN STANLEY AND THE OTHER LARGEST U.S. COMPETITORS REPORTING OVER THE LAST TWO DAYS. I THINK THAT WHAT WE LEARN FROM RESULTS IS THAT THE CAPITAL MARKETS EXPECTATIONS AND HEIGHT, IF YOU WILL, AROUND THAT BUSINESS, REALLY FUNNELED THROUGH THE SECOND QUARTER. WE HAVE BLOWOUT NUMBERS IN EQUITIES TRADING, INVESTMENT BANKING STRONG ACROSS THE LINES, INCLUDING IPO'S. I THINK THAT WHAT IS ENCOURAGING TO SEE IS THAT MOST OF THE MANAGEMENT TEAMS HAVE BEEN TALKING ABOUT PIPELINES BEING FULL AND MOST NOTABLY, GOLDMAN SACHS, POSTED THE BEST FEES SINCE THE RECORD YEAR 2021, TALKED ABOUT AN ACTUAL INCREASE IN THE INVESTMENT BANKING BACKLOG, EVEN IN SPITE OF THE STRONG SECOND QUARTER, SO IT SEEMS PERHAPS LIKE BETTER DAYS AHEAD IN THE SECOND HALF. HAIDI: WE ALSO SAW THE CHANGE IN STRATEGY FOR BLACKROCK WITH LARRY FINK. >> WHEN WE LOOK AT BLACK ROCK, IT IS A STORY OF MASSIVE SCALE NOW. $15 TRILLION IN ASSETS. WHAT INVESTORS CHEERED TODAY WAS THE GROWTH CONTINUES TO BE JUST AS IMPRESSIVE, IF NOT, FRANKLY, MORE IMPRESSIVE AT THE SCALE THEY ARE TODAY, PARTICULARLY WHEN WE LOOK AT THE ORGANIC BASE FEE GROWTH FIGURES, WHICH ARE RUNNING ABOVE THE 5% TARGET THAT BLACKROCK HAS EARMARKED. THAT MEANS THE NEW DOLLARS COMING OUT OF THEIR PLATFORM ARE COMING IN HIGHER FEE CATEGORIES. WHEN WE THINK ABOUT BLACKROCK, IT IS VERY SYNONYMOUS WITH ISHARES AND TYPICALLY LOW-FAIR ETF'S AND HEDGE FUNDS, BUT BLACKROCK HAS TRANSFORMED ITS GROWTH INTO THOSE HIGHER FEE MARKETS. I THINK THE QUALITY FOR BLACKROCK HAS INCREASINGLY IMPROVED OVER THE PAST COUPLE OF QUARTERS. SHERY: BANK OF AMERICA'S CHAIRMAN AND CEO WILL BE JOINING "BLOOMBERG SURVEILLANCE" LATER TODAY IN A CONVERSATION FOCUSED ON HIS COMPANY'S BLOWOUT PERFORMANCE AND OUTLOOK FOR THE REST OF THE YEAR AS WELL. WE ARE ALSO HEARING FROM J.P. MORGAN CEO JAMIE DIMON WARNING ABOUT THE RISK OF MAKING A SOPHISTICATED AI SYSTEM LIKE ANTHROPIC'S MYTHOS MODEL WIDELY AVAILABLE, COMPARING IT TO A BALLISTIC MISSILE. RAPID ADVANCES IN AI HAVE BUSINESSES AND GOVERNMENT ASSESSING THREATS. THE ISSUE TOOK ON MORE URGENCY AFTER ANTHROPIC SAID IT'S MODEL IS SO GOOD AT FINDING SOFTWARE VULNERABILITIES THAT IT CANNOT BE RELEASED TO THE GENERAL PUBLIC. JAMIE: I KNOW OUR GOVERNMENT IS ON TOP OF IT AT THIS POINT. IT'S REALLY TOO MAKE SURE WE ROLLOUT THIS STUFF THAT IS BEING CONTROLLED. YOU ARE GIVING BALLISTIC MISSILES TO INDIVIDUALS WITH MYTHOS, BASICALLY. SHERY: WERE TOLD ANTHROPIC IS SEEKING TO MEET WITH INVESTORS AHEAD OF ITS POTENTIAL MEGA-IPO. BLOOMBERG EARLIER REPORTED THAT ANTHROPIC IS CONSIDERING AN IPO AS SOON AS OCTOBER, PUTTING IT AHEAD OF RIVAL OPENAI'S POTENTIAL LISTING IN 2027. APPLE HAS RECEIVED LONG AWAITED GOVERNMENT APPROVAL TO ROLLOUT APPLE INTELLIGENCE IN CHINA. ON WEDNESDAY, CHINA'S CYBERSPACE ADMINISTRATION INCLUDED APPLE'S GENERATIVE AI ON A NEWLY APPROVED LIST OF PROVIDERS. THE CHINESE VERSION OF APPLE INTELLIGENCE INCLUDES TECHNOLOGY FROM ALIBABA AND BAIDU. WE HAVE MORE AHEAD ON "THE ASIAN TRADE." THIS -- "THE ASIA TRADE." THIS IS BLOOMBERG. >> OUR DOMESTIC STOCK MARKET IS QUITE UNSTABLE. IN FACT, WE HAVE EXPERIENCED A HISTORICALLY UNPRECEDENTED SURGE IN A VERY SHORT PERIOD OF TIME, SO IT WOULD REQUIRE TIME AND FLUCTUATION FOR THE MARKET TO STABILIZE. SHERY: THAT WAS THE SOUTH KOREAN PRESIDENT ON THE STOCK MARKET'S WILD SWINGS. WE HAVE SEEN THE VOLATILITY WHEN IT COMES TO THE KOSPI, AND NOT TO MENTION THE SK HYNIX AND SAMSUNG STOCKS THAT MAKE UP MORE THAN HALF OF THE KOSPI ITSELF. WE SAW A LITTLE BIT OF STRENGTH GIVEN THE EXPECTATION WE WOULD SEE THOSE SK HYNIX FLOWS BACK INTO THE SOUTH KOREAN ECONOMY. WE ARE PAST THAT 1500 LEVEL BY A LITTLE BIT OF WEAKNESS AGAINST THE GRAIN BACK IN TODAY'S SESSION. NOT TO MENTION WE ARE SEEING DOWNSIDE IN THE FUTURE SPACE. WE HAVE, OF COURSE, ALREADY SEEN THE BEST DAY IN THE KOSPI IN RECENT MONTHS, AND ALL OF THIS COMING AT A TIME WHEN IT IS BANK OF KOREA DAY. THE AI-DRIVEN CHIP BOOM, RESILIENT GROWTH, AND PERSISTENT INFLATION TO GIVE THE BOK ROOM TO RAISE RATES BY 25 BASIS POINTS TODAY. I KOREAN ECONOMIST JOINS US WITH MORE ON THIS, AND IT SEEMS THAT HIKE IS ALREADY PRICED IN BY THE MARKETS, SO WHAT WE WATCHING TODAY? >> AS YOU MENTIONED, THAT HYPE TODAY IS LARGELY EXPECTED, BUT THE BIGGER QUESTION IS HOW FAST AND HOW FAR THE THE BOK WILL RAISE INTEREST RATES AND HOW LONG IT WILL MAINTAIN HIGH INTEREST RATES IN THE RESTRICTED AREAS. MY VIEW IS BE OK WILL TAKE GRADUAL STEPS. IT WILL RAISE INTEREST RATES 25 BASIS POINTS EVERY QUARTER UNTIL THE FIRST HALF OF NEXT YEAR , SO IT WILL TAKE THE BASE RATE FROM 2.5% TO 3.5%. IT WILL HIGHLY DEPEND ON THE STRENGTH AND PERSISTENCY OF THE CHIP CYCLE. SHERY: WHAT ABOUT THE CHIPS MARKET VOLATILITY? WE ARE SEEING A LOT OF IT WHEN IT COMES TO STOCK MARKETS. WILL THAT HAVE AN IMPLICATION? >> I THINK IT HAS TWO ASPECTS, THE HIGH VOLATILITY IN THE KOSPI IS RELATED TO DELEVERAGING INVESTMENT, SO THE MARGIN DEPTH IN THE KOSPI MARKET IS AT A HISTORICALLY HIGH LEVEL. AT THE SAME TIME, THE SINGLE STOCK LEVERAGED ETF LAUNCHED IN MAY IS AMPLIFYING VOLATILITY, SO IT IS RELATED TO FINANCIAL IMBALANCES. THE BOK WILL TIGHTEN MONETARY POLICY TO LEAN AGAINST THE WIND, BUT AT THE SAME TIME, HIGH VOLATILITY MEANS THAT POLICYMAKERS WANT TO ADD ANOTHER LAYER OF VOLATILITY. A GOOD COMPROMISE WILL BE A GRADUAL TIGHTENING CYCLE. SHERY: WE KNOW THAT SOUTH KOREA RIGHT NOW HAS A LITTLE BIT OF LEEWAY WHEN IT COMES TO THE GROWTH SIDE. GDP EXPECTATIONS HAVE BEEN UPGRADED EVEN BY THE GOVERNMENT. HOW ABOUT THE FACT THAT WE ARE SEEING MORE INEQUALITY IN THE ECONOMY, THIS K-SHAPED RECOVERY OF SOUTH KOREA. DOES THAT GIVE PAUSE TO THE BOK? >> I THINK THAT GROWTH IS EXPECTED TO RISE THIS YEAR, MAINLY DRIVEN BY THE CHIP SECTOR AND BEYOND THE CHIP SECTOR, MANY SECTORS ARE STRUGGLING. THE CONSTRUCTION SECTOR CONTINUES TO DECLINE, BUT THE THE BOK IS WORKING THROUGH A VERY DIFFICULT CHALLENGE, BUT AT THE SAME TIME, I THINK IT MIGHT PREFER A DIVISION OF LABOR WITH FISCAL POLICY. I THINK THAT BE OK WOULD LIKE TO COMMUNICATE WITH GOVERNMENT, SO EXPANSIONARY GOVERNMENT POLICY WILL ADVANCE DISTRIBUTIONAL POLICY AND BE OK MONETARY POLICY -- BE OK -- BOK MONETARY POLICY WILL SUPPORT FINANCIAL STABILITY. HAIDI: WE HAVE THAT BOK DECISION OVER THE NEXT HOUR. CERTAINLY A GREAT DEAL OF UNCERTAINTY FROM THE OIL PRICE OUTLOOK TO WHAT'S GOING ON WHEN IT COMES TO THE AI ECONOMY IN THE LEVERAGE WE ARE SEEING IN SOME OF THOSE TRADES. A COPY SESSION BEING SET UP AS WE HEAD TOWARDS THE OPEN UP SOME OF THESE MARKETS. WE HAVE SYDNEY LOOKING LIKE WE WILL SEE ONE OF THE RARE BRIGHT SPOTS. ENERGY STOCKS CONTINUING TO BENEFIT AND OIL CONTINUES TO CLIMB HIGHER FOR WHAT STRAIGHT SESSION DESPITE A BIT OF A SOFTENING IN THE TONE FROM THE MOST RECENT SOCIAL MEDIA POST FROM PRESIDENT TRUMP. NIKKEI FUTURES LOWER BY ABOUT 2%. KOSPI FUTURES BY 5%. WE ARE EXPECTING POTENTIALLY SOME CONVERSATIONS TO BE HELD IN THE UPPER ECHELONS OF REGULATORS . THE FINANCE MINISTRY TO TALK ABOUT THE IMPACT OF SOME OF THESE ETF'S THAT HAVE BEEN THE CORE OF THE VOLATILITY AND ROTATION AND SWINGS THAT HAVE BEEN TAKING PLACE IN KOREAN MARKETS. WE WILL SPEAK EXCLUSIVELY WITH U.S. TRADE REPRESENTATIVE JAMIESON GREER ON ISSUES SHAKING WASHINGTON'S POLICY AGENDA. THAT COMES TO US LIVE FROM THE ASPEN POLICY FOR THEM. IN THE MEANTIME, WE ARE HEADED TOWARD THE MARKET OPENS IN SYDNEY, SEOUL, AND TOKYO NEXT. THIS IS BLOOMBERG. ♪ SHERY: THIS IS THE ASIA TRADE AND WE ARE WATCHING THE U.S. CONTINUE AIR STRIKES AGAINST IRAN. THE AI TRAIT IS STILL PRETTY VOLATILE. TWO THINGS THAT WILL BE IMPORTANT FOR SOUTH KOREA AS THEY ENGAGE IN INFLATIONARY PRESSURES AND VOLATILITY AROUND SEMI CONDUCTORS AROUND THIS BANK OF KOREA DECISION DAY. HAIDI: I LOVE THAT BANK OF KOREA IS ALMOST THE LEAST DRAMATIC DECISION TODAY. IT'S THAT ROTATION IN AND OUT OF TECH, SO MUCH OF THAT VOLATILITY IS BEING DERIVED BY THESE SINGLE STOCK ETF'S. SK HYNIX, SAMSUNG, WE ARE EXPECTING REGULATORS WITHIN THE GOVERNMENT MIGHT BE THINKING ABOUT DOING SOMETHING ABOUT THAT. SHERY: ANYTHING RELATED TO SEMI CONDUCTORS, THE AI TRADE. VERY IMPORTANT FOR JAPAN AS WE HAVE JENSEN HUANG HERE IN THE COUNTRY, ANNOUNCING PARTNERSHIPS WITH COMPANIES LIKE KAWASAKI, FOR EXAMPLE, ACCORDING TO LOCAL MEDIA. WE WILL BE FOLLOWING THE LATEST DEVELOPMENTS IN THE COUNTRY AROUND THE TECH SECTOR. THE NIKKEI IS DOWN MORE THAN 1% AT THE MOMENT. WATCH THOSE TECH STOCKS, THE JAPANESE YEN, NOT REALLY DOING MUCH AGAINST THE U.S. DOLLAR. WE ARE SEEING A LITTLE BIT OF THAT WHOLE REPATRIATION THEME. THE G PIF, THE PENSION FUND INVESTMENT TEAM IS FADING A BIT. REMEMBER WE HAD SEEN THE GOVERNMENT CALLING OUT FOR MORE DOMESTIC INVESTMENTS, PENSION FUNDS, PERHAPS REALLOCATING THOSE PORTFOLIOS. A LOT OF THAT HAD GIVEN RISE TO OPTIMISM IN JAPAN BUT WE ARE SEEING THE BROAD DOWNSIDE ACROSS MARKET ASSETS TODAY. TAKE A LOOK AT HOW SOUTH KOREA IS TRADING, THE MARKET HEAVILY DEPENDED ON THE TECH SECTOR, HEAVILY DEPENDENT ON OIL FROM THE MIDDLE EAST. ON THE DAY WITH THE BANK OF KOREA RATE DECISION COMES. PERHAPS NO FIREWORKS THIS TIME? ALL OF THE ECONOMISTS WE SURVEYED EXPECTED A RATE HIKE TODAY. IT ALL HAS TO DO WITH A HUGE BOOM IN SEMICONDUCTOR TRADE WITH GROWTH FORECASTS FOR THE COUNTRY BEING UPGRADED BOTH FROM THE GOVERNMENT, PRIVATE ANALYSTS AS WELL. THE KOREAN WON STILL UNDER PRESSURE, SEEING A LITTLE BIT OF STRENGTH. IF IT WERE TRADING AT TWO-MONTH HIGHS AGAINST THE DOLLAR BECAUSE OF EXPECTATIONS OR PERHAPS REPATRIATION OF FUNDS COMING FROM THE SK HYNIX LISTING WITH MORE DOMESTIC INVESTMENTS, BUT RIGHT NOW THAT'S LOSING MORE THAN 4%. REMEMBER, VERY VOLATILE MARKET, AS YOU SAID. THE KOSPI IS JUST COMING OFF OF ITS BEST DAY IN MONTHS AND NOW WE ARE AGAIN SEEING A DROP OF ALMOST 5%. HAIDI: WE COULD REALLY SEE FURTHER LOSSES IF MORE DETAILS COME ABOUT WITH THE GOVERNMENT IS PLANNING TO DO ON THE SINGLE STOCK LEVERAGED ETF'S WITH MEASURES ASSUMED TO BE ANNOUNCED NOW ACCORDING TO THE FINANCIAL SERVICE COMMISSION HAD, SPEAKING IN A U-2 PROGRAM SAYING THAT CLOSE CONSULTATIONS ARE UNDERWAY WITH THE SO-CALLED F4 AND THE FINANCIAL SUPERVISORY SERVICE THERE. WATCHING THAT IN WATCHING THAT GEOPOLITICAL SITUATION AS WELL, THE INFLATION PICTURE LOOKING EVER MURKIER WITH BRENT CONTINUING TO CLIMB, OIL PRICES HIGHER FOR A FOURTH CONSECUTIVE DAY, AIRSTRIKES CONTINUING WITH A SOFTENING OF THE TONE FROM PRESIDENT TRUMP IN THE LAST TRUE SOCIAL MESSAGING ABOUT THE RELEASED U.S. PRISONER FROM IRAN, BUT STILL SO MUCH UNCERTAINTY GOING FORWARD AND WE KNOW THAT ENERGY STOCKS CONTINUE TO BENEFIT, AS WE CAN SEE WITH TRADING GETTING UNDERWAY HERE IN AUSTRALIA. U.S. TRADE REPRESENTATIVE SAT BELIEVE THAT CHINA IS NOT LIVING UP TO THE TRUMP ADMINISTRATION'S UNDERSTANDING OF LAST YEAR'S TRADE DEAL BUT SOURCES ALSO INDICATE THAT THE U.S. ISN'T GOING TO DO MUCH ABOUT IT. DAVID GURA JOINS US NOW FROM COLORADO WITH MORE. DAVID: THANK YOU VERY MUCH. I'M HERE WITH AMBASSADOR GREER ON THE SIDELINES OF THE ASPEN SECURITY FORM. GREAT TO HAVE YOU WITH US. YOU WERE JUST ON THE PANEL AND SET YOU HAVE AN AVERSION TO MAKING NEWS, BUT WE ARE TO TRY NONETHELESS. A LOT OF FOLKS ARE WONDERING ABOUT BRAZIL AS A TEST CASE HERE. STATUTORY DEADLINE TODAY. ANYTHING YOU CAN SAY ABOUT THAT PROCESS AND WHAT TO EXPECT? >> THESE ARE LEGAL INVESTIGATIONS, SECTION 301. TWO SETS OF HEARINGS, TWO SETS OF PUBLIC COMMENTS, WE ARE FOCUSED ON UNFAIR TRADING PRACTICES BY BRAZIL. WE HAVE TO HAVE A LEGAL BASIS TO DO THIS AND THERE ARE ALL KINDS OF THINGS BRAZIL HAS BEEN DOING. THEY HAVE BEEN CENSORING OUR DIGITAL TECH COMPANIES AND RESTRICTING OUR ACCESS FOR ETHANOL TO THEIR MARKET. THEY HAD BEEN ACTUALLY ENGAGING IN ILLEGAL DEFORESTATION OF THE AMAZON, GIVING THEM A LEG UP ON THE AGRICULTURE EXPORTS. A LOT OF THESE THINGS HAVEN'T A PROBLEM FOR A LONG TIME WITH BRAZIL AND WE HAVE BEEN INVESTIGATING. TODAY WE ANNOUNCE OUR FINAL ACTION. I HAD A VIDEO CONVERSATION WITH MY COUNTERPART IN BRAZIL LAST NIGHT. VERY CORDIAL. I THINK THERE ARE STILL A LOT OF GAPS BETWEEN US, WE PROBABLY NEED TO HAVE SOME KIND OF ACTION WITH CONTINUED DISCUSSIONS. DAVID: 25% IS IN LINE WITH WHAT YOU THOUGHT OF FOR THE RANGE? >> THIS WAS PROPOSED BY MY OFFICE AT THE PRESIDENT'S DIRECTION, PROBABLY IT IS WHAT WE ARE LOOKING AT. AGAIN, I DON'T WANT TO GET AHEAD OF THE PRESIDENT, HE SIGNING SOMETHING TODAY. I JUST GOT OFF THE PHONE WITH HIM AND WE WILL HAVE MORE DETAILS TO COME. I WANT TO EMPHASIZE THAT THESE ARE UNFAIR TRADING PRACTICES BRAZIL HAS HAD IN PLACE AGAINST AMERICAN EXPORTERS AND WORKERS FOR MANY YEARS. THE PRESIDENT IS TRYING TO RESOLVE THESE THROUGH NEGOTIATION, LEVERAGING TERRORISTS, THAT'S WHAT WE ARE ALLOWED TO DO WITH SECTION 301. DAVID: ASKING ABOUT VIETNAM AS WELL, ANY UPDATE YOU CAN GIVE US ON THE STATUS OF THOSE NEGOTIATIONS? >> YES, VIETNAMESE OFFICIALS ARE IN WASHINGTON THIS WEEK OF NEGOTIATING OVER ALL THE TRADE DEALS FROM THE PAST YEAR AND A HALF. THEY'VE ALL HAD SOME CORE ISSUES . TERRORISTS, WE WANT OTHER COUNTRIES TO TAKE DOWN TARIFFS. NONTARIFF BARRIERS WHERE THEY RESTRICT U.S. EXPORTS ON GOODS AND SERVICES AND THINGS LIKE ECONOMIC SECURITY. IF WE ARE SHIPPING THEM ECONOMIC HIGH TECH EQUIPMENT, THEY NEED TO ALIGN WITH US ON EXPORT CONTROLS. THEN THERE ARE THINGS LIKE BASIC STANDARDS OF INTELLECTUAL PROPERTY AND OTHER THINGS. THE TYPES OF THINGS THAT OUR COMPANIES ABIDE BY, WE WANT THEM TO DO SO AS WELL. I HAVE A SEPARATE INVESTIGATION WITH VIETNAM REGARDING INTELLECTUAL PROPERTY, AS THEY HAVE BEEN A BAD ACTOR IN THIS KIND OF SPACE. THESE ARE THE THINGS WHERE WE STILL HAVE OPEN AREAS OF DISCUSSION. DAVID: THE TOP SWISS DIPLOMAT, CAN YOU CONFIRM THOSE ARE GOING WELL? >> I KNOW THAT THAT IS WHAT THEY WANT, THAT IS THE SUBSTANCE OF THE FRAMEWORK AGREEMENT WE AGREED TO A FEW MONTHS AGO. ONE INTERESTING THING WITH SWITZERLAND, WE HAVE BEEN VERY CONCERNED ABOUT THAT TRADE DEFICIT, BUT IN THE LAST FEW MONTHS WE ARE IN SURPLUS WITH SWITZERLAND, SO THAT'S A POSITIVE DEVELOPMENT. THE SWISS ARE INVESTING IN AMERICA AND THIS WEEK I'M GOING TO VISIT A PLANT IN UTAH WHERE THEY ACTUALLY SEE HE'LL. A SWISS COMPANY COMING HERE WITH THEIR APPRENTICESHIP PROGRAM, SO THEY ARE DOING WHAT THEY NEED TO DO TO GET RIGHT WITH THE U.S.. I CAN GUARANTEE ANYTHING, BUT THERE IS DIRECTION THERE. DAVID: RICHARD BLUMENTHAL SAID YOU WERE IN CONVERSATIONS ON THE BILL SPONSORED BY THE LATE LINDSEY GRAHAM. >> THERE ARE A LOT OF ELEMENTS TO THE BILL. THERE'S A TARIFF ELEMENT, THERE'S A SANCTIONS ELEMENT, ALL DESIGNED TO GIVE THE PRESIDENT DISCRETION TO DEPLOY PRESSURE ON RUSSIA AND THOSE WHO ARE SUPPORTING RUSSIA. WE HAVE WORKED CONSTRUCTIVELY WITH THE SENATE ON THIS. THERE ARE GOOD THINGS TO SAY ABOUT IT. I SPOKE WITH THE PRESIDENT ABOUT IT AS WELL. THERE IS AN OPENNESS THERE THAT WE WILL SEE OVER THE NEXT COUPLE OF DAYS, FINAL VIEWS FROM THE PRESIDENT ABOUT WHETHER HE WANTS TO BE SUPPORTED. I THINK WE HAVE IT IN A GOOD PLACE. IT'S MEANINGFUL THAT SENATOR BLUMENTHAL, SENATOR GRAHAM AND I WERE WORKING ON UP UNTIL HIS LAST DAYS. DAVID: IT WOULD GIVE THE LATITUDE TO THE PRESIDENT FOR TARIFFS OF UP TO 100% ON THE LARGEST RUSSIAN IMPORTERS OF OIL. ANY INDICATION AS TO WHETHER HE'S PREPARED TO DO THAT? >> WHEN I TALK TO THE PRESIDENT ABOUT THIS KIND OF ISSUE, HE WANTS TO BE CAREFUL ABOUT HOW HE DEPLOYS THIS KIND OF LEVERAGE. GEOPOLITICS IS FRAGILE. SANCTIONS ACTIONS, THIS IS SOMETHING THE PRESIDENT THINKS ABOUT CAREFULLY. HE TALKS TO ME, SECRETARY BESSENT, SECRETARY LUTNICK. HE TALKS TO EVERYBODY. HE TALKS TO PEOPLE OUTSIDE THE GOVERNMENT. HE WANTS TO HIT THE RIGHT SPOT OF PRESSURE ON COUNTRIES AND PRESSURE ON RUSSIA WITHOUT CREATING MORE CONFLICT OR REDUCING THE LIKELIHOOD OF A PEACE DEAL. DAVID: SECTION 122 TARIFFS ARE SET TO EXPIRE IN A COUPLE OF DAYS. IT'S ALL BUT CERTAIN THAT THEY GO INTO EFFECT AFTER THAT OR ARE WE LOOKING AT A POSSIBLE LAPSE IN COVERAGE? >> THE REALITY IS THAT THE SECTION 301 INVESTIGATIONS UNDOING WILL BE PROPOSED TARIFFS ARE ON THEIR OWN TRACK. WE MOVED QUICKLY DELIBERATELY, WE WANT TO RESOLVE THOSE UNFAIR TRADING TYPE -- PRACTICES AND WE WILL DO THEM AS SOON AS WE CAN TO GET THESE PRACTICES. WHETHER IT IS DAY OF COMEDY BEFORE, DAY AFTER, THAT'S LESS IMPORTANT THAN ADDRESSING THE PRACTICES IN GETTING THE LEVERAGE WE NEED IN PLACE TO RESOLVE THEM. >> DO YOU HAVE A TIMETABLE ON WHEN YOU MIGHT BRING THAT TO THE PRESIDENT? >> WE HAVE A COUPLE, RIGHT? WE HAVE A BAN ON THE IMPORT OF FORCED LABOR. SOME HAVE A LAW THEY DON'T ENFORCE. WE HAVE OUR REPORT ON THAT AND WE CAN TAKE ACTION FAIRLY QUICKLY ON THAT WITHIN THE NEXT FEW WEEKS. WE HAVE ANOTHER INVESTIGATION TARGETING A MORE COMPACT GROUP OF COUNTRIES ON STRUCTURAL ACCESS CAPACITY, COUNTRIES WHO TYPICALLY HAVE A BIG TRADE DEFICIT WITH THE WORLD, SORRY BIG SHIRT PLUS WITH THE WORLD OR US, OR EVEN IF THEY DON'T, THEY MAY HAVE PRACTICES THAT GENERATE, YOU KNOW, FACTORIES OR PRODUCTION TOTALLY OUT OF WHACK WITH GLOBAL DEMAND. SO, THIS IS A QUITE INTENSE PROJECT. I HAVE DOZENS AND DOZENS OF ATTORNEYS AND POLICYMAKERS WORKING ON THIS TO REALLY EXAMINE ALL OF THESE PRACTICES, SO IT TAKES LONGER THAN THIS FORCED LABOR ONE, WHICH IS KIND OF A BINARY WHERE THEY ARE LOOKING AT WHAT'S IN PLACE AND ARE THEY ENFORCING IT. SHERY: DOES THAT EXPLAIN THE ENTIRE DELAY? IS IT THE CHINA ISSUE? >> I DON'T THINK THAT'S THE CASE AT ALL. CHINA IS INCLUDED IN THIS, BUT THE REALITY IS IT'S A MORE COMPLEX INVESTIGATION AND WE HAVE TO MAKE SURE WE ARE HEADING OUR MILESTONES. WE HAVE RECEIVED A LOT OF COMMENTS FROM THE PUBLIC. WE HAVE TO ANALYZE THOSE AND INCORPORATE THEM INTO ANY RESPONSIVE ACTION WE MIGHT TAKE AND WE HAVE TO MAKE SURE WE ARE LIVING UP TO THE LETTER AND SPIRIT OF THE LAW AND MAKE SURE WE ARE TARGETING THESE UNFAIR TRADING PRACTICES THAT HAVE LED TO, FRANKLY, OFF SHORING WITHIN THE U.S. AND AN INABILITY TO BUILD NEW FACTORIES AT TIMES. WHEN OTHER COUNTRIES ARE BUILDING FACTORIES FOR OUR DEPRESSING DEMAND IN THEIR OWN COUNTRY, THIS IS NOT HOW MARKET ECONOMICS ARE SUPPOSED TO WORK AND IT CREATES A SITUATION WHERE THERE ISN'T ENOUGH INCENTIVE TO BUILD A NEW FACTORY TO EMPLOY AMERICAN WORKERS BECAUSE WE HAVE OVERCAPACITY ELSEWHERE AND WE WANT TO MAKE SURE THE CAPACITY IS RESTRAINED, RESTRICTED, OR MITIGATED SOMEHOW WITHIN OUR OWN ECONOMY SO THAT WE CAN HAVE MARKET INCENTIVES TO BUILD HIM MAKE HERE. DAVID: RARE EARTHS, HOW DO YOU ASSESS THE CHINESE PERFORMANCE AND DO YOU ANTICIPATE THAT THAT AGREEMENT WILL BE RENEWED IN DUE COURSE? >> THE CHINESE COMPLIANCE IN THE AGREEMENT IS NOT PERFECT. EVERYONE KNOWS THAT, YOU CAN READ IT IN THE PAPER. THAT SAID, WE ARE GETTING FLOW OF FAIR EARTHS IN THERE ARE NOT FACTORIES SHUTTING DOWN BECAUSE WE DON'T HAVE IT, BUT WE DO WANT TO BE IN THE POSITION WHERE WE WERE IN 202023, THE FIRST TRUMP TERM WHERE WE HAD A REGULAR FLOW OF RARE EARTH. WE KNOW THAT THE CHINESE USE RARE EARTHS FOR ECONOMIC COERCION. THEY DID IT IN 2010 AND 2011, IT ISN'T NECESSARILY SURPRISING, BUT WE ARE CONTINUING TO HAVE SOME FLOW AND WHERE WE HAVE GAPS AND PROBLEMS, THE SECRETARY OF THE TREASURY AND I WORKED WITHOUT COUNTERPART TO TRY TO LOOSEN IT UP. SOMETIMES WE ARE MORE SUCCESSFUL THAN OTHERS. WE ARE MOVING FORWARD IN THE U.S. ON RARE EARTH PRODUCTION. ONE OF THE THINGS I'M DOING OUT WEST HERE IS GOING TO UTAH TO VISIT A FACILITY WHERE THEY HAVE DISCOVERED RARE EARTHS IN THE UTAH DESERT AND THEY ARE REFINING THEM AND FURTHER MANUFACTURING THEM AT A FACILITY IN UTAH, A GREAT DEVELOPMENT FOR U.S. NATIONAL ECONOMIC SECURITY. DAVID: RARE EARTHS, PHARMACEUTICAL DEFENDANT -- DEPENDENCE, HOW ARE YOU THINKING ABOUT THAT IN TERMS OF CURBING THAT RELIANCE? >> WE THINK ABOUT THIS A LOT, IT'S REALLY CRITICAL. AT THE END OF THE DAY YOU SOMEHOW LOSE ACCESS TO CHINESE INPUTS, HE CAN BE A HUGE CHALLENGE FOR OUR OWN MANUFACTURING BASE. SOME PEOPLE MIGHT SAY WHAT ABOUT INDIA, FINE, BUT A LOT OF THOSE INPUTS ALSO COME FROM CHINA. ONE GREAT THING WE ARE SEEING AS WE TRY TO ENCOURAGE COMPANIES TO RE-SURE WE HAVE COMMITMENTS FROM 17 PHARMACEUTICAL COMPANIES, YOU KNOW? THE LARGEST AND MOST MAJOR PHARMACEUTICAL COMPANIES, NOT ONLY TO LOWER PRICES OF MEDICATION HERE IN THE U.S., PHARMACEUTICAL PRICES HAVING GONE DOWN BY 2.5%, BUT THEY HAVE ALSO AGREED TO RESHORE AND MANUFACTURE HERE, SO WE HAVE COMPANIES LIKE ELI LILLY, NOVARTIS, AND OTHERS POURING CONCRETE WITH SUPERSTRUCTURES ON NEW FACILITIES IN INDIANA AND SOUTHERN CALIFORNIA. FOR ME THIS HAS BEEN A BRIGHT SPOT IN OUR EFFORTS TO RESHORE. DAVID: TRANS SHIPMENTS IS A WORD IN THE TRADE REP GLOSSARY. HOW ARE YOU THINKING ABOUT MONITORING AND BLOCKING THAT WHEN IT COMES TO CHINA. >> IT IS A WORD IN THE GLOSSARY, BUT IT CAN MEAN DIFFERENT THINGS. THERE'S A PURE ILLEGAL SHIPMENT WHERE THEY SEND IT TO VIETNAM AND PUT ON A MADE VIETNAM STICKER, THAT'S JUST ILLEGAL AND IT IS ON CUSTOMS AND BORDER PROTECTION TO ENFORCE THAT, INVESTIGATIONS TO IDENTIFY AREAS OF FRAUD TO GO AFTER AND WE ARE DOING THAT. A DAY OR TWO AGO WE HAD A BIG ANNOUNCEMENT WITH DOJ TEAMING UP WITH CDP. SOME OF THAT WAS TRANSSHIPMENT. THEN YOU HAVE THE OTHER ISSUE, IT'S OFTEN ASIAN INPUTS, CHINA, VIETNAM, GOING TO A THIRD COUNTRY, MAYBE MEXICO, WHERE THEY DO JUST ENOUGH WORK WHERE THEY CAN LEGALLY SAY IT'S ACTUALLY FROM MEXICO, SO WE SHOULD GET A BETTER RATE. THAT'S AN ISSUE AND THAT'S A PROBLEM. WITH MEXICO RIGHT NOW, FOR EXAMPLE, WE ARE TALKING ABOUT RULES OF ORIGIN AND SAYING THAT IF YOU WANT A BETTER DEAL ON BRINGING SOMETHING IN FROM MEXICO, YOU HAVE TO MAKE SURE IT ACTUALLY HAS U.S. CONTENT. MAKE SURE IT HAS MEXICAN CONTENT, OR WHATEVER IT IS, AND IT HAS TO BE HIGHEST POSSIBLE TO PROTECT AGAINST THIS OTHER KIND OF SHIPMENT. >> THERE'S A LONG WAY TO GO UNTIL THIS MEETING WHEN THE CHINESE PRESIDENT COMES TO THE U.S. YOU WERE SO INTEGRAL TO THE CONVERSATIONS THAT TOOK PLACE IN BEIJING. WHAT ARE YOU EXPECTING DELIVERABLES-WISE TO COME OUT OF THAT CONVERSATION? >> THE NUMBER ONE DELIVERABLE WE ALWAYS HAVE IS TO CONTINUE THE STABILITY OF THE RELATIONSHIP. BOTH OF THESE LEADERS ARE COMMITTED TO HAVING A STRONG AND SOLID PERSONAL RELATIONSHIP. THAT DOES NOT MEAN WE DO NOT HAVE ISSUES IN THE BROADER RELATIONSHIP. OBVIOUSLY, WE DO. CHINA IS A BIG CHALLENGE FOR THE U.S. IN MANY WAYS, BUT WE WANT TO MAKE SURE WE ARE DELIVERING STABILITY. THERE HAS NEVER BEEN A SITUATION WHERE THE U.S. SIDE OR THE CHINESE SIDE HAS SAID EVERYONE SHOULD EXPECT A COMPREHENSIVE AGREEMENT THAT SOLVES ALL ISSUES. WE WILL TAKE STOCK ON THE RARE EARTH ISSUES. I THINK IT WILL BE A MOMENT FOR STOCK-TAKING AND CONFIRMING THE RELATIONSHIP, MAKING SURE CHINA IS COMPLYING WITH WHAT IT HAS AGREED TO DO. THAT IS WHAT WE ARE LOOKING FORWARD TO IN THIS MEETING. >> THANK YOU VERY MUCH. THANKS FOR YOUR TIME. SHERY: WE CONTINUE TO LOOK AHEAD TO THAT U.S.-CHINA SUMMIT AGAIN. MORE AHEAD. THIS IS BLOOMBERG. ♪ HAIDI: TAKE A BIG LOOK AT THE MOVE WE ARE SEEING. THIS VOLATILITY WE ARE INCREASINGLY SEEING BUILD AS A RESULT OF THIS LEVERAGED AI ETF TRADE, THE SINGLE STOCK TRADE THAT HAS REALLY COME TO A HEAD. WE ARE SEEING DOWNSIDE AT THE MOMENT. THIS AMID EXPECTATIONS SOUTH KOREA WILL SOON ANNOUNCE MEASURES FOR THE CONTROVERSY. THE FINANCIAL SERVICES HEAD MAKING THE STATEMENTS ON YOUTUBE, SAY CLOSE CONSULTATIONS ARE UNDERWAY WITH THE BANK OF KOREA, THE FINANCIAL SUPERVISORY SERVICE AS WELL AS FINANCE MINISTRIES TO PROTECT INVESTORS AND ENSURE MARKET STABILITY. THEY ARE REVIEWING THE MATTER COMPREHENSIVELY. IT REALLY COMMENTING AS TO IF WE COULD SEE A TEMPORARY TRADING HALT, BUT, CLEARLY, THAT IS ONE CONCERN. TO GIVE YOU AN INDICATION OF WHAT SORT OF PREMIUM WE ARE TALKING ABOUT, THE ADR'S FOR SK HYNIX OVER SOUTH KOREAN SHARES SOARING JUST THREE DAYS AFTER THAT TRADING DEBUT. YOU CAN SEE THAT FEAR PLAYING OUT WHEN IT COMES TO THE KOSPI AT THE MOMENT. THEY WON NOT DOING MUCH. WE ALSO HAVE THAT BE OK -- WE ALSO HAVE THAT BOK DECISION TO LOOK FORWARD TO. WHERE TO NEXT FOR THESE KOREAN MARKETS IF WE SEE SOME RESOLUTE STEPS BEING TAKEN BY AUTHORITIES WHEN IT COMES TO THESE LEVERAGED ETF'S WITH THE SINGLE STOCKS? >> I THINK IT IS QUITE NATURAL THAT AFTER 100% RALLY, YOU TEND TO SEEK DIGESTION IN THE MARKET, AND THAT IS WHAT WE SEE IN THE KOREAN MARKET RIGHT NOW, BUT DO NOT FORGET THAT THE FUNDAMENTALS ARE STILL STRONG. SOME OF THESE COMPANIES ARE NOT ABLE TO FULFILL EVEN 70% OF THE DEMAND. IF YOU LOOK AT THE END CUSTOMERS, THE MONETIZATION OF THE AI SPACE IS PLAYING OUT, SO AS LONG AS YOU HAVE MONETIZATION OF THE AI SPACE AND DEMAND/SUPPLY IMBALANCE, IT IS QUITE LIKELY THESE STOCKS WILL RECOVER. WE ARE QUITE BULLISH ON THE KOREAN EQUITY MARKET. HAIDI: WHAT DOES THE SELECTIVITY WITHIN SEMI'S LOOK LIKE? >> WE PREFER FIRST SEMI EQUIPMENT. GIVEN THE CAPACITY CONSTRAINT, IT IS LIKELY THIS WILL LAST FOR A COUPLE OF YEARS. SOME OF THE PLAYERS IN EUROPE AND SOME OF THE PLAYERS IN TAIWAN HAVE DONE EXTREMELY WELL. WE HEARD LAST NIGHT AS WELL THAT THEY RAISED GUIDANCE BECAUSE THEY ARE NOT ABLE TO FULFILL THE DEMAND. BEYOND THAT, FOUNDRIES I THINK STILL LOOK GOOD BECAUSE EARNINGS FOR THE NEXT COUPLE OF YEARS WILL BE MORE THAN 30%, 40%, AND IT WILL BE HIGH QUALITY, NOT DRIVEN BY PRICE MOMENTUM BUT MORE BY VOLUME GROWTH. THEN WE HAVE MEMORY PLAYERS IN THE KOREAN SPACE. I THINK THEY WILL ALSO DO WELL IN THE NEXT SIX MONTHS OR SO. HAIDI: I WANT TO GET YOUR VIEWS ON THESE F4 CONVERSATIONS TO TAKE PLACE. WE HAVE HEARD THE PRESIDENT IS TO RECEIVE BRIEFINGS, AND WE HAVE HEARD THE TOP PLAYERS COMMENTING ON MARKET VOLATILITY. DOES THIS LEVEL OF OVERSIGHT CONCERN YOU IN TERMS OF IF WE COULD SEE MORE EXTENDED PERIODS OF VOLATILITY AS WE SEE IN TODAY'S SESSION? >> I THINK IT IS QUITE LIKELY THAT MARKETS WILL REMAIN VOLATILE. THE EASY MONEY IN THE MARKET HAS BEEN MADE. THE FIRST HALF, EQUITY MARKETS WENT HIGHER DESPITE CONCERNS ABOUT THE ENERGY CRISIS AND THE AI CAPEX. FROM HERE, I THINK THE GAINS WILL BE MORE DIFFICULT. ALL THESE HEADLINES, DEFINITELY NOT GOOD FROM A MARKET PERSPECTIVE, BUT AS EARNINGS HOLD, THE MARKET WILL GO HIGHER. FROM GLOBAL EQUITIES, WE STILL EXPECT MARKETS TO GO HIGHER BECAUSE EARNINGS WILL BE UP MORE THAN 20% THIS YEAR. HAIDI: WE HAVE TALKED AT LENGTH ABOUT THE OPPORTUNITIES IN KOREA. ARE THERE OTHER GEOGRAPHIC MARKETS FOR THE AI TECH THEME THAT PERHAPS PRESENT BETTER OPPORTUNITIES IN TERMS OF VALUE? CHINA OR JAPAN FOR EXAMPLE? >> PRETTY MUCH ALL THE MARKETS IN ASIA I WOULD SAY OFFER AI OPPORTUNITIES. WE ARE SEEING MOMENTUM IN CHINA AS WELL, SO IF YOU LOOK AT THE ONSHORE MARKET IN CHINA, HARDWARE STOCKS HAVE BEEN DOING EXTREMELY WELL BECAUSE CHINA WILL SPEND $300 MILLION OVER THE NEXT FIVE YEARS TO BUILD ITS OWN AI ECOSYSTEM, AND THERE WILL BE NO COMPETITION. LONG-TERM PERSPECTIVE, THE AI HARDWARE STOCKS IN CHINA, I THINK THEY CAN DO EXTREMELY WELL. AT THE SAME TIME, IN THE SHORT TERM, THE INTERIM PLAYERS SHOULD RECOVER BECAUSE VALUATIONS ARE CHEAP, AND THEY ARE ABLE TO MONETIZE THE AI INVESTMENT INTO EXISTING OPERATIONS. SOME OF THESE STOCKS ARE TRADING AT 13, 14 TIMES. LOOK BEYOND KOREA. JAPAN, CHINA, I THINK THEY OFFER A FANTASTIC OPPORTUNITY FROM AN AI PERSPECTIVE. HAIDI: WE HAVE TO LEAVE IT THERE. THANK YOU FOR YOUR TIME WITH US. MORE AHEAD HERE ON "THE ASIA TRADE." THIS IS BLOOMBERG. SHERY: WE ARE SEEING GOLD PRICES PRETTY STEADY AS WE GOT COOLER U.S. INFLATION DATA, NOT JUST DPI YESTERDAY BUT PPI IN THE OVERNIGHT SESSION AS WELL. THE VARIABLE RIGHT NOW IS WHAT HAPPENS TO OIL PRICES, GIVEN THAT WE CONTINUE TO SEE THE U.S.-IRAN NEGOTIATIONS ON GOING, THE U.S. CONTINUING AIRSTRIKES. THIS COULD ESCALATE INTO A CRISIS UNLESS THE STRAIT OF HORMUZ IS OPEN, BUT INFLATION EXPECTATIONS VERY IMPORTANT FOR SOUTH KOREA, VERY RELIANT ON MIDDLE EASTERN IMPORTS, BUT ALSO THE FACT THAT INFLATION IS AT THE FASTEST LEVEL IN ABOUT TWO MONTHS. WE CONTINUE TO SEE THE VOLATILITY WHEN IT COMES TO ASSET PRICES AROUND KOREA ON A DAY WHEN WE ARE GETTING THE BOK RATE DECISION. ALL EXPECTATIONS FOR A HIKE. AS I MENTIONED EARLIER, INFLATION AT THE FASTEST IN TWO YEARS. GROWTH BEING BOOSTED BY THE SEMICONDUCTOR TRADE AS WELL. THIS IS BLOOMBERG. HAIDI: PRETTY CHALLENGING DAY FOR EQUITY INVESTORS IN ASIA, LED BY GREATER VOLATILITY IN THE KOSPI. WE ARE SEEING THAT LOSS BEING HELD AT JUST OVER THE 5% LEVEL. FRESH SELLING RENEWING CONCERNS OVER HOW THIS AI CHIP-RELATED TRADE IS. WE ARE SEEING LOSSES, BUT STILL TWO POINT 7% LOWER WHEN IT COMES TO JAPANESE STOCKS. WE ALSO HAVE THE BOK DECISION AT SOME POINT THIS HOUR TO CONTEND WITH, BUT IT IS THIS POTENTIAL REGULATORY ACTION WE COULD SEE WHICH HAVE BEEN THE BIG CONTRIBUTOR WHEN IT COMES TO SOME OF THE VOLATILITY WE HAVE SEEN INCREASINGLY OUT OF THESE MARKETS. THAT'S WHY WE ARE SEEING THAT BIG DRIVE FOR THE KOSPI AT THE MOMENT. AT THE SAME TIME, THE ENERGY TRADE CONTINUES, OIL CLIMBING FOR A FOURTH CONSECUTIVE DAY. IT IS REALLY ABOUT WHERE TO IN TERMS OF THE NEXT CATALYST FOR THIS AI AND CHIP-RELATED TRADE. WATCHING JUST MARKETS WATCHING OUT FOR EARNINGS -- MARKETS WATCHING OUT FOR EARNINGS FROM TWO OF NVIDIA'S KEY SUPPLIERS. WHAT ARE WE LOOKING OUT FOR IN TERMS OF THESE NUMBERS? STEPHEN: ABSOLUTELY PIVOTAL WEEK THAT GLOBAL INVESTORS ARE LOOKING AT TO SEE IF THE SPENDING PATTERNS IN AI ARE SUSTAINABLE. ASML WAS THE FIRST ONE OVERNIGHT . OBVIOUSLY, THE NUMBERS WORK BUT. IT RAISED ITS FULL YEAR NET SALES GUIDANCE FOR A SECOND TIME ALREADY THIS YEAR, AND IT WAS A FAIRLY TEPID RESPONSE, AS YOU MENTIONED THERE AT THE TOP, AS CHIP STOCKS FELL AGAIN, SO ATTENTION TURNS NOW TO TSMC, AND TOP CLIENT OF ASML. ONE OF THE GUIDANCES THAT ASML GAVE IS THAT THEY ARE LOOKING TO ADD 30% CAPACITY TO MAKE THOSE EXTREME ULTRAVIOLET LITHOGRAPHY MACHINES NEXT YEAR AND IS EVEN OPEN, GIVEN THE AMOUNT OF DEMAND, FOR ANOTHER 30% IN 2028. THAT WOULD BRING THE NUMBER OF MACHINES UP TO 100 10, AND THAT IS SOMETHING ASML'S CFO TALKED ABOUT, THAT THEY WILL HAVE TO SIGNIFICANTLY INVESTIGATE THAT BECAUSE CLIENT SIGNALS FOR DEMAND INDICATE THEY COULD POSSIBLY ABSORB THAT AND GET THAT CAPACITY UP. IT RAISES THE QUESTION AS IT RELATES TO TSMC BECAUSE THE INFORMATION, FOR ONE, THE NEWS OUTLET IS SAYING ASML IS LOOKING AT POSSIBLY RAISING PRICES ON ITS HIGH-END LITHOGRAPHY EQUIPMENT, WHICH IS SOMETHING WE WOULD WIDELY ASSUME THAT TSMC HAS ITS BIGGEST CLIENT, WOULD HAVE SOME PUSHBACK ON, AND INDICATIONS ARE THAT THEY WOULD PUSHBACK. THERE IS LOTS TO DIG INTO WITH TSMC COMING UP WITH ITS RESULTS LATER AND ALSO EXECUTIVE GUIDANCE, AND WE HAVE AN INTERVIEW AS WELL WITH THE TSMC CFO. HAIDI: COULD WE SEE TSMC EXTENDING BEYOND THE PREVIOUS GUIDANCE? STEPHEN: THAT'S WHAT WE WILL BE LOOKING FOR. PREVIOUS GUIDANCE WAS FOR UPWARDS OF 56 BILLION DOLLARS THIS YEAR. UBS, FOR ONE, SAYS THE NUMBER COULD BE UPWARDS OF $60 BILLION, SO ANY KIND OF FIRM OUTLOOK CHANGE WILL BE SOMETHING WE WILL BE LOOKING AT. REVENUE HAS BEEN DOING WELL. WE HAD SECOND-QUARTER NUMBERS. JUNE NUMBERS WERE UP 68%. WE CAN EQUATE THAT TO A JUMP OF 67%, BUT AGAIN, THE STOCK MARKET HAS NOT RESPONDED GREATLY TO THOSE NUMBERS, EVEN THOUGH A 68% JUMP, MAYBE THE EXPECTATION IS A LITTLE TOO HIGH. WE HAVE TO LOOK INTO THAT AS WELL. JUNE SALES REINFORCE OUR VIEW THAT AI AND SERVER PROCESSOR DEMAND WILL COMFORTABLY OFFSET SMARTPHONE AND PC WEAKNESS, STRENGTHENING THE CASE FOR PRICE INCREASES THAT SHOULD LIFT GROSS MARGINS OUTLOOK ABOVE THE CONSENSUS OF 67.1% OR EVEN TO THE UPPER END OF THAT OUTLOOK OF 67.5% FOR THOSE GROSS MARGINS. SHERY: CHIEF NORTH ASIAN CORRESPONDENT STEPHEN ENGLE JOIN US FROM TAIPEI. HE WILL BRING US THAT CONVERSATION WITH THE CFO OF TSMC ON MONDAY. APPLE SHARES CLIMBED AFTER RECEIVING LONG-AWAITED GOVERNMENT APPROVALS TO ROLLOUT APPLE INTELLIGENCE IN CHINA. CHINA CYBERSPACE ADMINISTRATION INCLUDED APPLE'S GENERATIVE AI ON THE LIST OF NEWLY APPROVED PROVIDERS. APPLE PARTNERING WITH ALIBABA. HOW CONSEQUENTIALIST THIS? -- HOW CONSEQUENTIAL IS THIS? >> REALLY, WHAT IS IMPORTANT HERE IS THAT BEIJING IS EFFECTIVELY CERTIFYING THE PARTNERSHIP AS SAFE, CONTROLLABLE, COMPLIANT FOR MASS-MARKET USE. FOR A FOREIGN PLAYER LIKE ALIBABA TO OPERATE GENERATIVE AI IN CHINA, IT DOES NEED A LOCAL PARTNER THAT REGULATORS CAN TRUST, AND ALIBABA IS NOT A GATE KEEPER ON THE DEVICE SIDE OF THINGS, BUT THE REALITY IS THAT IT DOES NOT QUITE CHANGE ALIBABA'S EARNINGS PROFILE IN THE NEAR TERM. THE WAY WE SEE IT AS IT DOES UPGRADE ITS STATUS IN THE AI HIERARCHY FROM AN E-COMMERCE-LED INTERNET COMPANY TO ONE OF THE CORE PLATFORMS THAT GLOBAL AND DOMESTIC PLAYERS CAN PLUG INTO WHEN THEY WANT TO SCALE AI IN CHINA. SHERY: TELL US A LITTLE MORE ABOUT ALIBABA'S PLAN. WHAT DOES IT MEAN WHEN IT COMES TO THE PARTNERSHIP NOT JUST REPUTATION-WISE, FOR APPLE? >> RIGHT. I THINK THE RACE IS STILL ON IN TERMS OF CHINA AI AND WHO WILL STAND OUT IN THIS ENTIRE DEVELOPMENT, BUT I THINK ONE THING TO NOTE IS THAT CHINA'S AI RACE HAS TWO TRACKS. ONE OF IT WOULD BE HARDWARE-CENTRIC ECOSYSTEM, AND WE ARE TALKING ABOUT HUAWEI AND XIAOMI HERE. ON THE OTHERS, THAT'S WHERE ALIBABA COMES IN AS AN EMERGING INFRASTRUCTURE PROVIDER THAT FOREIGN PLATFORMS LIKE APPLE, FOR INSTANCE, CAN DEPEND ON TO BE COMPLIANT AND LOCALIZED. IF WE LOOK AT IT TOGETHER, THE APPLE DEAL DOES NOT QUITE NOT APPLE OR -- HUAWEI OR XIAOMI OFF THEIR PERCH IN TERMS OF SMARTPHONES. IT DOES CONFIRM FROM THIS IMPROVER THAT REGULATORY TRUST IN GOVERNMENT IS ACTUALLY QUITE CRITICAL IN CHINA. ESSENTIALLY, ALLIE BUBBA -- ALIBABA HAS BEEN FORMALLY RECOGNIZED AS A PARTNER THAT CAN KEEP GLOBAL AI WITHIN CHINA'S GUARDRAILS. HAIDI: SAMSUNG, SK HYNIX, MICRON HAVE ENJOYED THEIR DOMINANT POSITION IN THE GLOBAL DRAM AND HIGH-BANDWIDTH CHIP MARKET, BUT OUR BLOOMBERG OPINION COLUMNIST WARNS THAT CHINA SEE SMT -- CHINA'S CXMT IS STARTING TO LOOK LIKE AN UPSTART. SHOULD THESE DOMINANT PLAYERS BE WORRIED? >> I THINK SO. AT THIS POINT, CXMT HAS BEEN GAINING MOMENTUM IN MARKET SHARE AND IN ADDITION TO, IT IS SEEKING A SHANGHAI IPO WITH THE HOPE OF RAISING 10 BILLION U.S. DOLLARS, AND THAT IS A LOT OF MONEY IN CHINA. CHINESE FACTORIES BUILD UP VERY FAST, AND CXMT IS NOT SHY ABOUT ITS PLANS TO USE THOSE PROCEEDS. IT WILL DOUBLE CAPACITY, AND THAT IS A PROBLEM FOR THE BIG BECAUSE THE BIG THREE ARE ALREADY EXPANDING THEIR CAPACITY. NOW THE QUESTION IS IF THE DRAM MARKET WILL FLIP INTO OVERSUPPLY WITHIN THE NEXT YEAR OR SO. HAIDI: WHAT ABOUT HIGH-END CHIPS? >> THE INDUSTRY CONSENSUS IS THAT CXMT IS TRYING WITH HBM AND IT IS SO FAR AT THE ENGINEERING STAGE BUT IS BY NO MEANS READY TO GO AT THE COMMERCIAL SCALE YET, AND THE CXMT WILL NOT BE ABLE TO DO ANYTHING UNTIL MAYBE 2028. HAVING SAID THAT, IT IS ALREADY ABLE TO MASS-PRODUCE CONVENTIONAL DRAM, AND THAT COULD HURT THE BIG THREE'S EARNINGS SUBSTANTIALLY BECAUSE IT IS CONVENTIONAL PRICES THAT ARE JUMPING THIS YEAR -- CONVENTIONAL DRAM PRICES THAT ARE JUMPING THIS YEAR. HAIDI: WHAT DOES THIS ALL MEAN IN TERMS OF RECEPTION FOR THIS IPO? >> I THINK CHINESE INVESTORS WILL LOVE IT. WE HAVE SEEN CHINA'S GDP NUMBERS COMING OUT YESTERDAY. THE ECONOMY IS NOT DOING VERY WELL. SEMICONDUCTOR TRADE IS THE ONLY GAME IN TOWN AND THEY WILL JUST LOVE IT. SHERY: THE LATEST ON ALL OF THE SEMICONDUCTOR NEWS, ESPECIALLY IN THE CHINA SPACE AS WE GET PERHAPS MORE COMPETITION. THE CHIEF FINANCIAL OFFICER OF PALANTIR SEES AI MODELS POSING A FINANCIAL RISK TO THE U.S., THIS AS CONCERN GROWS OVER CHINESE RIVALS IMPROPERLY USING A TECHNIQUE YOU -- A TECHNIQUE KNOWN AS DISTILLATION. >> MY VIEW IS THAT NATIONAL SECURITY IS NOT AN END UNTO ITSELF BUT A MEANS TO AN END, AND THE ACTUAL END IS AMERICAN PROSPERITY, SO IT POSES A THREAT TO AMERICAN PROSPERITY. THESE CHINESE OPEN-SOURCE MODELS ARE THE RESULT OF DISTILLATION TACTICS. THIS IS STOLEN IP FROM FRONTIER LABS, AND I THINK THE FONTERRA LABS SHOULD DO MORE TO PROTECT THEIR OWN IP, BUT I'M LESS WORRIED ABOUT IT IN THE PRESENT MOMENT BECAUSE THE GRAVEST THREAT TO US IS NOT HOMICIDE. IT IS SUICIDE, AND INABILITY TO TURN THESE TOKENS INTO ECONOMIC VALUE AND GENERATE AMERICAN PROSPERITY FOR IT. YOU SEE THAT WITH THE PROPOSED MORATORIUM IN NEW YORK ON DATA CENTERS. TURNING OUR BACK ON AI WOULD BE AS CONSEQUENTIAL A MISTAKE AS TURNING OUR BACK ON THE ADAM IN THE 1970'S. WE ARE STARTING TO SEE A BURGEONING ECOSYSTEM FORMING. I THINK YOU WILL SEE IN THE NEXT MONTH A SLATE OF ANNOUNCEMENTS OF OTHER AMERICAN COMPANIES PUTTING OUT OPEN WEIGHT MODELS THAT COMPANIES WILL BE ABLE TO CHEAPLY FINE-TUNE AND CAPTURE THEIR OWN ALPHA IN WAYS THEY CONTROL. >> PART OF THE U.S.'S STRATEGY WHEN IT COMES TO NATIONAL SECURITY HAS BEEN TO HAVE THE GOVERNMENT TAKE EQUITY STAKES IN COMPANIES DEEMED CRITICAL TO NATIONAL SECURITY. WE KNOW THE IDEA HAS BEEN FLOATED WHEN IT COMES TO SOME OF THESE FRONTIER LABS. I WONDER WHAT YOU MAKE OF THE STRATEGY. IS THIS THE RIGHT WAY FOR THE U.S. TO GO ABOUT IT? >> I THINK IT IS VERY CASE-DEPENDENT. I'M GLAD IT IS AN OPTION ON THE TABLE. FOR SOME COMPANIES THAT NEED AN EQUITY INJECTION, IT COULD MAKE A LOT OF SENSE. FOR OTHER COMPANIES, I'M NOT SURE IT MAKES AS MUCH SENSE, BUT I'M GLAD IT IS AN OPTION ON THE TABLE. HAIDI: PALANTIR'S SEAT SPEAKING WITH BLOOMBERG'S TYLER KENDALL. MORE AHEAD ON "THE ASIA TRADE." THIS IS BLOOMBERG. SHERY: WE'VE SEEN MORE DOWN ON KOREAN ASPECTS. THE KOSPI NOT LOSING MORE THAN 6%. WE WILL BE WATCHING FOR A TRADING HALT IF THESE LOSSES CONTINUE. THE ENERGY SECTOR ONE OF THE FEW GAINING GROUND. OIL PRICES ARE HIGHER TODAY. WTI AND BRENT AROUND THAT $80 A BARREL LEVEL GIVEN THE ONGOING TENSIONS BETWEEN THE U.S. AND IRAN, BUT THE TEXT SELLOFF CONTINUES. THE TECH SECTOR DOWN MORE THAN 9% AS WE SEE VOLATILITY CONTINUE IN THE AI TRADE. THE AI TRADE, INFLATION, OIL PRICES, ALL OF THIS VERY IMPORTANT FOR THE BANK OF KOREA. IT IS DECISION DAY TODAY. JOINING US NOW IS THE KOREAN ECONOMIST. WE SAW TWO DISSENTERS IN THE PREVIOUS MAY MEETING, AND THEY WANT AN IMMEDIATE HIKE. DOES THIS MEAN EVERYBODY IS ON BOARD, AND WHY? >> SHARE, THANK YOU FOR HAVING ME. TODAY, WE THINK THE BOK IS EXPECTED TO HIKE BY 25 BASIS POINTS, GIVEN THERE'S A LOT OF CONCERNS AROUND INFLATION. THE BOK HAS BEEN SIGNALING THAT IS LIKELY TO HIKE SEVERAL TIMES BEFORE, SO THE MARKET IS WELL-POSITIONED FOR A 25 BASIS POINT HIKE TODAY. SHERY: COULD WE SEE BACK-TO-BACK HIKES? >> IN TERMS OF BACK-TO-BACK HIKES, WE SEE A VERY LOW PROBABILITY, GIVEN THAT THE BOK IS LIKELY TO WAIT A BIT IN ORDER TO SEE THE IMPACT OF THE JULY RATE HIKE. THE OIL PRICE HAS COME DOWN A BIT, THOUGH IT REBOUNDED RECENTLY, BUT COMPARED TO PREVIOUSLY, THE OIL PRICE IS LOWER. THE GOVERNMENT HAS BEEN SAYING IT WILL DO A LOT OF MEASURES IN ORBITAL -- IN ORDER TO STABILIZE PRICES ON SHORT KOREA, AND ALSO, THERE WILL BE MORE REAL ESTATE POLICY MEASURES IN ORDER TO STABILIZE THE HOUSING CRISIS, SO THE BOK WILL DO A 25 BASIS POINT HIKE TODAY, AND IS LIKELY TO WAIT FOR MORE IMPACT TO BE MONITORED IN AUGUST, AND THEN WE ARE EXPECTING ANOTHER HIKE IN OCTOBER. SHERY: WHERE DO YOU SEE THE TERMINAL RATE IN THIS CYCLE? >> WE ARE CURRENTLY EXPECTING TO HIKE JULY 1 AND OCTOBER 1, SO IT WILL BE 2.3%, BUT WE NOTE THAT THERE IS STILL RISK OF ANOTHER HIKE, SO THREE HIKES IN TOTAL GIVEN THAT THE THE BOK IS LIKELY TO FOCUS ON INFLATION IF INFLATION STAYS ELEVATED ABOVE THE BOK'S 2% TARGET, THERE IS RISK FOR ANOTHER RATE HIKE NEXT YEAR. SHERY: ESPECIALLY SINCE THE GOVERNOR HAS HIGHLIGHTED MARKET VOLATILITY AS AN INFLATION RISK. HOW DO YOU EXPECT THAT TO APPLY AND AFFECT MONETARY POLICY WHEN IT COMES TO THE MARKET FLUCTUATIONS? >> FOR THE BOK, FX IS IMPACTING INFLATION. THEY LOOK AT IT AS A FACTOR FOR INFLATION. FOR KOREA'S IMPORT INFLATION, IT ROSE BY 20% YEAR ON YEAR, WHICH IS BIG FOR IMPORT INFLATION. BECAUSE THE KOREAN WON HAS DEFLATED, DEPRECIATED, BOK IS CONCERNED ABOUT IMPORT PRICE PUSHING OVERALL HEADLINE INFLATION HIGHER. IN TERMS OF THE FX IMPACTING INFLATION, THE BE OK IS DEFINITELY CONCERNED. SHERY: WHAT ABOUT THE FACT THAT WE SEE MORE VOLATILITY IN THE EQUITY SPACE AS WELL? WE KNOW THE GOVERNMENT IS TRYING TO SEE IF THERE ARE SOME MEASURES TO REALLY TAME THIS VOLATILITY. THE 24-HOUR WON TRADING SITUATION AS WELL. WHEN IT COMES TO FINANCIAL DECISIONS IN THE COUNTRY, IS THIS SOMETHING THE THE BOK CONSIDERS? >> IN TERMS OF THE FINANCIAL CONDITION AND FINANCIAL STABILITY, DEFINITELY, THE THE BOK WILL CONSIDER THIS VOLATILITY VERY CAUTIOUSLY. IN TERMS OF THE FX LEVEL, THEY WERE PREVIOUSLY CONCERNED ABOUT DOLLAR-KOREA GOING UP HIGHER. WITH THE 24-HOUR TRADING. HOWEVER, WITH THEIR CAUTIOUS MONITORING, WE SEE THE DOLLAR-KOREA MOVING DOWN FROM ITS RECENT HIGH, SO IT WAS QUITE A DECLINE. IT WILL GIVE SOME COMFORT FOR THE BOK. THE REASON WE SEE THIS DECLINE IS THAT FOREIGN INVESTORS HAVE BEEN NET SELLING IN KOSPI, BUT THEY HAVE BEEN MODERATING THAT SELLING WITH THE KOSPI CORRECTING, AND SECOND, KOREAN EXPORTERS LIKE SK HYNIX ARE SELLING DOLLAR, SO THIS HAS BEEN HELPING DOLLAR KOREA TO STABILIZE DOWN. SHERY: WE CONTINUE TO SEE THIS EXUBERANCE AROUND ANYTHING TO DO WITH ARTIFICIAL INTELLIGENCE. HOW MUCH WILL THIS ACTUALLY HELP WHEN IT COMES TO THE SOUTH KOREAN ECONOMY -- HOPE YOUR THOUGHT BECAUSE WE ARE GETTING THE BANK OF KOREA COMING OUT WITH ITS POLICY DECISION. IT IS A HIKE TO 2.70 5% FROM 2.5%, AS EXPECTED BY ALL ECONOMISTS INTERVIEWED BY BLOOMBERG. WE HAVE INFLATION NOW ACCELERATING AT THE FASTEST PACE IN MORE THAN TWO YEARS, SO GIVE US YOUR REACTION TO THE VERY MUCH-ANTICIPATED RATE HIKE WE ARE GETTING FROM THE BOK. BUT AS I WAS TALKING ABOUT THE SEMICONDUCTOR BOOM, HOW MUCH WILL THE AI TRADE HELP OFFSET SOME OF THIS TIGHTENING WE SEE FROM THE BOK AS WELL? >> SURE. ALSO, THIS RATE HIKE IN JULY WAS WIDELY EXPECTED, GIVEN THE SIGNAL FROM THE THE BOK. THE FOCUS TODAY WITH THE PRESS CONFERENCE WILL BE MORE ON THE BOK'S FORWARD GUIDANCE IN TERMS OF THE TIMING OF THE NEXT HIKE AND THE TERMINAL RATE FOR THE RATE HIKE CYCLE, SO WE WILL WATCH OUT FOR THAT DURING THE PRESS CONFERENCE. ALSO, REGARDING THE AI CYCLE, HELPING KOREA, WE ARE SEEING A LOT OF SUPPORT FROM AI AND ALSO CHIP EXPORT IN KOREA. BECAUSE OF KOREA EXPORTS GROWING BY 70% YEAR ON YEAR IN JUNE, IT HAS PUSHED KOREA'S GROWTH POTENTIAL REALLY HIGH. THOUGH WE ARE EXPECTING KOREA GROWTH TO BE AROUND 2.6%, WE ARE CONSIDERING TO RAISE OUR FORECAST FOR GDP. THE BANK OF KOREA ALSO HINTED THEY WILL RAISE THEIR GDP FORECAST, SO INDEED, THERE IS GROWTH POTENTIAL FOR NOT ONLY EXPORT BUT ALSO CONSUMPTION AND GOVERNMENT SPENDING DRIVEN BY THIS AI CYCLE. SHERY: DOES NOT HELP OFFSET SOME OF THE CONCERNS AROUND THE DEEPENING OF THE K-SHAPED RECOVERY, OF HOUSEHOLD DEBT STILL BEING HIGH? WE ARE SEEING APARTMENT PRICES IN KOREA NOW THAT NOT EVERYONE CAN AFFORD. DOES THE AI CYCLE MITIGATE SOME OF THE INEQUALITY WE SEE IN THAT COUNTRY? >> IT WILL DEFINITELY HELP, THOUGH IT IS MORE DRIVEN AND FOCUSED IN THE TECH SECTOR. WE ARE SEEING THAT GOVERNMENT SPENDING IS HELPING TO SUPPORT THE LOWER PART OF THE K. IN APRIL THIS YEAR, THE KOREAN GOVERNMENT DID A SUPPLEMENTARY BUDGET TO SUPPORT THE GENERAL PEOPLE. THE IMPACT OF THE AI CYCLE IS NOT ONLY IMPACTING A SPECIFIC INDUSTRY BUT ALSO SUPPORTED THE GENERAL PRIVATE CONSUMPTION AND GOVERNMENT SPENDING. SHERY: REALLY GOOD TO HAVE YOU WITH US AS WE DISSECT THAT BOK RATE HIKE DECISION TODAY. THIS IS BLOOMBERG. HAIDI: IT IS ALL ABOUT KOREA FOR A NUMBER OF REASONS, AND IS ON THE WAY DOWN WHEN IT COMES TO THE KOSPI, DRAGGING DOWN THE REST OF ASIAN EQUITIES. THIS IS WE EXPECT SOUTH KOREA WILL SOON ANNOUNCE MEASURES REGARDING THE CONTROVERSY OVER THESE LEVERAGED ETF'S LINK TO SINGLE STOCKS, THE LIKES OF SAMSUNG AND SK HYNIX, AND THEIR CONTRIBUTION TO MARKET VOLATILITY. WE WILL HEAR FROM THE F4 REGULATORS AS WELL AS FINANCIAL SERVICES REGULATORS AS WELL. THE BOK UNSURPRISINGLY RAISING RATES FOR THE FIRST TIME IN MORE THAN THREE YEARS. THIS AI-DRIVEN BOOM HELPING FUEL INFLATION LEVELS. SUBSCRIBERS CAN ALSO GET MORE ON THE TERMINAL FOR MORE ON THAT BOK DECISION. GET THAT COMMENTARY AND REACTION FROM OUR TEAM NOW. THIS IS BLOOMBERG.