US-China Trade Tensions Return, US Chip Selloff Weighs on Asia | The Asia Trade 8/25/2026

HAIDI: THIS IS THE ASIA TRADE. PAUL: ASIAN STOCKS SET TO FOLLOW WALL STREET LOWER AFTER A SELLOFF IN CHIPMAKERS, NVIDIA EXTENDING ITS LONGEST SLUMP SINCE 2022. HAIDI: PRESIDENT TRUMP SAID TO BE CONSIDERING HIGHER TARIFFS ON CHINA AHEAD OF NEXT MONTH'S SUMMIT. PAUL: WILL PRICES EASE AS THE U.S. PLANS TO ISOLATE IRAN ECONOMICALLY. HAIDI: WE HAVE BREAKING NEWS AROUND UKRAINE AND SOME OF THE SUPPORT WE'VE SEEN FROM ALLIES. ANDY BURNHAM IS PLANNING A U.S. TRIP NEXT MONTH TO LOBBY PRESIDENT TRUMP WHEN IT COMES TO THE ISSUE OF UKRAINE AID. HE IS SPEAKING IN A BLOOMBERG INTERVIEW IN KYIV, SAYING THAT THEY ARE RUNNING LOW ON A STOCK OF INTERCEPTORS. THAT IS FIXABLE AND EUROPEAN LEADERS MAY MEET WITH YOU AND GENERAL ASSEMBLY TO TALK ABOUT THE ISSUE AND HOW TO FURTHER SUPPORT UKRAINE. WE ARE HEARING NOW FROM A BLOOMBERG INTERVIEW U.K. PRIME MINISTER ANDY BURNHAM WILL TRAVEL TO THE U.S. NEXT MONTH TO LOBBY PRESIDENT TRUMP TO LET UKRAINE ACCESS SOME OF ITS PATRIOT AIR DEFENSE MISSILES AHEAD OF THE WINTER AND THE EUROPEAN LEADERS ARE CONSIDERING HOLDING ANOTHER COALITION OF THE WILLING AROUND THE YUAN GENERAL ASSEMBLY MEETING WITH A VIEW TO BE ABLE TO SECURE AMERICAN INTERCEPTORS AND STOCK FROM OTHER COUNTRIES AS WELL FULL TOP PRESIDENT ZELENSKYY OF UKRAINE HAS MADE REPEATED PLEAS TO ALLIES IN THE U.S. TO HELP UKRAINE OBTAIN THESE PATRIOT MISSILES TO REPLENISH ITS STOCKS IN TIME FOR WINTER. RUSSIA IS EXPECTED TO RAMP UP ATTACKS WHEN IT COMES TO ENERGY INFRASTRUCTURE COME SO TRYING TO GET IT BEFORE THAT. PRIME MINISTER ANDY BURNHAM SPEAKING IN A BLOOMBERG INTERVIEW IN KYIV MONDAY EVENING. WE DO HAVE A LOT OF GEOPOLITICAL NEWS GOING ON. WE ALSO HAVE THE SITUATION WITH IRAN, THE WAS TELLING IRAN'S TRADE PARTNERS TO CUT TIES OR FACE SANCTIONS. WE WILL WATCH THE IMPACT OF THAT WHEN IT COMES TO CRUDE MARKETS. THE OTHER THING WE ARE WATCHING CLOSELY, THE SITUATION WITH TREASURIES. GAINS ACROSS TREASURIES, A VERY PIVOTAL WEEK FOR THE WEST BOND MARKET. YIELDS ACROSS THE SESSION WERE PRETTY LOW ACROSS MATURITIES MONDAY. THE KEY QUESTION IS WHETHER TREASURY SECRETARY SCOTT BESSENT, WHAT HE WILL DO NEXT, THE DETAILS OF THE FINANCIAL INITIATIVE HINTED AT TO TACKLE THE BUDGET DEFICIT WOES. THE OIL SITUATION WITH IRAN AND SOME OF THE ECONOMIC PRESSURES WE ARE SEEING THE U.S. PRESS ON IRAN AND ITS TRADING PARTNERS, OIL IS PRETTY STEADY AT THE MOMENT COME A LITTLE BIT OF A GAIN ON NEW YORK TRADED OIL. A LITTLE BIT OF AGAIN WITH THE LIKES OF GOLD. PAUL: PERSON A TRUMP THREATENING TO RATCHET UP TARIFFS WITH MULTIPLE TRADE PARTNERS. MINMIN LOW IS IN HONG KONG AND WHITE HOUSE CORRESPONDENT JEFF MASON WITH JOINS US AS -- AS WELL AS DEREK. MINMIN, THE U.S. IS PLANNING TO IMPOSE 7.5% TARIFF ON CHINESE GOODS. WHAT WE KNOW ABOUT THIS? MINMIN: THIS IS ACCORDING TO WHAT SOURCES HAVE TOLD BLOOMBERG, NOT OFFICIALLY CONFIRMED BY THE WHITE HOUSE. SOURCES SAID THE U.S. IS LOOKING TO IMPOSE THESE TARIFFS AHEAD OF THE TRUMP SUMMIT UNDER SECTION 301 INTO CHINESE OVERCAPACITY. THE RESULT OF THAT INFESTATION WILL LIKELY BE PUBLISHED AHEAD OF THE SUMMIT. THIS WOULD BRING THE TOTAL TARIFFS UNDER TRUMP'S SECOND TERM TO 20%. IF YOU RECALL IT SEEMS LIKE SO FAR CHINA IS TOLERANT OF A 20% CEILING ON TARIFFS. THIS IS WHAT WAS AGREED UPON PREVIOUSLY IN KUALA LUMPUR AT THE SUMMIT LAST YEAR. SO FAR CHINA HAS NOT RESPONDED OR RETALIATED AGAINST ANY TARIFFS THAT DON'T GO ABOVE THAT CAMP. THIS IS POTENTIALLY SOMETHING THAT COULD HAPPEN ALTHOUGH THE EXACT RATES ARE NOT FINAL YET. ANOTHER OPTION IS THE TRUMP ADMINISTRATION MIGHT IMPOSE HIGHER TARIFFS AND THEN SUSPEND A PORTION OF IT AND ONLY IMPOSE 7.5 PERCENT. THIS SETS UP FOR THE TRUMP SUMMIT EXPECTED IN SEPTEMBER. HAIDI: IT GOES TO THE EXPECTATIONS OF A REACTION FROM BEIJING, RIGHT? THERE IS OBVIOUSLY A LOT OF NEGOTIATIONS AND A NEW WANTS TO BUILDING OF THIS RELATIONSHIP BEFORE WE GET TO THE SUMMIT. ," YES -- MINMIN: YES, AND I THINK EXPECTATIONS IN GENERAL ACCORDING TO PEOPLE I'VE BEEN SPEAKING WITH HAS BEEN PRETTY LOW, AT LEAST THE MAINTENANCE OF THE STATUS QUO. SOURCES HAVE TOLD US THE TWO SIDES ARE STILL LOOKING TO EXTEND THE TRADE TRUCE WHICH EXPIRES IN NOVEMBER. ONE OF THE LOW HANGING FRUIT FOR NOW AS A KEY DELIVERABLE WOULD BE THE BOARD OF TRADE FINALIZING THE GOODS THAT WOULD BE ELIGIBLE TO BE TARIFF FREE, SOME $30 BILLION WORTH OF GOODS THAT MIGHT GET EXEMPTIONS FROM TARIFFS. ON THE FLIPSIDE THIS ALSO MEANS EVERYTHING OUTSIDE OF THAT $30 BILLION OF GOODS WOULD BE IMPACTED BY TARIFFS. THIS IS COMING AT A TIME WHEN CHINA'S ECONOMY HAS BEEN PRETTY SLUGGISH EXCEPT FOR EXPORTS WHICH IS ONE OF THE ONLY BRIGHT SPOTS. THOSE TARIFFS WOULD BE HITTING AT ONE OF THE ONLY MORE RESILIENT PARTS OF THE CHINESE ECONOMY. THEN THERE ARE THE OTHER ISSUES LIKE THE TECH ISSUES, TAIWAN. THOSE WOULD LIKELY STILL BE DISCUSSED, BUT WE ARE NOT EXPECTING ANY BREAK OF THE SUMMIT. HAIDI: THAT IS MINMIN LOW. SCOTT BESSENT ALSO THREATENED ECONOMIC PUNISHMENT AGAINST ANY COUNTRY DOING BUSINESS WITH IRAN AS PART OF WHAT HE CALLED THE ECONOMIC D-DAY CAMPAIGN TO END NEARLY SIX MONTHS OF WAR. >> LET ME BE CLEAR, ANY ENTITY THAT FACILITATES MONEY LAUNDERING ON BEHALF OF IRAN WILL BE REMOVED FROM THE U.S. DOLLAR SYSTEM. THE CLOCK JUST STARTED TAKING. HAIDI: LET'S BRING UP BLOOMBERG WASHINGTON AND WHITE HOUSE CORRESPONDENT JEFF MASON. WE'VE BEEN WAITING FOR THE DETAILS OF THIS ECONOMIC PRESSURE CAMPAIGN. OBVIOUSLY IT IS LESS ABOUT PRESSURE THE U.S. CAN EXERT AGAINST IRAN AND MORE ABOUT WHAT IT CAN CONVINCE OTHER COUNTRIES TO DO. JEFF: IT CERTAINLY IS. THAT WAS A QUESTION SECRETARY BESSENT DID NOT ENTIRELY ADDRESSED TODAY. HE WAS ASKED SPECIFICALLY ABOUT CHINA AND HE GAVE A BROAD ANSWER, BASICALLY SAYING ANY COUNTRY THAT IS DOING BUSINESS WITH IRAN WILL FACE THESE TYPES OF CONSEQUENCES. HE DID NOT GET INTO THE SPECIFICS OF HOW THEY INTEND TO DEAL WITH CHINA ON THAT. THAT WILL BE ONE OF MANY THINGS THAT ARE ON THE LIST OF ISSUES THAT HANG OVER THE UPCOMING SUMMIT WE WERE TALKING ABOUT PREVIOUSLY. PAUL: IT BEGS A COUPLE OF QUESTIONS. WOULD'VE CHINA AND INDIA DON'T PLAY BALL ON THIS? AND IF THIS WAS SUCH A GOOD IDEA, WHY WASN'T IT DONE EARLIER? JEFF: I LIKE THAT LAST ONE. THAT IS ONE I WOULD LIKE TO ASK AS WELL. IF WE HAVE A CHANCE TO ASK THE PRESIDENT IN THE COMING DAYS I THINK SOMEBODY THEY CERTAINLY WILL. I WOULD LOVE TO HAVE A CHANCE TO DO THAT. THAT IS THE QUESTION. WE ARE IN THE MIDDLE OF A WAR THE PRESIDENT STARTED WITH ISRAEL EARLIER THIS YEAR THAT HAS HAD A BUNCH OF UNINTENDED CONSEQUENCES FOR HIM, POLITICALLY AND FOR THE UNITED STATES ECONOMICALLY. IT CERTAINLY DOES RAISE THE QUESTION OF IF THEY KNEW ALL ALONG THERE WAS AN ECONOMIC D-DAY OPTION, WHY IS NOT THE ONE THAT THEY WENT WITH? I THINK WE CAN PARSE SOME OF THE ANSWERS. NUMBER ONE, THE PRESIDENT HAS LOST HIS APPETITE FOR ADDITIONAL MILITARY STRIKES RIGHT NOW, BUT HE ALSO WAS NOT WILLING TO SAY WE'VE LOST. THAT'S REALLY NOT IN HIS VOCABULARY. AND HE IS NOT ANY POSITION BECAUSE OF THE STATUS OF THE NEGOTIATIONS WITH IRAN TO SAY NECESSARILY THE UNITED STATES HAS WON. WHICH DOESN'T MEAN HE WON'T SAY THAT AND HE HAS SAID THAT, BUT CLEARLY THE CONFLICT IS ONGOING. THIS IS THE NEXT STEP. IT IS A BROAD STEP. THE SECRETARY DID NOT HAVE A LOT OF SPECIFICS, THAT IS SOMETHING WE WILL BE FOLLOWING UP WITH THE NEXT -- IN THE COMING DAYS AS THE PRESIDENT HOLDS THESE CONVERSATIONS WITH FOREIGN LEADERS THAT SCOTT BESSENT REFERRED TO. HAIDI: WE ARE HEARING FROM THE PRESIDENT AT A RALLY SAYING THE U.S. IS BEATING IRAN VERY BADLY, THEY CANNOT HAVE A NUCLEAR WEAPON, GAS PRICES ARE GOING TO GO DOWN. AT THE SAME TIME WE ARE SEEING A CLEAR SHIFT OF FOCUS AWAY FROM MILITARY CONFLICT BACK TO THE TRADE WAR. IS THIS PART OF A CALCULATION IN TERMS OF GOING INTO THE MIDTERMS, THIS IDEA OF TRADE CONFLICTS AND BRINGING IT BACK TO BUILDING AMERICA BACK UP AGAIN IS GOING TO PLAY BETTER AT THE POLLS? JEFF: IF IT IS PART OF A CALCULATION, I'M NOT SURE IF IT IS PAYING OFF. THE TRADE WAR WITH CANADA WILL HAVE ANOTHER CONSEQUENCE OF BRINGING PRICES UP, CERTAINLY ON THOSE GOODS THAT WERE COMING INTO THE U.S. FROM CANADA THAT ARE NOW GOING TO BE TARIFFED GOING BOTH WAYS. YEAH, CERTAINLY THE MIDTERMS ARE AT THE VERY TOP OF THIS WHITE HOUSE'S AGENDA, IT IS A CRUCIAL ELECTION FOR REPUBLICANS WHO CURRENTLY HAVE POWER WITH ALL OF THE INSTITUTIONS IN WASHINGTON, INCLUDING BOTH HOUSES OF CONGRESS. THERE WAS A LOT ON THE LINE. BUT THE PRESIDENT "MAKE AMERICA GREAT AGAIN" THEME AND AMERICA FIRST STRATEGY HAS BEEN PART OF HIS STRATEGY SINCE HE GOT INTO OFFICE, AND IT CERTAINLY HOW HE GOT INTO OFFICE IN THE 2024 CAMPAIGN. I DON'T THINK YOU ARE WRONG TO SAY HE'S FOCUSING ON THAT, BUT I THINK THE UNINTENDED CONSEQUENCES WE WERE TALKING ABOUT WITH REGARD TO THE WAR ALSO WOULD BE INAPPROPRIATE THING TO TALK ABOUT WITH REGARD TO THE TRADE EXCHANGE WITH CANADA NOW. HAIDI: BLOOMBERG WASHINGTON AND WHITE HOUSE REPORTER JEFF MASON WITH THE LATEST. THE LATEST FRONT OF THIS TRADE WAR HAS BEEN CANADA. REPORTEDLY SET TO ANNOUNCE RETALIATORY TARIFFS TUESDAY AGAINST THE U.S. AFTER PRESIDENT TRUMP THREATENED TO DOUBLE LEVIES ON CANADIAN AUTOS TO 50%. CANADIAN PRIME MINISTER MARK CARNEY SAYS HE IS WILLING TO NEGOTIATE IF WASHINGTON CHANGES ITS APPROACH. >> THE GOAL OF OUR TRADE NEGOTIATIONS WITH THE UNITED STATES HAS ALWAYS BEEN TO GET THE BEST DEAL FOR CANADIANS, NEVER A DEAL AT ANY PRICE OR ON ANY TIMEFRAME. WE MADE PROGRESS AND WE DID MAKE SOME PROGRESS IN RECENT WEEKS. IN THE END, THAT MOMENTUM REVERSED. AND WE COULD NOT ACCEPT WHAT THE U.S. HAD OFFERED. NOR COULD WE GIVE WHAT THEY ASKED. HAIDI: LET'S BRING IN DEREK, OUR EXECUTIVE EDITOR FOR CANADA. GREAT TO HAVE YOU WITH US. IT'S A VERY STRONG LEG WHICH THAT WAS USED. THE ONE THAT STANDS OUT FOR ME IS PRIMA MR. CARNEY TALKING ABOUT THE ATTITUDE, THE DESTRUCTIVE ATTITUDE HE SEES COMING FROM WASHINGTON? DEREK: THAT'S RIGHT, THERE WAS KIND OF A TWOFOLD A MESSAGE TODAY. ONE WAS CARNEY SAID IT WAS CLEAR TO US THE TRUMP ADMINISTRATION REALLY WANTS TO CRUSH SEVERAL REALLY IMPORTANT INDUSTRIES FOR CANADA. ONE OF THEM BEING THE AUTOMOTIVE INDUSTRY, STEEL, ALUMINUM. HE USED STRONG LANGUAGE ON THAT. AT THE SAME TIME HE MADE IT CLEAR THEY WERE STILL OPEN TO NEGOTIATIONS. HE USED THAT "RIGHT ATTITUDE" LINE, IF THE AMERICANS BRING THE RIGHT ATTITUDE. WHAT IS THE RIGHT ATTITUDE IS IN HIS WORDS IS TO NOT TREAT CANADA AS A SUBSIDIARY OF THE UNITED STATES, TO TREAT IT AS A SOVEREIGN NATION AND AS A PARTNER AS IT HAS BEEN FOR DECADES. WE WILL SEE WHERE THIS GOES COME UP THERE IS NO INDICATION THAT TALKS ARE ABOUT TO RESTART. PAUL: DEREK COME IF THIS DOES ESCALATE, AND IT LOOKS LIKE IT WILL, WHAT IS THE LIKELY IMPACT ON CANADA? DOES MARK CARNEY HAVE THE PUBLIC SUPPORT TO GO DOWN THIS PATH? DEREK: RIGHT NOW HE DEFINITELY HAS THE PUBLIC SUPPORT. THERE WAS A WEEKEND POLL THAT SHOWED ABOUT THREE OUT OF FOUR CANADIANS SAY HE WAS RIGHT TO WALK AWAY FROM THE TRADE TALKS. ALL OF THE PROVINCIAL PREMIERS, THEY APPEAR TO BE BEHIND HIM. BUT OF COURSE CANADA HAS NOT REALLY FELT THE ECONOMIC PAIN OF THIS LATEST ROUND OF TARIFFS. THEY'VE ONLY BEEN IN EFFECT A FEW DAYS NOW. THE ESCALATION FROM TRUMP TODAY AGAINST THE AUTO SECTOR, PROPOSING 50% TARIFFS AGAINST CANADIAN AUTOS STARTING IN JANUARY, THAT WOULD RENDER EVERY CANADIAN AUTO PLANT BASICALLY UNABLE TO EXPORT INTO THE U.S. THAT WOULD BE EXTREMELY PAINFUL FOR JOBS AND INCOME, ESPECIALLY IN THE MIDDLE OF THE COUNTRY. WE WILL SEE HOW THE SUPPORT HOLDS UP. HAIDI: WHEN IT COMES TO THE LEVERAGE THE PRIME MINISTER HAS COME OBVIOUSLY THERE ARE KEY INDUSTRIES LIKE CRITICAL MINERALS, ENERGY. PRIME MINISTER CARNEY HAS BEEN CAUTIOUS ABOUT THIS IN THE PAST. DOES THE ADVERSARIAL RELATIONSHIP SUGGEST THIS IS ON THE TABLE? DEREK: I THINK HE IS GOING TO CONTINUE TO BE CAUTIOUS ABOUT USING OIL IN PARTICULAR AS A LEVER. THERE ARE A NUMBER OF TECHNICAL ISSUES WITH CURBING THE FLOW OF OIL OR TAXING IT. THAT IS A REALLY STRONG WEAPON THAT I THINK HE HAS EXPRESSED RELUCTANCE TO USE. I THINK WHAT YOU WILL SEE STARTING TOMORROW IS COUNTER TARIFFS THEY WILL APPLY TO CERTAIN U.S. PRODUCTS THAT ARE MADE IN THE U.S. AND POLITICALLY IMPORTANT AREAS OF THE U.S. IN SOME WAYS. HE IS ALSO SPENDING TIME TOUTING THE IMPORTANCE OF THE CANADIAN MARKET TO U.S. EXPORTERS. IT IS NOT LOST ON ANYBODY CANADA EXPORTS A LOT OF VEHICLES TO THE U.S. THE OPPOSITE IS ALSO TRUE, AND IN FACT CANADA IS THE BASE MARKET -- BIGGEST MARKET FOR THE U.S. IN A WHOLE BUNCH OF DIFFERENT CATEGORIES. SO CONSUMER BOYCOTTS AND COUNTER TARIFFS, I THINK THESE ARE THE TOOLS OF THE MOMENT PROBABLY WITHIN CANADA. PAUL: THAT IS OUR BLOOMBERG A EDITOR FOR CANADA. STILL, MARKET STRATEGY, BMO SAYING FOCUSED ON THE U.S. MUCH MORE AHEAD ON "THE ASIA TRADE." THIS IS BLOOMBERG. >> WE HAVE NOT BOUGHT A SINGLE BOND YET. THE NEXT TIME WE HAVE AN OPERATION IS SEPTEMBER 9. >> SCOTT BESSENT RESPONDING TO QUESTIONS ABOUT WHETHER HE WILL INCREASE BOND BUYBACKS IN THE NEAR FUTURE. FOR MORE ON THE OUTLOOK OF THE BOND MARKET, WE HAVE GARFIELD REYNOLDS SO WE ARE SORT OF IN A HOLDING PATTERN AT THE MOMENT, AREN'T WE? WE ARE WAITING FOR MORE DETAILS TO SEE WHAT SCOTT BESSENT CAN SAY AND DO IN TERMS OF ADDRESSING THE FUNDAMENTAL PROBLEM WHICH ARE THESE CONCERNS OVER THE BUDGET. >> THAT IS SOMETHING THAT WAS NOT ADDRESSED TODAY AND SCOTT BESSENT LAST WEEK SAID THAT HE WOULD BE COMING UP WITH FISCAL CONSOLIDATION PLANS. HE NAME CHECKED THE WHITE HOUSE BUDGET CHIEF THAT HE WAS WORKING WITH HIM ABOUT HOW TO DO THAT. THAT IS THE BIGGEST CONCERN FOR INVESTORS WHEN IT COMES TO LONG AND TREASURIES. INFLATION IS ALSO A CONCERN BUT THE BIGGEST CONCERN BY FAR IS THE FISCAL DEFICIT AND THE POTENTIAL THAT IT IS GETTING OUT OF CONTROL AND IT KEEPS ON GETTING LARGER WHILE THE TRUMP ADMINISTRATION DID TRY METHODS THAT IT SAID RESTRAINING THE BUDGET, THAT BEING TARIFFS ON THE REVENUE RAISING FRONT AND THE DOGE ATTEMPT ON THE OUTLAYS FRONT. NEITHER OF THESE HAVE DONE ANYTHING. MEANWHILE THAT CUTTING TAXES AND BOOSTING MILITARY SPENDING. UNTOUCHABLE PROGRAMS. EVER GREATER AMOUNTS OF DEBT. THAT IS A MAJOR CONCERN FOR INVESTORS ACROSS THE CURVE AND FURTHER AT THE CURB. SO FAR, SCOTT BESSENT HAS NOT DONE ANYTHING THAT COULD BE SEEN TO PERSUADE INVESTORS HE HAS GOT A HANDLE ON HOW TO RAIN THE SITUATION IN. >> IS NOT JUST THE U.S. GOVERNMENT ISSUING TREASURIES OR BONDS BUT THE CHIPMAKERS AS WELL GETTING VERY ACTIVE ALSO. WE SAW A SELLOFF IN TECH IN THE U.S. HOW MUCH OF THIS IS TO DO WITH NVIDIA PRICE INCREASES OR IS IT TO DO WITH ALL OF THIS AND WHERE ARE WE HEADING? >> THIS IS ALL PLAYING A ROLE ALONG WITH THE POLICY UNCERTAINTY BUT THE BIGGEST DIFFICULTY IS THAT YOU HAVE A PARABOLIC RUN-UP IN THE AI TRADE OF VARIOUS STRIPES. IT WAS ABOUT THE SO-CALLED HYPERSCALERS. IT WAS ABOUT THE PICKS AND SHOVELS. MACRON, TSMC COMPANIES THAT MAKE THE CHIPS THAT GO INTO THE BITS THAT GO INTO THE NVIDIA CHIPS AND DATA CENTERS. ALL OF THOSE SWORD. PROFIT EXPECTATIONS ARE VERY GENEROUS. WE START TO SEE A SLOWDOWN IN THE GROWTH RATE. INVESTORS HAVE TO READJUST THEIR EXPECTATIONS FROM WHERE PROFITS ARE GOING TO GO AND WE HAVE SAID CASH FLOW BEING USED UP AND COMPANIES TURNING TOWARDS DEBT. THAT RINGS ALARM BELLS BECAUSE WHEN THE BUBBLES POP AND THERE'S BEEN LOTS OF CONCERN THAT THE BOOM, HOWEVER JUSTIFIABLE SOME OF IT HAS BEEN, DOES LOOK A LOT LIKE AN HISTORIC BUBBLE. WHEN BUBBLES BURST, DEBT IS OFTEN AT THE HEART OF IT. THAT IS A BIG ISSUE AND INDEED, THERE IS AN INTERRELATED CONCERN WHICH IS ONE OF THE THINGS THEY ARE HOPING TO DRIVE DEBT HIGHER GLOBALLY. OUR CONCERNS ABOUT INFLATION, HOW DO YOU REIGN IN INFLATION? YOU GET CENTRAL BANKS TO HIKE RATES. TRADITIONALLY THE KEY WAY THAT BUBBLES POP, THAT IS WHAT HAPPENED WITH THE.COM BOOM AND WHAT HAPPENED WITH THE HOUSING BOOM. THAT I THINK IS LURKING IN THE BACKGROUND FOR TECH COMPANIES THAT AT SOME STAGE HIGHER INTEREST RATES BOTH AT THE SHORT END AND THE LONG AND ARE GOING TO ADD TO THE BURDEN AS THOSE PROFIT EXPECTATIONS START TO ROLL OVER. PAUL: THE DARK SHADOW IN THE CORNER COULD BE HISTORY. GARFIELD REYNOLDS, THANK YOU. TIME NOW TO LOOK AT SOME MORNING BECAUSE AHEAD OF THE ASIA TRADING DAY. INTEREST RATE STRATEGISTS AT GOLDMAN SACHS AND WELLS FARGO SAY THE U.S. TREASURY DEPARTMENT'S BOND BUYBACKS WILL DO LITTLE TO REVERSE THE JUMP IN THE LONG-TERM YIELDS. THEY SAY THE STEPS WILL BE INEFFECTIVE UNLESS WASHINGTON ADDRESSES CONCERNS ABOUT THE BUDGET DEFICIT AND INFLATION PRESSURES PUSHING RATES HIGHER. KELSEY BARROW SAYS ANXIETY ABOUT HEAVY SUPPLY IN THE BOND MARKET MIGHT BE OVERBLOWN. HE SAYS THE U.S. INVESTMENT GRADE MARKET FACES A BUSY SEPTEMBER WITH ISSUANCE EXPECTATIONS IN THE RANGE OF 170 FIVE TO 250 BILLION DOLLARS. SHE SAYS DEMAND HAS KEPT PACE WITH ISSUANCE WITH RETAIL DEMAND AT THE HIGHEST SINCE 2010. >> INVESTORS SHOULD BE SELECTIVE. AND WALSH TOLD US MORE ABOUT WHY THEY SEE HIGHER TREASURY YIELDS AS A POTENTIAL BUYING OPPORTUNITY. >> HERE WE ARE IN A TRAINING REACH ON THE 10 YEAR AND AT THE LOW END, WE HAVE BEEN THE HEIGHT -- IN THE HIGH THREES AND AT THE HIGH-END, AT 475. THAT IS PRETTY MUCH THE HIGH-END OF OUR RANGE. IF WE SEE 5% ON TREASURIES ON THE 10 YEAR, I WOULD TELL YOU THAT IS A BUYING OPPORTUNITY. I THINK THE MARKETS ARE NOT ABLE, PARTICULARLY THE EQUITY MARKETS ARE NOT ABLE TO FUNCTION AS WELL BEYOND THAT AND I DO BELIEVE IT TIGHTENS FINANCIAL CONDITIONS. THE 30 YEAR HAS TRADED MORE ON INFLATION CONCERNS. I DON'T SEE US GOING TO 6% ON THE 30 YEAR AND IF IT DOES, I WOULD TAKE THE OPPOSITE OF YOU AND I WOULD BACK UP THE TRUCK AND I WOULD BUY A LOT OF THIRTY-YEAR TREASURIES. AT THIS POINT IN TIME, WHAT WE ARE ALSO SEEING -- I SAID STRATIFICATION EARLIER. WE ARE SEEING THAT ALSO IN THE PULL-UP. ANOTHER FACTOR THAT IS HAPPENING AND THAT IS THE SHEER AMOUNT OF DEBT THAT IS BEING ISSUED NOT JUST AT THE TREASURY LEVEL FROM FISCAL SPENDING BUT ALSO BECAUSE OF DATA CENTERS AND AI TRADE, THE AI TRADE THAT IS HAPPENING AT THIS POINT IN TIME. AS A RESULT, WE ARE SEEING A VERY SIGNIFICANT AMOUNT OF NEED FOR CAPITAL AND THEY WANT TO ISSUE IN THE LONG END WHICH IS PULLING RATES UP. >> DO YOU WANT TO INVEST IN THAT DEBT COME A LONG DURATION HYPERSCALER DEBT OR DO YOU SEE THAT IS POTENTIALLY MORE TOXIC THAN U.S. GOVERNMENT DEBT SHOULD THINGS TURN SOUTH? >> I THINK THERE ARE OTHER PARTS OF THE INFRASTRUCTURE TRADE THAT MAKE A LOT MORE SENSE. POWER BILL DOWN OF LONG-TERM REAL ASSET INVESTING. MY CONCERN ABOUT THE DATA CENTER BUILDOUT AND THE COST OF THAT IS THE OBSOLESCENCE RISK IN THE LONG TERM. I AM SELECTIVELY AN INVESTOR IN SHORTER DURATION OFFERINGS BUT WE HAVE TO BE THOUGHTFUL BECAUSE THE AI OFFERINGS THAT ARE COMING OUT IN THE CAPITAL MARKET ARE NOT JUST ONE PLACE. THEY ARE AN UNSECURED INVESTMENT GRADE CREDIT, STRUCTURED CREDIT. THEY ARE IN INFRASTRUCTURE. YOU HAVE TO BE REALLY THOUGHTFUL TO MAKE SURE YOU ARE GETTING THE RIGHT AMOUNT OF DIVERSIFICATION. PAUL: THAT IS GUGGENHEIM'S CIO AND WALSH SPEAKING ON BLOOMBERG SURVEILLANCE. MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. ♪ PAUL: LET'S TAKE A QUICK LOOK AT THE OIL PRICE AFTER THE U.S. TELLS IRAN'S TRADING PARTNERS TO CUT TIES OR FACE SANCTIONS. WE ALSO HEARD FROM SINOPEC SAYING CHINA'S OIL DEMAND LIKELY PEAKED LAST YEAR SO WE HAVE CRUDE STABILIZING. BRENT AT 92 POINT 17 A BARREL. MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. ♪ HAIDI: A LOT AT PLAY AT THE MOMENT IN GEOPOLITICS TWO ALSO THE TREASURY MARKETS. I THINK IT WHEN IT COMES TO THE TREASURY MARKET WE ARE WAITING FOR SCOTT BESSENT TO GIVE MORE DETAILS OR SAY MORE IN TERMS OF HOW HE WANTS TO ADDRESS WHAT INVESTORS ARE TRULY WORRIED ABOUT, WHICH IS THE BUDGET SITUATION. WE DID NOT GET ANY SORT OF DETAILS OR SIGNALS ON HOW HE PLANS TO REVAMP THE DEBT MANAGEMENT SITUATION. THERE WAS A REPORT THAT THEY WOULD DEFEND BUYBACKS OF HIGH-YIELD SECURITIES. WE DID NOT GET ANY MORE DETAILS OTHER THAN SAYING WE HAVE NOT BOUGHT A SINGLE BOND YET. THE 30 YEARS ARE DOING A WHOLE LOT OF NOTHING AT THE MOMENT. S&P FUTURES LOOKING REMARKABLY POSITIVE AFTER A CHALLENGING DAY. EVEN AS WE HAD A PULLBACK ON OIL PRICES WE DID SEE THE TEXT SELLOFF REMAIN PERVASIVE. THAT WILL PLAY THROUGH WHEN WE GET TO THE START OF TRADING IN ASIA. PAUL: A DESCRIPTION OF THE BUYBACKS, FINANCIAL REPRESSION OF THE WEST DOLLAR. IT IS INTERESTING WATCHING THIS PLAY OUT. ALSO INTERESTING THE LATEST ON IRAN. WE WERE ANTICIPATING SOMETHING FROM SCOTT BESSENT AND SOMETHING WE GOT, TELLING IRAN'S TRADING PARTNERS TO CUT TIES OR FACE SANCTIONS. IT HAS PUT SOMETHING OF A FLOOR ON CRUDE PRICES, CRUDE AT 85.17. SANCTIONS ON 60 IRANIAN ENTITIES THAT WOULD TARGET GOLD OIL AVIATION SHIPPING, TECHNOLOGY ECONOMIC ASPHYXIATION IS ANOTHER DESCRIPTOR SCOTT BESSENT USED STRIKING THE APPROACH TO IRAN. ALSO NEWS FLOW ON THE U.S. APPROACH TO TRADE WITH CHINA. 7.5 TO REV COMING ON CHINESE GOODS, -- 7.5% TARIFF COMING ON CHINESE GOODS, JUST AHEAD OF PRESIDENT XI'S TO THE U.S. NEXT MONTH. HAIDI: THAT WOULD RESTORE HER SECOND TERM TARIFFS TO AROUND 20 PERCENT, STILL CONSISTENT WITH THE TRADE TRUCE ACCORDING TO BEIJING PREVIOUSLY. LET'S BRING IN THE CHIEF MARKET STRATEGIST AT BMO MANAGEMENT. NOT ONLY DO WE STILL HAVE WAR IN THE MIDDLE EAST THAT IS STILL UNRESOLVED. IT SEEMS WE HAVE THE TRUMP ADMINISTRATION SHIFTING ITS FOCUS BACK TO THE TRADE WAR AS WELL FULL STOP HOW DOES THIS IMPACT INVESTORS? ARE YOU SEEING THE IMPACT ON SENTIMENT YET? CAROL: I DEFINITELY THINK IT IS IMPACTING THE QUESTIONS THAT WE HAVE, NOT ONLY THE TRADE ISSUES WITH CHINA ALSO WITH CANADA AND WHAT'S GONE ON OVER THE WEEKEND. THE INTERESTING THING IS FROM AN INVESTMENT STANDPOINT WE ARE JUST COMING OFF THIS GANGBUSTERS EARNINGS SEASON WHERE WE HAD LOTS OF ECONOMIC DATA OF THAT WAS SUPPORTIVE OF SUPER STRONG EARNINGS. NOW WE ARE IN THIS NEVER NEVER PERIOD UNTIL AFTER LABOR DAY, LIGHT WEEKS, LIGHT TRADING VOLUME, LIGHT MARKET SCENARIOS OTHER THAN THE FACT YOU HAVE A BIG NVIDIA ANNOUNCEMENT THIS WEEK AND JACKSON HOLE AT THE END OF THE WEEK. BIG EVENTS, BUT WITH LIGHTER VOLUME IT CAN TEND TO PUSH THE MARKETS AROUND. CLIENTS START OPENING THE WORRY CLOSET, BRINGING OUT ALL OF THESE THINGS TO FOCUS ON. TARIFFS, INFLATION, THERE'S A LONG LIST OF THINGS THAT PEOPLE WILL BUFFETT THE MARKETS AROUND. BECAUSE NOW THAT WE'VE SET ASIDE EARNINGS FOR A WHILE. HAIDI: WITH WHAT IS GOING ON WITH THE LONG END BOND YIELDS, TREASURY YIELDS A PARTICULAR, HOW MUCH DO WE SEE THAT PLAY THROUGH? YOU ARE STILL OVERWEIGHT GROWTH, NOT JUST AI, AND PREDOMINATELY IN THE U.S. DOES THE BOND MARKET TELL YOU CAREFUL REBALANCING NEEDS TO HAPPEN NOW? CAROL: DEFINITELY INVESTORS FOR THE VERY LONG TIME -- VERY FIRST TIME IN A LONG TIME CAN DO SOME REBALANCING IN ORDER TO KEEP THEIR PORTFOLIO ALLOCATION WHERE IT NEEDS TO BE. GILLOOLY STOCKS HAVE GROWN AGAIN THIS YEAR, DOUBLE DIGITS FOUR YEARS RUNNING NOW -- CLEARLY STOCKS HAVE GROWN AGAIN THIS YEAR. IT IS IMPORTANT TO ASSESS WHY THOSE LONG BONDS ARE GOING UP. THERE'S A VARIETY OF REASONS. ONE OF THEM IS GROWTH IS STRONG. THAT IS WHERE THE LONGEST END OF THE BOND IS GOING UP, ALONG WITH THE EXTRA SUPPLY THAT YOU'VE GOT COMING IN. THE BOND MARKET IN GENERAL TENDS TO TAKE IT BETTER IF WHAT IS PUSHING THE YIELDS UP HIS ORGANIC GROWTH, AND WE ARE SEEING THAT. PAUL: WHERE YOU PLACE THE RISK OF SEEING A CORRECTION IN EQUITIES, PARTICULARLY IN THE U.S. BEFORE THE END OF THE YEAR? WE HAVE AI BORROWING, SPENDING RAMPING UP. AND IF YOU SAW THAT, WOULD YOU BUY THE DIP? CAROL: AS LONG AS THE FUNDAMENTALS PLAY OUT LIKE THEY ARE TEED UP, YES. WE'VE HAD A LONG TIME SINCE WE'VE HAD A PULLBACK. WE HAVEN'T EVEN HAD A 10% PULLBACK, WHICH TENDS TO HAPPEN EVERY YEAR OR SO. THERE'S LOTS OF CHARTS THAT WE USE THAT SHOW EVEN IN VERY STRONG UP YEARS YOU HAVE A NATURAL PULLBACK IN HERE. LAST YEAR WE HAD IT, RELATED TO THE LIBERATION DAY TARIFFS. THIS YEAR WE HAD A PULLBACK WITH THE WAR STARTED BUT NOWHERE NEAR AS SEVERE AS THE ONE A YEAR AGO, EVEN THOUGH ON THE SURFACE WE'VE HAD A LOT OF INDIVIDUAL SECTORS AND STOCKS THAT HAVE HAD SEVERE CORRECTIONS THIS YEAR THAT HAVE ALLOWED THE OVERALL MARKET TO BE UP. IT WOULD NOT BE SURPRISING TO SEE SOME SORT OF PULLBACK. PAUL: POTENTIALLY LINKED TO THE DEBASEMENT TRADE AS WELL FULL TOP IS THAT SOMETHING YOU ARE LOOKING AT? AS THE U.S. DOLLAR WEEKENDS, DO YOU LOOK AT GOLD AND EMERGING CURRENCIES AND YOU LOOK AT CRYPTO PERHAPS -- AS THE U.S. DOLLAR WEAKENS? CAROL: CRYPTO YOU WERE STILL TRUMP TO FIGURE OUT WHAT SORT OF ASSET IS IT. IT IS CLEARLY PLAYING IN HERE AS INVESTORS ARE LOOKING AT THE DEBASEMENT TRADE. GOLD IS PROBABLY FOR THOSE WHO CAN'T SLEEP AT NIGHT BECAUSE OF GEOPOLITICAL RISK AND OTHER THINGS, PROBABLY HAS A PLACE IN SOME PORTFOLIOS. BUT WHAT I WOULD BE CAREFUL ABOUT IS CALLING IT A DEBASEMENT TRADE, SIMILAR TO THE FACT WE DID NOT NECESSARILY -- YOU EVEN SAW THE DOLLAR REBOUND, SOME SAYING THEY WERE LOOKING FOR HAVENS, SO THE DOLLAR WAS STILL THE BET. PAUL: WE HAVE A VERY IMPORTANT SPEECH AT THE END OF THE WEEK. KEVIN WARSH IS GOING TO BE ADDRESSING JACKSON HOLE. HE HAS EXPLICITLY SAID DON'T EXPECT ANY FORWARD GUIDANCE. WHAT IS THE BEST YOU CAN EXPECT FROM THE SPEECH IN TERMS OF WHAT IS HAPPENING WITH INFLATION AND POTENTIAL REACTION TO WHAT SCOTT BESSENT IS DOING IN THE BOND MARKET? CAROL: I'M NOT SURE WE WILL GET MUCH OF THAT. CLEARLY I'M NOT SURE IT WILL BE A NORMAL PRESS CONFERENCE FOR IT IS A SPEECH, NO Q&A AFTERWARDS. HOPEFULLY IDEALLY WE WOULD GET A LITTLE INSIGHT INTO ANY PROGRESS HE COULD SHARE ABOUT WHAT THEY ARE WORKING ON. YOU KNOW THEY ARE TALKING ABOUT THE IMPACT OF AI, COMMUNICATIONS, TALKING ABOUT POTENTIAL DATA SETS, CHANGING UP THE DATA SETS THE FED LOOKS AT. I KNOW HE HAS GIVEN THEM UNTIL THE END OF THE ARE IDEALLY TO WRAP IT UP BUT HE'S ALSO SAID HE HOPED SOME OF THE WORK WOULD BE DONE BY THIS FALL, SO HOPEFULLY HE COULD GIVE US A LITTLE PEEK INTO THAT PROGRESS. THAT WOULD BE GREAT. PAUL: CAROL, CHIEF MARKET STRATEGIST AT BMO WITH MANAGEMENT, THANK YOU SO MUCH FOR YOUR ANALYSIS. LET'S LOOK AHEAD TO THE OPENING KOREA. AT THE TOP OF THE HOUR. PERHAPS UNSURPRISINGLY, SING A LITTLE WEAKNESS IN FUTURES, THE TEXT SELLOFF PRETTY HARD IN THE U.S. SESSION, SAMSUNG ELECTRONICS DOWN ABOUT 2% PREMARKET, SK HYNIX OFF ABOUT 2.5%. ASIA TRADERS WILL BE PRICING IN A PRETTY SHARP FALL IN CHIP STOCKS AFTER WHAT WE SAW IN THE WAS MARKETS, STILL DIGESTING NVIDIA'S PLANNED PRICE HIKES. FOR MORE ON WHAT TO EXPECT, LET'S GET TO MARKETS REPORTER ANTHONY STEPHENS. SAFE TO ASSUME IT WILL BE RISK OFF ASIAN CHIP STOCKS TODAY? ANTHONY: IT IS INTERESTING BECAUSE ASIA LED THE WAY LOWER YESTERDAY. THE KOSPI CLOSED DOWN THREE. SOME OF THAT WAS ALL AROUND THE SAMSUNG SHAREHOLDER. ALSO SK HYNIX CAUGHT UP ON THE DOWNSIDE OF THOSE CONCERNS. NOW IT IS WHETHER CHIPMAKERS CAN PASS ON THE SUPPLIER COSTS TO NVIDIA, GIVEN THE FACT NVIDIA WAS ONLY ABLE TO RAISE PRICES 15%. THAT IS A LOT LESS THAN SOME OF THESE CHIP PRICES ON THE NAND SIDE AND D RAM AND OTHER SIDES HAD GONE UP. NVIDIA IS EATING SOME OF THESE PRICE INCREASES. HOW LONG THAT CONTINUES IS THE QUESTION THAT MARKETS ARE PRICING. WE SAW A SHARP DIVERGENCE OF OVERNIGHT WITH HYPERSCALERS OUTPERFORMING CHIPMAKERS. IT WAS NOT A TECH ON, TAKE OFF STORY IN THE U.S., IT WAS THE FACT THE CUSTOMERS OF THE CHIPS WERE OUTPERFORMING AS THEY LOOK LIKE THEY ARE STARTING TO GET SOME COST PRESSURE BACK. THE SELLERS OF CHIPS UNDERPERFORMED AS IT LOOKS LIKE THEY ARE UNABLE TO PASS ON MORE OF THESE PRICE INCREASES GOING FORWARD. THE LIKES OF MACRON TRADING QUITE SHARPLY LOWER, AND THAT IS OBVIOUSLY WITH KOREA GIVEN ITS PREDISPOSITION ON THE MEMORY SIDE OF THINGS. WE WILL SEE HOW MUCH FURTHER SK HYNIX FALLS. IT IS INTERESTING TO NOTE THE PREMIUM AND SK HYNIX HAS COLLAPSED AROUND 49% TO 29% TODAY. EVEN THOUGH THE HEADLINE HAS NOT MOVED MUCH, THE PREMIUM AND IN PLAY HAS COME OFF SHARPLY. MAYBE U.S. RETAILERS ARE GIVING UP ON SK HYNIX WILL ALSO WE ARE SEEING SIGNIFICANT OUTFLOWS FROM SPECIFIC ETF'S LIKE DRAM. THERE IS A LITTLE BIT OF DELEVERAGING ON THE SEMICONDUCTOR TRADE. ALL OF THAT IS IMPORTANT GOING INTO THE NVIDIA EARNINGS. NVIDIA IS DOWN SEVEN DAYS IN A ROW, PUNCTUATING THAT DROP YESTERDAY. HAIDI: IN TERMS OF WHAT WE ARE SEEING WITH THE CASH FLOW SITUATION FOR THE HYPERSCALERS, ARE THINGS STARTING TO TURN? ANTHONY: THEY ARE REPORTING MORE INCOME WHILE DOING A LOT MORE CAPEX. THE NET CASH FLOW SITUATION HAS PROBABLY NOT CHANGED. THEY ARE BRINGING IN CASH MONEY. THE CUSTOM CHIP INDEX, THE CUSTOM CHIP INITIATIVE FROM THE LIKES OF GOOGLE, ALPHABET, MICROSOFT, THEY CONTINUE TO GAIN PACE. A LOT OF ESTIMATES THAT CUSTOM DEMAND CHIP DEMAND IS CATCHING. THAT IS A MEGATREND IN THE CHIP WORLD THAT WE NEED TO START WATCHING. WHO MAKES THE CHIPS FOR THESE HYPERSCALERS IS DRASTICALLY DIFFERENT FROM WHO MAKES THE CHIPS FOR NVIDIA. THAT ENTIRE SUPPLY CHAIN WILL BE IN PLAY WITH THE MEMORY DEMANDS OF THOSE CHIPS ALSO QUITE DIFFERENT FROM NVIDIA CHIPS. THERE WAS A LOT MORE HOMEWORK THE STREET NEEDS TO DO TO MAKE SENSE OF HOW THE HYPERSCALERS ARE MOVING FORWARD IN THE BACK HALF OF THIS YEAR. HAIDI: ANTHONY STEPHENS THERE. MORE AHEAD ON "THE ASIA TRADE." THIS IS BLOOMBERG. ♪ HAIDI: WE ARE ROUNDING OUT THE EARNINGS SEASON. WHAT HAS BEEN INTERESTING IS THE DIVERGENCE BETWEEN HOW THE BANKS HAVE PERFORMED VERSUS HOW THE MINERS HAVE PERFORMED AND THE IDIOSYNCRASIES. DEMAND IS INTERESTING BECAUSE THE CLASSIC TRADERS OF IRON ORE IS CHINA. WE KNOW WHAT THE SLOWDOWN IN THE OLD ECONOMIES OF CHINA, DEMAND HAS BEEN DIMINISHING AS WELL FOR TOP IRON ORE STILL A KEY COMPONENT FOR THE LIKES OF BHP AND RIO TINTO. WITH THE LIKES OF BHP, IS IT A COPPER MINER NOW? FOR THE FIRST TIME THEY ARE GETTING MORE REVENUE FROM THE COPPER BUSINESS. PAUL: COPPER OF THE NEW MINOR -- THE NEW IRON ORE. INTERESTING TIMING. DIFFERENT STORY FOR THE BANKS. REALLY DIVERGING. IS IT AN IDIOSYNCRATIC STORY, IS IT A RATES RISING CHANGES TO THE PROPERTY MARKET TAX REGIME, NOBODY WANTS TO BUY PROPERTY AT THE MOMENT STORY? THERE ARE NUMBER OF STORIES DEPENDING ON WHICH BANK WE ARE TALKING ABOUT. ENERGY STOCKS HAVE BEEN PERFORMING SOMEWHAT DIVERT GENTLY IN AUSTRALIA AS WELL. WE JUST HEARD ABOUT FIRST-HALF PROFIT JUMPING 27% AS MIDDLE EAST SUPPLY SHOCKS PUSHED OIL HIGHER AND LNG PRICES, WHICH SHOULD OFFSET LOWER PRODUCTION. WE HAVE MORE NOW FROM MELBOURNE. TELL US ABOUT THE KEY TAKEAWAYS FROM THIS EARNINGS REPORT. >> GOOD MORNING, PAUL. AS YOU MENTIONED, WE SAW NET INCOME RISE 27% IN THE SIX MONTHS TO JUNE, WHICH WAS A BIT OF A SURPRISE. IT WAS HIGHER THAN ANALYST ESTIMATES. A BIT OF AN EXCITING SUPPLIES -- SURPRISE FOR WOODSIDE. IT REALLY GOES TO SHOW THIS PROLONGED IMPACT OF THE WAR IN IRAN AND HOW WE ARE SEEING THAT PLAY OUT IN THESE COMPANIES HERE IN AUSTRALIA. HAIDI: WHAT ARE THE MAIN THINGS THAT THE MARKET WAS WATCHING FOR IN THIS SET OF EARNINGS? >> I WOULD SAY THAT PROBABLY THE KEY PROJECT THE MARKET WAS CLEARLY PAYING ATTENTION FOR THIS TIME AROUND WAS THE LOUISIANA LNG PROJECT. IT IS THE COMPANY'S FIRST PROJECT OFFSHORE OF ITS KIND AND WE REALLY SAW SOME HIGH SPENDING OF IT IN THE LAST COUPLE OF MONTHS. THAT HIGH SPENDING REALLY SAW WOODSIDE'S CREDIT RATING FALL QUITE A BIT. I THINK WHAT WE WILL CONTINUE TO SEE LOOKING FORWARD IS THIS PROCESS OF TRYING TO SECURE A NEW -- NEW PARTNERS FOR THAT PROJECT. PAUL: WHAT IS NEXT FOR WOODSIDE THEN? ANY LINGERING QUESTIONS THAT MIGHT BE EXPECTED ON THE ANALYST CALL? >> ABSOLUTELY. OTHER THAN THE ONGOING EQUITY SELL DOWN PROJECT WITH THE LOUISIANA LNG PROJECT, BROWN'S REMAINS A QUESTION MARK. THIS IS REQUIRED TO FEED GAS INTO WOODSIDE'S NORTHWEST SHELF EXPORT PROJECT. BUT THERE ARE LINGERING QUESTIONS IN TERMS OF REGULATION, THIS BEING SOME LATENT QUESTIONS IN AUSTRALIA ABOUT WHETHER THEY ARE POTENTIALLY COULD BE AN EXPORT -- SORRY, A TAX ON GAS EXPORTS WHICH WOULD HAVE MAJOR REPERCUSSIONS FOR THE PROJECT. THERE ALSO HAS BEEN LEGAL CHALLENGES AND ACTIVIST PUSHBACK TO BROWSE WHICH IS A QUITE CARBON INTENSIVE PROJECT COMPARED TO OTHER SIMILAR PROJECTS AROUND THE WORLD. IF WE SAW ANY OF THOSE CHALLENGES GAIN ANY PARTICULAR SPEED, THAT COULD POSE A BIG ISSUE FOR THE COMPANY HAIDI:. BLOOMBERG'S AUSTRALIA ENERGY REPORTER FROM MELBOURNE. SOME OTHER ENERGY REPORTING'S WE ARE SHOWING, PDD SHARES CLOSED LOWER AFTER THE OWNERS OF SECOND QUARTER SALES MISSED ESTIMATES. ADJUSTED EARNINGS OF 19.33 PER U.S. SHARE COMFORTABLY BEAT PROJECTIONS. PDD IS FACING GLOBAL REGULATORY PRESSURE INCLUDING OVER THE QUALITY OF GOODS AVAILABLE ON TEMU. THEY EXPECT VEHICLE DELIVERIES OF 121 THOUSAND UNITS COMPARED WITH ANALYST FORECASTS OF 147,000. THE ROBOT UNIT PLANS TO RAISE 900 MILLION DOLLARS FROM INVESTORS INCLUDING ALIBABA AND TENCENT, BOLSTERING ITS PUSH INTO HUMANOIDS. MORE AHEAD ON THE ASIA TRADE, THIS IS BLOOMBERG. ♪ PAUL: LET'S GET THE LATEST FROM THE CORPORATE FRONT. THE U.S. SEC IS OVER THE HEAD FRENCH SITUATIONAL AWARENESS, SOURCES SAY IT IS SEEKING INFORMATION ABOUT TREATING ACTIVITY AT THE HEDGE FUND WHICH CAME UNDER PRESSURE LAST MONTH. SITUATIONAL AWARENESS LIQUIDATED SOME POSITIONS AMID A BARRAGE OF CALLS IN THE AR STOCK RUN BEFORE CITADEL STEPPED INTO BY THE BULK OF ITS A BIT. TAIWANESE PROSECUTORS HAVE INDICATED A SENIOR NVIDIA MANAGER IS PART OF A GROUP THAT SMUGGLED ADVANCED AI CHIPS INTO CHINA. SOURCES SAY TWO SENIOR EMPLOYEES WERE ALSO INDICTED, AND CONFUSED -- ACCUSED OF ORGANIZING THE SHIPMENT OF 74 SERVERS CONTAINING THE BE 300 SERVERS INTO JAPAN AND INDONESIA IN BREACH OF U.S. TRADE RESTRICTIONS. HAIDI: SOUTH KOREA'S CULTURAL EXPORTS HAVE BECOME A GLOBAL PHENOMENON FROM K-POP, TO TV DRAMAS AND MOVIES. AS AI RESHAPES INDUSTRIES AROUND THE WORLD, ONE INDUSTRY IS BETTING ROBOT IDOLS COULD BE THE NEXT EVOLUTION OF K-POP. >> AS MUCH AS SAMSUNG AND SK HYNIX HAVE THRUST SOUTH KOREAN MARKETS INTO THE MEDIA, K-POP GROUPS AND SHOWS LIKE SQUID GAME . MUSIC, FILMS, VIDEO GAMES AND OTHER CULTURAL INDUSTRIES GENERATED OVER $113 BILLION IN REVENUE LAST YEAR, AND MORE THAN $15 BILLION IN EXPORTS. THEY EMPLOY ABOUT 690,000 WORKERS, MORE THAN DOUBLE THE COMBINED NUMBER OF THE MEMORY CHIP ENTRANCE. THE ENTERTAINMENT SECTOR HAS GROWN MORE EXPERIMENTAL AND AMBITIOUS AS COMPETITION INTENSIFIES. ONE STARTUP LOOKING TO DISRUPT K-POP'S TRADITIONAL SYSTEM IS GALAXY CORPORATION LOOKING TO BLEND AI CHARACTERS AND LIFE-SIZE ROBOT IDLES TO CREATE CONTENT WITHOUT THE LIMITATION OF HUMAN PERFORMERS. THE CEO SAYS THEY ARE NOT LOOKING TO REPLACE PEOPLE BUT CREATE NEW IP. >> ROBOTS CAN LEARN EVERYTHING AT ONCE AND IMMEDIATELY PERFORMED FOR PEOPLE, WHEREAS IT MIGHT TAKE A PERSON A MONTH OR TWO TO LEARN. ONCE TRAINING IS COMPLETE, THERE'S NO NEED TO DO IT AGAIN SO WE CAN IMMEDIATELY HAVE A ROBOT TRAINEE DEBUT IN NEW YORK. IT DOES NOT REQUIRE 3, 5 OR 10 YEARS OF PREPARATION. HUMANS NEED THAT'S HOW AEI -- THAT'S HOW AI IS CHANGING EVERYTHING. REPORTER: HIS CURRENT ROSTER INCLUDES K-POP SUPERSTAR G DRAGON, AN ACTOR FROM THE FILM PARASITE AND THE SAN FRANCISCO GIANTS RIGHT-HANDER. THERE'S A ROBOT PARK IN SEOUL WHERE VISITORS CAN INTERACT WITH 50 DIFFERENT TYPES OF ROBOTS. HE PLANS TO OPEN NEW ROBOT THEME PARKS AND OTHER CITIES INCLUDING DUBAI. THEY ARE PARTNERING WITH UNIT TREE, CHINA'S FIRST PUBLICLY TRADED HUMANOID MAKER. >> EVEN IF THE ROBOT IS MADE IN CHINA, COMBINING IT WITH SOFTWARE MADE IN KOREA AND JOINING FORCES TO GO GLOBAL HOLDS SIGNIFICANCE. I BELIEVE ROBOTS WILL BECOME PART OF PEOPLE'S LIVES AS INNOVATIONS ARE RELEASED INCLUDING SPECIAL EDITIONS OF THEIR FAVORITE CELEBRITIES THEY CAN COLLECT. REPORTER: WELL GALAXY IS SHOWCASING ONE OF THE FIRST REAL WORLD USE CASES FOR THESE ROBOTS, HE SAYS DISCUSSIONS ON GLOBAL GUIDELINES NEED TO TAKE PLACE. >> AI IS ALREADY PART OF OUR LIVES. WHAT A SOMEWHAT DISAPPOINTING IS THAT WE DON'T GET GLOBAL GUIDELINES THAT MATCH ITS DEVELOPMENT. WHETHER THAT MEANS GLOBAL LAWS OR SYSTEMS TO PROTECT, AGAINST RISKS OR SECURITY FRAMEWORKS, THE SAME WAVE IS COMING WITH PHYSICAL AI. WE MUST NOT MAKE THE SAME MISTAKES AGAIN. WE NEED TO ESTABLISH GLOBAL GUIDELINES TO ENSURE ROBOTS DO NOT HARM OUR LIVES. REPORTER: GALAXY IS NOT A PREPARING FOR WHAT COULD BE THE FIRST OVERSEAS LISTING FOR AN AGENCY WITH A GOAL TO FILE AN IPO IN SEOUL LATE LAST -- NEXT YEAR. THEY ARE TARGETING AND OVERSEAS PRE-IPO AROUND THIS YEAR. GALAXY'S PLAN DEBUT WILL BE A TEST OF WHETHER THE NEXT GENERATION OF ENTERTAINMENT DIRECTORS CREATE STARS OR CODES THEM. PAUL: LET'S GET TO THE TOP OF GLOBAL HEADLINES. INDONESIA'S PRESIDENT SAYS COMPANIES RESPONSIBLE FOR FOREST FIRES POLLUTING THE AIR IN SEVERAL COUNTRIES WILL HAVE PERMITS REVOKED. A SWISS MONITORING GROUP AS A MALAYSIAN CITY RECORDED THE WORLD'S WORST AIR QUALITY. IQ AIR LISTED JAKARTA, KUALA LUMPUR AND SINGAPORE AMONG CITIES WITH MONDAY'S WORST AIR QUALITY. THE WORLD'S OCEAN TEMPERATURE HAS HAD A RECORD HIGH AS CLIMATE CHANGE COMBINED WITH THE POWERFUL EL NIÑO IN THE TROPICAL PACIFIC. EUROPE'S EARTH'S OBSERVATION AGENCY SAYS THE SEA SURFACE TEMPERATURE LAST SATURDAY WAS 21.1 DEGREES CELSIUS. THAT'S THE HIGHEST SINCE DAILY TRACKING STARTED IN 1979. HIGHER OCEAN TEMPERATURES INCREASED THE CHANCE OF EXTREME WEATHER EVENTS. HAIDI: TAKE A LOOK AT WHAT WE ARE WATCHING WHEN IT COMES TO THE DOLLAR DEBASEMENT TRADE. WE CONTINUE TO SEE GOLD SURGING AHEAD. IT'S BEEN ONE OF THE BIGGEST BENEFICIARIES AS WE CONTINUE TO WATCH FOR A SPEC -- SECRETARY SCOTT BESSENT REFRAINING FROM SIGNALS WHEN IT COMES TO HIS MANAGEMENT OF U.S. DEBT. THERE HAD BEEN A REPORT OF THAT POTENTIAL PLAN TO DRAW DOWN ITS CASH PILE TO FUND BUYBACKS OF THESE HIGH-YIELD SECURITIES. AT THE MOMENT WE SEE GOLD AGAIN ADVANCING TO THAT THREE MONTH HIGH, THE DEBASEMENT TRADE RETURNING, CONCERNS OVER U.S. FISCAL POLICY AND THE IMPACT OF THE GREENBACK DRIVING GOLD TO THE HIGHEST INTRADAY LEVEL SINCE MID-MAY. A THIRD WEEKLY GAME WE SAW LAST MONTH AS WELL. THE MARKET OPENS IN SEOUL, SYDNEY AND TOKYO NEXT. ♪ PAUL: THIS IS THE ASIA TRADE, WE ARE COUNTING DOWN TO ASIA'S MAJOR MARKET OPENS. ONCE AGAIN, TRADE IS UP FRONT AND CENTER. WE HAVE HAD PLENTY OF NEWS ON THAT FRONT. ALSO A TECH CORRECTION IN THE U.S. HAIDI: THAT REMAINS INTERESTING, PARTICULARLY WHEN IT COMES TO PRICING ISSUES OR CONCERNS AROUND NVIDIA, AS WELL AS NVIDIA EARNINGS. IT IS INTERESTING. WE HAVE UNRESOLVED LEADING MILITARY CONFLICT ARISE, AND NOW WITH THE U.S. CALLING ON THE BIGGEST TRADING PARTNERS OF IRAN TO DO MORE. THAT WILL BE AN INTERESTING DYNAMIC FOR CHINA AND THE U.S. AHEAD OF THE LEADERSHIP SUMMIT IN AT THE SAME TIME WE HAVE THE OVERCAPACITY TARIFFS SET ON CHINA. WE HAVE THE SITUATION WITH CANADA AS WELL. PAUL: IT IS GOING TO BE SETTING UP FOR AN INTERESTING CONVERSATION BETWEEN TRUMP AND XI NEXT MONTH IN WASHINGTON. WE ARE JUST OPEN FOR TRADE ACROSS THE ASIA-PACIFIC. JAPAN IS UP AND RUNNING NOW. HAIDI: COMING ONLINE AT ABOUT .5 PERCENT. THE RECOVERY WHEN IT COMES TO THE TEXT TRADE, THE U.S. REMAINS PRETTY FRAGILE, SOMETHING BEING PASSED THROUGH WHEN IT COMES TO THE LIKES OF THE JAPANESE MARKETS. AS WE SEE ALWAYS WITH THE PASS-THROUGH FOR KOREA AS WELL FOR WHAT IS INTERESTING WITH THIS REVIVAL OF THE DOLLAR DEBASEMENT TRADE, WE ARE SEEING PRESSURE TAKEN OFF THE YEN. THE YEN HAS BEEN HOLDING QUITE STEADY, 159. WE HEARD FROM TREASURY SECRETARY SCOTT BESSENT FRAMING ANY FURTHER MOVES, SIGNALS TO MOVE ON THE REVAMP OF U.S. DEBT MANAGEMENT. WE ARE EXPECTING JGB'S TO BE TRACKING TREASURIES HIGHER. SPEAKING OF THE KOSPI, LET'S LOOK AT HOW WE ARE FARING WHEN IT COMES TO THE DIRECT CORRELATION BETWEEN WHAT HAD BEEN TRADING OVERNIGHT. THE U.S. HAS BEEN PRESSING SOUTH KOREA FOR A MEMORY CHIP INVESTMENT IN THE YOU -- IN THE COUNTRY TO ENSURE THE SUPPLY OF CHIPS. THAT WAS DISCUSSED DURING THE INDUSTRY MINISTER'S TRIP. WE HEARING SOME REPORTS OF SEMICONDUCTOR INVESTMENT ALSO BEING SEPARATE FROM THE 350 BILLION U.S. INVESTMENT AGREED BY THE U.S. LAST YEAR AS WELL. WE ARE SEEING SOME DOWNSIDE ACROSS THE BOARD, IN PARTICULAR FOR THE HEAVYWEIGHTS, SAMSUNG AND SK HYNIX. SK HYNIX DOWN OVER 4%. PAUL: JUST OPEN FOR TRADE IN AUSTRALIA, SEEING SOME MODEST GAINS FOR THE ASX, UP .25%. THE BIG SECTORS OF FINANCE AND MATERIALS BOTH IN THE GREEN AT THE MOMENT. A COUPLE OF STOCKS, WOODSIDE ENERGY PRODUCER UP 1.7 PERCENT AFTER FIRST-HALF NET INCOME BEAT ESTIMATES. THE SUPERMARKET GIANT, FIRST FULL-YEAR NET INCOME MISSING ESTIMATES, THEIR STOCK OFF ABOUT 1.3%. AUSTRALIANS DRINKING LESS, HAVING AN IMPACT ON THAT. IN THE BOND SPACE, THE 10 YEAR PRETTY MUCH PARKED WHERE WE LEFT IT, JUST ABOVE 4.7. IT WAS JUST BELOW THAT MARK AT THE CLOSE. 30 YEAR YIELD FIVE POINT 23%. WE HAD SOME COLORFUL LANGUAGE FROM CITADEL CALLING THE TREASURY BUYBACK FINANCIAL REPRESSION THAT RISKS WEAKENING THE U.S. DOLLAR AND FUELING INFLATION AS WELL. WE HEARD FROM TREASURY SECRETARY SCOTT BESSENT A BIT EARLIER. >> WE HAVEN'T BOUGHT A SINGLE BOND YET. THE NEXT -- THE NEXT TIME WE HAVE AN OPERATION IS SEPTEMBER 9. HAIDI: MORGAN STANLEY SAYS U.S. TREASURIES COULD SOURCE BETWEEN 80 BILLION AND 200 BILLION FOR THE BOND BUYING OPERATIONS. MARKETS REPORTER ANTHONY STEPHENS JOINS US FOR MORE. WE ARE STILL IN WAIT AND SEE MODE, BUT THERE ARE QUESTIONS IN TERMS OF HOW EFFECTIVE THIS WILL BE. ANTHONY: YES, THAT CENTERS ON THE FEASIBILITY OF MOVING THE MATURITY OFF THE TREASURIES. IN THAT CONTEXT THIS NEW COMMENTARY AROUND USING THE TREASURY GENERAL ACCOUNT TO RAISE MONEY TO INFLUENCE THIS BUYBACK IS INTERESTING. THAT ACCOUNT IS ABOUT $ 950 BILLION, IT IS THE DAY-TO-DAY CHECKING ACCOUNT FOR THE TREASURY. OF THAT AROUND $200 BILLION IS AVAILABLE ACCORDING TO MORGAN STANLEY AND OTHERS. HOW MUCH IMPACT CAN THAT HAVE? THAT IS THE INTERESTING QUESTION. IN SHORT BURSTS, YES, IT IS MEANINGFUL AND AT SOME CREDIBILITY TO THE FIREPOWER ON HAND FOR THE U.S. TREASURY. IN THE LONG RUN, AGAINST THE LONG RUN FUNDAMENTALS, IT IS A BIT DUBIOUS. WOULD IT ALSO DOES IS PUSH ISSUANCE TO THE FRONT END OF THE CURVE. YOU DO HAVE THAT FLATTENING OF THE CURVE IMPACT FROM THIS MESSAGING ALREADY. WHAT HAPPENS NEXT IS PROBABLY GOING TO BE ANOTHER FOCUS. WHERE DOES THE OUTLET FROM THIS CHANGE IN MONETARY POLICY IS COME TO? MOST LIKELY THAT WILL BE ON THE U.S. DOLLAR. PAUL: LET'S TALK ABOUT THE U.S. DOLLAR. WE SAW A STEEP DECLINE IN THE DOLLAR SPOT INDEX. THEY CREPT BACK UP A LITTLE SINCE THE LOWS FRIDAY. WHAT IS THE DIRECTION OF TRAVEL, WHAT IS THE TREND? ANTHONY: YOU ARE SEEING A VARIETY OF OFFSHORE TRENDS. YOU HAD THE BIG RALLY IN GOLD, THE RECOVERY IN CRYPTO, EVEN THOUGH IT HAS HIT TECHNICAL RESISTANCE, BUT YOU'RE ALSO SEEING THE CARRY TRADE MARGIN AND A BIG WAY. THE CARRY TRADE IS A SHARP NOW IS BOTH THE YEN AND DOLLAR BECOME VERY EASY FUNDING CURRENCIES. THE G10 CARRY TRADE INDEX KEEPS GOING COME UP 14% NOW, THAT IS EQUITY LIGHT. THAT WILL CONTINUE TO ATTRACT CAPITAL. EMERGING MARKETS FX INDEX HAS BROKEN TO THE UPSIDE. THAT REALLY REMOVES OIL AS A HEADWIND FOR THE EMERGING MARKETS FX, THAT IS A NEW DYNAMIC FOR EMERGING MARKET FX TRADERS AND THEY WILL LEAN INTO THAT. WHILE THE TREASURER IS SO AGGRESSIVE IN TRYING TO TEMPER DOWN YIELDS. THE OUTLET FOR THE YIELD MOVE IS IN THE FX. THAT IS WHERE PEOPLE HAVE TO PRICE IN THE FACT THE U.S. IS TRYING TO CONTROL ITS YIELDS, TRYING TO CONTROL ITS RATES. THAT IS AN OBVIOUS COROLLARY TO THE REST OF THE WORLD WHERE THERE IS MORE NORMALIZED MONETARY POLICY, ESPECIALLY THE EMERGING MARKETS THAT ARE TRYING TO CONTROL INFLATION AND THE G10 COUNTRIES LIKE THE AUSSIE AND KIWI DOLLAR. FOR NOW THE SHORT DOLLAR TRADE WITH THE CARRY COMPONENT SEEMS LIKE AN EASY TRADE FOR FX TRADERS TO LEAN INTO. PAUL: MARKETS REPORTER ANTHONY STEPHENS, THANK YOU. OUR NEXT GUEST IS A CEO. THANK YOU SO MUCH FOR JOINING US TODAY. I WANT TO START WITH THE AI-RELATED CORPORATE DEBT ISSUANCE. YOU SEE THIS BECOMING A MARKET RISK, BUT WE ARE NOT AT THAT THRESHOLD YET. WHEN DO WE ARRIVE AT THAT POINT? IS IT POSSIBLE TO TELL AND INEVITABLE? >> IF YOU LOOK AT THE CORPORATE DEBT ISSUANCE FROM AI LAST YEAR IT WAS ABOUT $12 BILLION. THIS YEAR HAS ALREADY SURPASSED $200 BILLION. THAT IS NEARLY A 24 INCREASE OF THE PRIVATE SECTOR TAPPING INTO THE DEBT MARKET. WE DON'T THINK IT IS GOING TO SLOW DOWN. WE WILL PROBABLY SEE CORPORATE DEBT ISSUANCE ONLY INCREASE WITH THE PROJECTION OF -- PROGRESSION OF TIME. THE PROBLEM IS THIS IS HAPPENING AT A TIME WHEN WE HAVE A HIGH INTEREST RATE AND THE DEMAND FOR THE WEST TREASURY HAS TEMPORARILY WEEKEND. THAT WILL CAUSE SOME RIPPLE EFFECTS ACROSS THE WORLD. PAUL: YOU ALSO NOTE THERE IS A DIFFERENCE BETWEEN HOW THE U.S. AND ASIA FUND AI INVESTMENTS. WHICH APPROACH DO YOU FEEL IS MORE SUSTAINABLE? >> I THINK IF YOU LOOK AT IN JAPAN, SOFTBANK IS RAISING ¥1 TRILLION FROM BOND TO THE INVESTORS. I THINK THAT IS A HEALTHY APPROACH BECAUSE IF YOU HAVE TOO MUCH STRAIN ON THE PUBLIC DEBT, THE GOVERNMENT IS ISSUING BONDS AND THE CORPORATE COMPANIES ARE ISSUING BONDS, AND EVERYBODY IS RAISING DEBT WHILE THE DEMAND IS OVERSUPPLY, THEN THE ONLY ANSWER IS THE PRICE OF MONEY, THE INTEREST RATE HAS TO GO UP. IF YOU CAN USE THE RETAIL POCKET AND DIVERSIFY AWAY SOME OF THE PRESSURE, THAT IS LIKELY MORE SUSTAINABLE. HAIDI: THIS IS A HUGE AMOUNT OF DEBT RAISING. IT'S ALSO HAPPENING AT A TIME WHEN WE ARE SEEING UPWARD PRESSURE ON BOND YIELDS, TREASURY YIELDS. DO YOU SEE THE CONFLUENCE OF THESE TWO FACTORS QUICKLY OVERLAPPING IN TERMS OF HOW MUCH THE CAPITAL WILL COST? >> WE SEEM TO HAVE A VICIOUS CIRCLE HERE. HIGHER DEMAND FOR AI, INCREASED CHIP PRICE. THAT INCREASED THE AMOUNT OF CAPEX REQUIRED, WHICH THEN ULTIMATELY INCREASED THE REQUIRED RETURN FROM INVESTING AI. THAT MY FUEL BACK INTO HIGHER AI CHIP PRICE. SO THIS VICIOUS CIRCLE SEEMS TO BE ALREADY IN MOTION. RIGHT NOW IT'S NOT A CRISIS YET, BUT CERTAINLY IT IS A MARKET RISK. HAIDI: YOU WOULD NOT CALL IT AN AI DEBT BUBBLE YET. WHAT MARKERS WOULD YOU BE LOOKING FOR WHERE YOU START GETTING WORRIED ABOUT THAT? >> I THINK IF WE SEE THE 10 YEAR YIELD, U.S. TREASURY YIELD ABOVE 4.8, THEN THE AMOUNT OF PREMIUM THAT NEEDS TO BE PAID WILL BE REFLECTED IN THE PRIVATE BONDS. IF YOU LOOK AT THE CDS PREMIUM FOR SOME OF THE TECH GIANTS, IT IS NOT JUST META-, IT IS ALSO OTHER AI-RELATED COMPANIES, YOU SEE THIS PREMIUM IS CREEPING UP FAST, THIS IS NOT A GOOD SIGN. AT SOME POINT INVESTORS WILL BE ASKING, LOOK, WE MADE THIS MASSIVE COMMITMENT TODAY HOPING THAT SOMEDAY WE CAN MONETIZE FROM AI, BUT WHAT IF THE RETURN THAT'S GOING TO BE GENERATED DISAPPOINTS SIGNIFICANTLY? THAT'S GOING TO BE AN INFLECTION POINT IN THIS CYCLE. PAUL: CONSIDERING THE RISKS YOU JUST UNPACKED FOR US, WHAT IS THE BEST APPROACH FOR INVESTING AROUND THE AI STORY AT THE MOMENT AND HOW DO YOU HEDGE AGAINST THOSE POTENTIAL RISKS? >> IT IS IMPORTANT TO DISTINGUISH AI COMPANIES INTO TWO GROUPS, ONE THAT SPENDS ON CAPEX AND THE OTHER THAT IS RECEIVING THE CAPEX. SOME COMPANIES KEEP SPENDING ENORMOUSLY, HOPING IN THE FUTURE THE AI INVESTMENT WILL PAY OFF. OTHERS ARE ACTUALLY COLLECTING CASH NOW. IF YOU LOOK AT THE ASIA SEMICONDUCTOR COMPANIES, THEY ARE RAISING PRICES. NVIDIA IS RAISING PRICES BY MORE THAN 15%, THAT TELLS YOU SOMETHING. WHILE THIS GAME IS GOING ON, SOME COMPANIES ARE ACTUALLY MAKING PROFITS TODAY. SO THE COMPANY THAT MAKES MONEY NOW FROM THE COMPANY THAT HOPES TO MAKE MONEY IN THE FUTURE. HAIDI: DO YOU THINK IT IS A VERY REAL POSSIBILITY THAT AI CAN BE BOTH TRANSFORMATIVE AND PRODUCTIVE BUT THAT FINANCIAL RETURNS FROM AI MAY REMAIN DISAPPOINTING? >> I THINK IT IS POSSIBLE. AND I THINK THEY CAN COEXIST. I HAVE NO DOUBT THAT AI IS TRANSFORMATIVE AND IS VERY REAL. IT IS IMPACTING OUR DAILY LIVES AND ALSO THE JOB MARKET AT THE SAME TIME. , WHEN EVERY DIVISIONAL COMPANY EXPONENTIALLY GROWS IN THE FUTURE AND STARTS INVESTING IN AI INFRASTRUCTURE, IT MAY SEEM RATIONAL FROM INDIVIDUAL COMPANIES. HOWEVER, FROM A COLLECTIVE LEVEL, IF EVERYBODY IS THINKING THE SAME THING, THERE WILL BE REDUNDANCY AND INEFFICIENCY SOMEWHERE. THAT WILL PROBABLY DRIVE DOWN THE EXPECTED RETURN FROM AI. HAIDI: JUNG IN YUN, REALLY GREAT TO HAVE YOU WITH US, CEO AT FIBONACCI ASSET MANAGEMENT. MORE AHEAD ON "THE ASIA TRADE." THIS IS BLOOMBERG. HAIDI: BLOOMBERG HAS LEARNED THE U.S. IS SET TO IMPOSE AN EXTRA 7.5% ON CHINESE GOOD OVER ALLEGATIONS OF MANUFACTURING OVERCAPACITY. SOURCES SAY IT COULD COME BETWEEN NEXT MONTH -- NEXT ONCE WASHINGTON SUMMER. IS THIS STILL RELATIVELY ACCEPTABLE IN TERMS OF WHERE THE TRADE TRUCE LIES? >> IT IS RELATIVELY ACCEPTABLE. THIS IS WHAT THE TWO SIDES HAD DISCUSSED AND AGREED UPON, A 20% TARIFF OR CEILING. THEY AGREED ON THIS IN KUALA LUMPUR IN THE END OF LAST YEAR ON THE SIDELINES OF THE ASEAN SUMMIT. THE LATEST ADDITION, IT WOULD LIKELY NOT SPARK ANY RETALIATION FROM CHINA FOR NOW. THIS IS GOING TO COME THROUGH AFTER THE CONCLUSION OF THE INVESTIGATION INTO CHINESE OVERCAPACITY, THE RESULT OF WHICH COULD BE RELEASED SOON BEFORE PRESIDENT XI'S TRIP TO CHINA. AGAIN, THIS IS COMING AMID A LOT OF EXPECTATIONS FOR THE SUMMIT. BOTH SIDES ARE EXPECTED TO EXTEND THE TRADE TRUCE WHICH EXPIRES IN NOVEMBER, ALTHOUGH SOME SOURCES ARE SAYING THE TRUMP ADMINISTRATION CONSIDER IMPOSING HIGHER TARIFFS AND THEN SUSPENDING A PART OF THE TARIFFS, BUT THAT IMPOSING 7.5% TO STABILIZE RELATIONS. PAUL: YOU SAY THERE MIGHT NOT BE ANY REACTION FROM CHINA BUT THE TIMING CERTAINLY IS INTERESTING. WHAT IS THE MOTIVATION BEHIND THE TIMING OF THIS ANNOUNCEMENT? REPORTER: THE TIMING COMING AHEAD OF THE TRUMP-XI TRIP, POTENTIALLY SETTING THE STAGE FOR ANY NEGOTIATIONS BETWEEN THE LEADERS. BOTH LEADERS WILL WANT TO IDEALLY DELIVER SOME WINS FOR THEIR COUNTRIES, WHEN XI IS IN THE U.S. THERE ARE VERY FEW AREAS WHERE WE EXPECT BREAKTHROUGHS. ONE OF THE LOWEST HANGING FRUIT IS TRADE, WHEN PRESIDENT TRUMP VISITED BEIJING. SO FAR, IT'S BEEN DISCUSSED FOR MANY MONTHS BUT THEN THERE HAS NOT BEEN ANY DETAILS IN TERMS OF WHAT SORT OF GOODS WOULD BE EARMARKED TO BE EXEMPTED FROM TARIFFS. PERHAPS BOTH SIDES MIGHT DISCUSS AND COME UP WITH MORE DETAILS AROUND THAT. WHEN IT COMES TO THE OTHER DETAILS, PARTICULARLY TECH EXPORT RESTRICTIONS, AND CHINA'S RARE EARTH EXPORT RESTRICTIONS, PERHAPS TRUMP IMPOSING THOSE TARIFFS WOULD PROVIDE A BARGAINING CHIP TO ENSURE THAT CHINA WOULD ALSO CONTINUE TO KEEP ITS END OF THE BARGAIN AND EXTEND THE TRADE TRUCE AS WELL. PAUL: CHINA CORRESPONDENT MINMIN LOW. CANADA WILL REPORTEDLY ANNOUNCE RETALIATORY TARIFFS AGAINST THE U.S. TUESDAY AFTER PRESIDENT TRUMP THREATENED TO DOUBLE LEVIES ON CANADIAN AUTOS TO 50%. PRIME MINISTER MARK CARNEY SAYS HE REMAINS OPEN TO NEGOTIATIONS IF WASHINGTON CHANGES ITS APPROACH. >> THE GOAL OF TRADE NEGOTIATIONS WITH THE UNITED STATES HAS ALWAYS BEEN TO GET THE BEST DEAL FOR CANADIANS. NEVER A DEAL AT ANY PRICE OR ON ANY TIMEFRAME. WE DID MAKE PROGRESS IN RECENT WEEKS BUT IN THE END, THAT MOMENTUM REVERSED AND WE COULD NOT ACCEPT WHAT THE U.S. HAD OFFERED, NOR COULD WE GIVE WHAT THEY ASKED. HAIDI: U.S. TREASURY SECRETARY SCOTT BESSENT HAS THREATENED ECONOMIC PUNISHMENT AGAINST ANY COUNTRY DOING BUSINESS WITH IRAN AS PART OF WHAT HE CALLS AN ECONOMIC D-DAY CAMPAIGN TO END NEARLY SIX MONTHS OF THE WAR. >> WE WANT TO EMPHASIZE THAT WE ARE SPREADING OUT ACROSS THE WORLD AS WE SPEAK, THAT YOU WILL SEE A WAVE OF SANCTIONS WHEN YOU LEAVE THIS MEETING TODAY AND YOU SHOULD EXPECT THAT CADENCE TO CONTINUE AND I WOULD EXPECT THAT YOU WILL SEE A MAJOR ANNOUNCEMENT OF A FINANCIAL INSTITUTION BEING SANCTIONED AT THE END OF THIS WEEK. HAIDI: OUR BLOOMBERG SENIOR EDITOR DEREK WALLBANK JOINS US. WE KNOW THE MAXIMUS ECONOMIC PRESSURE IS REALLY A PRESSURE CAMPAIGN AGAINST THE LIKES OF TRAINA. IS THIS GOING TO SET A COLLISION COURSE BEFORE THE LEADERSHIP SUMMIT? >> I THINK THAT IS A KEY QUESTION. I THINK WHAT SOME PEOPLE IN THE MARKET WERE EXPECTING WHEN BESSENT CAME OUT WITH THIS, HE WAS GOING TO LAY OUT WHAT. HAPPENED EXACTLY WHAT THESE CONSEQUENCES WERE GOING TO BE. THIS IS A PREVIEW IF YOU WILL, A PRECURSOR TO A LOT OF FUTURE ACTIONS, RESTATING THE THREATS TO BE SURE. BUT THE SEVERITY WITH WHICH THE UNITED STATES WAS GOING TO DEAL WITH CHINA AND/OR ANY OTHER MAJOR IRANIAN TRADING PARTNER HAS YET TO BE DETERMINED. YOU HEARD FROM BESSENT IN THE CLIP SAYING HE EXPECTED A MAJOR FINANCIAL INSTITUTION TO BE SANCTIONED BY THE END OF THE WEEK. THE U.S. HAS ANY NUMBER OF RANGE OPTIONS AVAILABLE TO IT. YOU ARE REALLY TALKING ABOUT SECONDARY SANCTIONS AND THOSE CAN BE VERY WIDE. THERE REALLY IS A QUESTION OF HOW MUCH THAT IS GOING TO GO. THERE IS A MEETING EXPECTED BETWEEN PRESIDENT XI AND DONALD TRUMP NEXT MONTH. HISTORICALLY THE U.S. AND CHINA HAVE TRIED TO NOT WANT TO DO SOMETHING THAT WOULD UPSET THOSE MEETINGS BEFORE EVEN THOUGH WE HAVE IN PREVIOUS INSTANCES SEEN ONE OR BOTH SIDES RAISE THE TEMPERATURE A LITTLE BIT BEFORE. BUT WE WOULD NOT NECESSARILY BE EXPECTING SOMETHING THAT WOULD SORT OF UP TO THE ENTIRE RELATIONSHIP TO COME RIGHT BEFORE IT. THAT SAID, IF YOU DON'T TAKE CHINA AS A SERIOUS FOCUS OF THIS, THEN WHAT DOES IT SAY ABOUT THE OVERALL CAMPAIGN WHEN CHINA IS THE PREDOMINANT BUYER OF IRANIAN OIL? PAUL: TO THAT POINT, WILL THIS EVEN WORK? BECAUSE AUTHORITARIAN REGIMES HAVE PROVED VERY DIFFICULT TO DISLODGE IN THE PAST JUST USING ECONOMIC MEANS. WHAT IS THE CHANCES THAT THIS ACTUALLY GETS SOMEWHERE? IS THERE A TEMPLATE FROM THIS? >> I THINK A LOT OF ANALYSTS HAVE NOTED THAT IRAN HAS BEEN UNDER SIGNIFICANT U.S. PRESSURE FOR DECADES. IT HAS NOT BENT. THERE ARE REPORTS THAT WE AND OTHERS HAVE SUGGESTED MORE HARD-LINE FOLKS ARE IN KEY POSITIONS IN THEIR MILITARY OPERATIONS -- OPERATIONS THAN BEFORE AND PERHAPS THERE'S LESS OF AN APPETITE, EVEN POTENTIALLY FOR TALKS NOW THAN THERE WERE THEN. THE THEORY FROM THE WHITE HOUSE RIGHT NOW IS THAT ECONOMIC PRESSURE, IF APPLIED AT SCALE, WILL ALLOW THEM TO BEND. BUT AS YOU MENTIONED, THAT COMES WITH A LOT OF TRADE-OFFS. ONE OF THE KEY PRESSURE POINTS THAT THE U.S. WILL BE FACING IS SIMPLY A FACTOR OF THE CALENDAR, DONALD TRUMP WANTS TO RUN A HEARTED AND GOOD ECONOMY INTO THE MIDTERM ELECTIONS IN NOVEMBER. THOSE DATES ARE SET FOR THE ELECTION. IF THERE IS SOMETHING THAT COMES WITH CONSEQUENCE, BE AT GASOLINE PRICES AT RETAIL, DIESEL PRICES, ACCESSIBILITY OF FERTILIZER, OR ANY RETALIATION CHINA OR ANY OTHERS MIGHT IMPOSE, THAT WOULD HAVE AN ECONOMIC COST AHEAD OF THE MIDTERMS AND THE UNITED STATES IS NOT THE ONLY NATION IN THE WORLD THAT'S AWARE OF THOSE MIDTERM ELECTIONS ARE. HAIDI: SENIOR EDITOR DEREK WALLBANK THERE. MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. ♪ PAUL: LET'S CHECK IN ON HOW AUSTRALIAN DATACENTER STOCKS ARE TRADING. THIS IS FOLLOWING AN ANNOUNCEMENT FROM THE PRIME MINISTER THAT AUSTRALIA WILL BE LEGISLATING TO ENFORCE A NATIONAL STANDARD ON DATACENTER USE OF ELECTRICITY AND WATER THIS. IS TO ENSURE THAT HOUSEHOLD UTILITY BILLS DON'T GET OUT OF CONTROL. DIG ECO-AND GOODMAN GROUP BOTH PUSHING A LITTLE BIT HIGHER. THESE TWO ARE A LITTLE MORE DIVERSIFIED THAN SOME OF THE STOCKS WE ARE SEEING DECLINES ON. HAIDI: ELSEWHERE IN THE MARKETS, IT IS ALL ABOUT GOING INTO THOSE NVIDIA NUMBERS. SOME OF THE CONVERSATIONS WHEN IT COMES TO NVIDIA'S PRICE HIKES AS WELL, IN TERMS OF HOW THIS AFFECTS A BROADER AI TRADE. IT IS A SEVEN-DAY LOSING STREAK WHEN IT COMES TO NVIDIA DOWN ANOTHER 3%. WE ARE SEEING POSTURING WHEN IT COMES TO HEAVYWEIGHTS, THE COST ME DOWN BY CLOSE TO 3%, SK HYNIX DOWN BY OVER FIVE. WE DID HAVE A LITTLE BIT OF NEWS FLOW WHEN IT COMES TO THE LABOR UNION SIDE OF THINGS. A TENTATIVE WAGE AGREEMENT WAS RELEASED. WE WILL CONTINUE TO WATCH FOR THAT. UNION LEADERS AND MANAGEMENT HAVE REACHED A TENTATIVE AGREEMENT BEFORE PUTTING IT TO A MEMBERSHIP GROUP -- VOTE. WE ALSO HAVE THE U.S. REPORTEDLY ASKING SOUTH KOREA TO INVEST IN MEMORY CHIP PRODUCTION FACILITIES IN THE COUNTRY TO ENSURE STABLE CHIP SUPPLIES. THAT WAS A CONVERSATION THAT HAPPENED IN THE INDUSTRY MINISTER VISIT WASHINGTON RECENTLY, ALSO ACCORDING TO LOCAL REPORTING. PAUL: LET'S LOOK AT WHAT IS HAPPENING IN JAPAN AT THE MOMENT. WE HAVE THE NIKKEI LOSING SOME GROUND AS WELL. OFF BY 8/10 OF 1%. CHIP STOCKS ARE BEARING THE BRUNT OF THE SELLING OF THE MOMENT. KIOSK SEO WAS DOWN ABOUT 1.3%. ADVANTEST PUSHING LOWER. A BIT OF A GAP FOR THE MARKETS ARE PERFORMING WELL IN JAPAN. WE HAVE MORE AHEAD ON THE ASIA TRADE. THIS IS BLOOMBERG. ♪ HAIDI: WITH CHINA EARNINGS REMAINING IN FOCUS, AND MIXED EARNINGS PRINT. REVENUE OUTLOOK FELL SHORT OF EXPECTATIONS. SET TO RAISE $900 BILLION FROM THE LIKES OF ALIBABA AND TENCENT. WINNIE HSU JOINS US FOR MORE. WHAT ARE THE ELEMENTS THAT INVESTORS WERE CONCERNED ABOUT? WINNIE: YEAH, SO AS YOU MENTIONED, A BIT OF A MIX. THE EARNINGS WERE STRONG WHEN IT COMES TO THE NET INCOME AND OPERATING PROFIT BEAT EXPECTATION, BUT THE DRAG IS COMING THROUGH FROM THE SECOND QUARTER REVENUE, WHICH IS COMING AT 112.4 BILLION YUAN VERSUS AN ESTIMATE OF 115. THE DRAG IS MOSTLY COMING THROUGH FROM THE TRANSACTION SERVICES WHILE WE ARE STILL SEEING ONLINE MARKETING SERVICES AT A PLUS. FOR INVESTORS, THEY ARE FOCUSING ON JUST HOW OVERALL THE COMPANY IS NAVIGATING SOME OF THESE GLOBAL CHALLENGES WHEN IT COMES TO THE COMPLIANCE, WHEN IT COMES TO THESE TECHS FROM EUROPEAN COUNTRIES FOR EXAMPLE, SO TRYING TO FIND THE BALANCE BETWEEN HOW THEY MANAGE THESE GLOBAL CHALLENGES AND SOME OF THE MORE DOMESTIC BUSINESSES. WHAT THEY LIKE ABOUT THE DOMESTIC BUSINESSES IS ACTUALLY HOW THE COMPANY SEEMS TO BE DEEPENING SOME OF ITS SUPPLY CHAIN, EXPANDING FURTHER TO THE RURAL AREAS, AND ALSO LOOKING AT SOME OF THE BETTER FULFILLMENT PROGRESS THE COMPANY IS HAVING SO WE ARE SEEING PROGRESS COMING THROUGH FOR ITS 100 BILLION YUAN MERCHANT SUPPORT PROGRAM ACTUALLY HELPING SOME OF ITS COMPANIES TO SHOW HIGHER PROFITABILITY ON THE PLATFORM AS WELL. PAUL: ANOTHER IS OUT FUNDRAISING AS WELL. 900 MILLION. WHAT ARE THE IMPLICATIONS OF THIS FOR THE MARKET? WINNIE: YEAH, I FEEL LIKE FOR THE BROADER MARKET IT GOES TO SHOW HOW THERE IS SUCH AN ACTIVE FUNDRAISING ACTIVITY GOING ON FOR ALL OF THESE TECH COMPANIES, BUT INTERESTINGLY FOR THIS ONE SPECIFICALLY, WHEN YOU LOOK AT THE $900 MILLION U.S., IS ABOUT THE SIZE WE SAW FOR UNITREE'S ASIA IPO RECENTLY, AND THE BREAKDOWN OF THIS IS $600 MILLION COMING THROUGH FROM EXTERNAL INVESTORS. $200 MILLION FROM XPENG ITSELF AND $100 MILLION FROM THE EXECUTIVES. THE SIGNIFICANCE OF THIS IS IT REALLY SHOWS THE CAPABILITY OF THE COMPANY MOVING FROM JUST AN AUTOMAKER TO HUMANOID ROBOT MAKERS. CITI HAD A NOTE IN THE MORNING SAYING XPENG IS PROBABLY CHINA'S CLOSEST COMPARABLE TO TESLA AS AN INTEGRATED PHYSICAL AI COMPANY AND THAT THEY SEE THIS AS A LONG-TERM POSITIVE. OF COURSE, WHEN YOU LOOK AT THE SHAREPRICE REACTION, IT WAS MOSTLY REACTING TO HOW THE EARNINGS COMING THROUGH AS A MISS, SO MISSING THE QUARTERLY EARNINGS EXPECTATIONS, ALSO SEEING VEHICLE DELIVERY GUIDANCE , A BIT OF A GUIDANCE FORWARD, A BIT OF A MESS AS WELL. OVERALL WHEN YOU LOOK AT THE LONGER-TERM, THE TRANSITION INTO BEING ABLE TO BECOME A HUMANOID ROBOT MAKER IS STILL SEEN AS QUITE POSITIVE. HAIDI: HOW DO INVESTORS VIEW THE DISCONNECT BETWEEN CHINA'S IPO BOOM RECENTLY AND THE BROADER WEAKNESS WE SEE IN THE MARKET? WINNIE: YEAH, IT IS QUITE INTERESTING BECAUSE WE JUST TALKED ABOUT UNITREE PLUS CS 70 -- CXMT. USE SHARE PRICES JUMPING SINCE JULY. DURING THE SAME PERIOD OF TIME, THE STAR 50 INDEX WAS DOWN 30% WHILE CSI 300 ALSO LAST 8%. SO THAT DIVERGENCE GOES TO SHOW YOU HOW THE OPTIMISM AND ENTHUSIASM FOR THE IPO MARKET IS ALSO A REFLECTION OF LACKING CONFIDENCE IN THE SECONDARY MARKET. NOW, THIS IS COMING THROUGH WITH DIFFERENT REASONS, DIFFERENT FACTORS, INCLUDING HOW THERE IS A LACK OF CATALYST AFTER THE GLOBAL SELLOFF AND THE CHIP STOCKS AND THAT THE ECONOMIC PICTURE OF CHINA REALLY REMAINS VERY WEAK, ESPECIALLY WHAT WE SAW IN THE RECENT ECONOMIC NUMBERS, SO INVESTORS ARE SEEKING OPPORTUNITIES IN TECH, AND AT THIS POINT, IT SEEMS LIKE THEY ARE SEEING MORE OPPORTUNITIES IN THE IPO MARKET WHILE SOME OF THE OTHER NAMES THAT ARE ALREADY LISTING CONTINUE TO SHOW WEAKNESSES THROUGH EARNINGS RESULTS AS WELL. PAUL: WINNIE HSU THERE. LET'S GET TO THE TOP CORPORATE STORIES WE ARE TRACKING. BLOOMBERG HAS BEEN TOLD THAT TAIWANESE PROSECUTORS INDICTED A MANAGER AS PART OF A GROUP THAT SMUGGLED ADVANCED AI CHIPS INTO CHINA. SOURCES SAY TWO SENIOR EMPLOYEES OF SENIOR MICRO COMPUTER WERE ALSO INDICTED, ACCUSED OF ORGANIZING THE SHIPMENTS OF 74 SERVERS CONTAINING HIGH-END CHIPS INTO CHINA VIA JAPAN AND INDONESIA. ELON MUSK SAYS SPACEX PLANS TO LAUNCH ITS FIRST AI SATELLITES EQUIPPED WITH NVIDIA CHIPS IN THE FOURTH QUARTER OF NEXT YEAR. IN A POST ON X, HE SAYS THEY WILL HAVE SIGNIFICANT SCALE IN 2028. A LOWER COST AND MORE ENVIRONMENTALLY FRIENDLY ALTERNATIVE TO LAND-BASED FACILITIES. THE U.S. SEC HAS SENT SUBPOENAS TO MAJOR WALL STREET BANKS OVER THE HEDGE FUND SITUATIONAL AWARENESS. SOURCES SAY IT IS SEEKING INFORMATION ABOUT TRADING ACTIVITY AT THE HEDGE FUND, WHICH CAME UNDER PRESSURE LAST MONTH. SITUATIONAL AWARENESS LIQUIDATED SOME OF ITS POSITIONS DURING A BARRAGE OF CALLS BEFORE CITADEL STEPPED INTO BY THE BULK. HAIDI: PRIVATE EQUITY MANAGERS HAVE FOUND A NEW WAY TO DRUM UP CASH TO CALM INVESTORS FRUSTRATED WITH RECORD LOW PAYOUTS. OUR BLOOMBERG PRIVATE MARKETS REPORTER JOINS US WITH MORE ON TODAY'S BIG TAKE. TAKING A STEP BACK, WHAT FILLED THE GROWTH OF THESE TRANSACTIONS WE HAVE SEEN IN RECENT MONTHS? LAURA: IT IS REALLY INTERESTING. THE MANAGERS HAVE BEEN STRUGGLING TO SELL ASSETS FOR SOME TIME NOW BECAUSE OF MISMATCHING VALUATIONS AND A RISE IN INTEREST RATES, AND THAT SPURRED ALL SORTS OF WAYS AND TECHNIQUES OF TRYING TO UNLOCK CASH TO GET BACK TO EXISTING INVESTORS WHO WANT THEIR MONEY BACK. WE DUG INTO PREFERRED EQUITY, WHICH IS ESSENTIALLY WHEN ANY INVESTOR COMES IN AND INJECTS CAPITAL THAT THEY REPAY EXISTING INVESTORS IN THIS CASE. FOR THE NEW INVESTOR, THEY NEGOTIATE ALSO TEST SWEETENERS AND CAN ALSO NEGOTIATE A FAIRLY QUICK EXIT IN SOME CASES AS WELL SO IT CAN BE A WIN-WIN IN CERTAIN SITUATIONS. WE HAVE SEEN HUGE GROWTH IN THIS PARTICULAR AREA, WHICH IS WHY WE DUG INTO IT FOR THIS STORY. PAUL: WHAT ELSE ARE PRIVATE EQUITY FIRMS DOING TO LOCK IN INVESTORS? LAURA: THIS HAS BEEN GOING ON FOR SOMETIME, PARTICULARLY THE LAST TWO TO THREE YEARS. IT HAS REALLY SPURRED ALL OF THE DIFFERENT PROJECTS AND STRATEGIES THAT DECIDE TO UNLOCK CASH. THERE ARE THINGS LIKE LOANS WHERE YOU -- THERE ARE ALSO SECONDARIES WHERE YOU SELL STAKES OF FUNDS. THERE ARE CONTINUATION VEHICLES WHERE YOU SELL ASSETS TO A DIFFERENT FUND. THEY ARE ALL DESIGNED TO CATCH UP EXISTING INVESTORS IF THEY WANT TO BE CASHED OUT. BUT YEAH, HUGE GROWTH IN THIS MARKET PIONEERED THE FUND TO FINANCE MARKET, WHICH FIVE OR SIX YEARS AGO WAS PROBABLY ABOUT HALF THE SIZE. HAIDI: HOW DO INVESTORS FEEL ABOUT THESE FINANCIAL ENGINEERING TECHNIQUES? LAURA: I THINK A FEW YEARS AGO WE WERE SEEING MORE RESISTANCE, MORE PUSHBACK. THERE ARE CERTAINLY STILL CASES OF THAT, BUT OVERALL, INVESTORS HAVE BECOME MORE PRAGMATIC. IT IS A SOLUTION FOR MANY. I THINK IT IS BECOMING MORE NORMALIZED, SO I THINK IT IS DEFINITELY SOMETHING THAT INVESTORS ARE GETTING MORE USED TO. HOWEVER, I THINK THERE ARE STILL CERTAIN SITUATIONS WHERE WE WILL SEE LOTS OF PUSHBACK AND WE WILL BE ON THE LOOKOUT FOR THAT AS THEY COME THROUGH. PAUL: LAURA THERE. STILL TO COME, INFINITY INVESTMENT MANAGEMENT JOINS US TO DISCUSS THE COMPANY'S EMERGING AS AUSTRALIA'S EARNINGS SEASON WINNERS. THAT CONVERSATION NEXT. THIS IS BLOOMBERG. PAUL: LET'S CHECK IN ON A COUPLE OF STUXNET REPORTED EARNINGS IN AUSTRALIA THIS MORNING. LET'S START OFF WITH THE WOODSIDE ENERGY. INCOME BEAT ESTIMATES. NET INCOME RISING 27% TO $1.7 BILLION IN THE SIX MONTHS THROUGH TO JUNE. BENEFITING FROM THE HIGHER ENERGY COSTS WE HAVE SEEN DURING THE CONFLICT IN THE MIDDLE EAST, OFFSETTING TO SOME DEGREE THE PRODUCTION DIFFICULTIES. COLES GROUP START UP IN THE TERRITORY, NOW PUSHING HIGHER. MISSED THE AVERAGE ANALYST ESTIMATE. THERE IS STILL A DIVIDEND. $.37 PER SHARE. ALTHOUGH THAT IS A BIT MORE THAN EXPECTED. THE DIVISION TAKING A BEATING, PROFIT DOWN ALMOST 50% ON THE YEAR'S AS AUSTRALIA IS APPARENTLY DRINKING LESS. HAIDI: AUSTRALIAN COMPANIES HIT THE RESET BUTTON DURING THE 2026 FINANCIAL YEAR AND INVESTORS KEPT FAITH IN SOME OF THE RESTRUCTURING LEADERSHIP EFFORTS, REAPING REWARDS. SIGNS OF PROGRESS MADE EARNINGS SEASON SEEING SOME BOOST TO THOSE STOCKS, BUT LET'S GET INTO MORE OF AN ASSIST WHEN IT COMES TO THE EARNINGS SEASON AND THE OUTLOOK. ELFREDA JONKER IS A PORTFOLIO MANAGER. I LOVE THESE. PRICED FOR PERFECTION, DELIVERY FOR AVERAGE, OVERALL UNINSPIRING. [LAUGHTER] ELFREDA: IT IS PROBABLY A LITTLE BIT DRAMATIC WITH MY DESCRIPTION, BUT I THINK IT DOES RING TRUE IF YOU LOOK AT THE CURRENT REPORTING SEASON IN AUSTRALIA. IT HAS BEEN NOT NECESSARILY DISAPPOINTING BECAUSE OVERALL EARNINGS ARE COMING THROUGH SORT OF IN LINE WITH EXPECTATIONS, BUT IT REALLY HAS BEEN COMMODITIES DRAGGING MOST OF THE SECTORS UP. , IF YOU EXCLUDE THAT EARNINGS, FOR THE SEASON IS AT 5% RELATIVE TO THE AVERAGE OF 10%. SO OVERALL IT DOES NOT LOOK LIKE A LOT IS GOING ON, BUT UNDERNEATH THE HOOD, WE HAVE SEEN QUITE A BIT OF DISPERSION. NOT JUST ACROSS SECTORS BUT ALSO WITHIN SECTORS AND THOSE THAT ARE COMING IN JUST IN LINE. HAIDI: ONE OF YOUR TOP CONVICTION CALLS THIS ACTUALLY BHB. WE WERE TALKING ABOUT THESE IRON ORE MINERS ARE NOW COPPER MINERS. ELFREDA: ABSOLUTELY, AND IT IS ONE OF THE REASONS WHY WE HAVE INCREASED OUR POSITION IN THEM. MORE THAN 50% IS NOW COPPER AND COPPER IS ONE OF THOSE'S METALS THAT WE BELIEVE ARE GEARED TO A NUMBER OF STRUCTURAL TRAINS. NOT JUST ROLLOUT BUT ELECTRIFICATION. YESTERDAY, IT WAS OUR BIGGEST STOCK AND IS A BIT OF A BORING PIC COME OF -- PICK, BUT FOR US THAT HAS FANTASTIC MANAGEMENT AND ALSO THE CAPITAL MANAGEMENT THEY JUST ANNOUNCED AGAIN, INCREASING DIVIDEND AND BUYBACK. A LOT OF SUPPORT FROM HERE. SO IT DEFINITELY DOES DESERVE A POSITION IN A PORTFOLIO IN AUSTRALIA. PAUL: THE MATERIALS SECTOR HAS BEEN PERFORMING WELL AS A WHOLE WHICH STANDS IN SHARP CONTRAST TO WHAT IS GOING ON IN THE OTHER OVERWEIGHT SECTOR, WHICH IS FINANCIALS AND BANKS IN PARTICULAR. HOW MUCH OF WHAT IS GOING ON WITH THE BANKS IS IDIOSYNCRATIC AND HOW MUCH IS IT TO THE RATES RISING? ELFREDA: I THINK IT IS PROBABLY A COMBINATION OF ALL OF THE ABOVE. IF YOU LOOK AT ALL OF THE BANKS EFFECTIVELY THEY HAVE REFLECTED IN THIS EARNINGS SEASON THAT THE CONSUMER IN AUSTRALIA IS A BIT SOFTER. IT'S IF YOU THINK ABOUT ALL THE CHALLENGES WE ARE FACING HERE -- IF YOU THINK ABOUT ALL THE CHALLENGES WE ARE FACING HERE, INTEREST RATES, THEY ARE SEEING THE IMPACT COMING THROUGH ON MORTGAGES. AT THIS POINT IN TIME, PRETTY MUCH ALL THE BIG BANKS ARE SEEING EARNINGS DOWNGRADES AND THEY COME FROM A RELATIVELY LONG PERIOD OF EARNINGS UPGRADES. THIS IS A SECTOR WE HAVE BEEN REDUCING EXPOSURE WITH THE PREFERENCE OF OTHER FINANCIALS, AMP, MCCOURY, DOING A LOT BETTER THAN WHAT THEY WERE IN THE LAST FEW YEARS. PAUL: HOW DO YOU SEE THE PROPERTY STORY PLAYING INTO BROADER CONSUMER SENTIMENT AS WELL AND STOCKS? >> I THINK IT IS A BIG DEAL. A BIG PART OF THE AUSTRALIAN WEALTH IS IN THE PROPERTY MARKET. CURRENTLY YOU ARE SEEING A BIG DROP AND IT'S ALSO ABOUT THE EXPECTATION FROM HERE. A LOT OF PEOPLE ARE STANDING BACK NOT WANTING TO BUY BECAUSE THEY EXPECT OF THE LONGER PRICE. IF YOU ARE UNCERTAIN OF WHERE THAT'S GOING, IN AN ENVIRONMENT WHERE INFLATION IS HIGHER AND POTENTIALLY INTEREST RATES COULD STILL INCREASE AS WELL, IT IS PLAYING A REALLY BIG PART. THAT'S WHAT YOU PICK UP IN OUTLOOK STATEMENTS FROM A LOT OF COMPANIES THIS OUTLOOK SEASON, THE MORE CAUTIOUS TONE AROUND THE CONSUMER AND IT'S A CONFIDENCE GAME. AT THIS POINT IN TIME, THERE'S NOT A HUGE AMOUNT BENEFITING THE AUSTRALIAN COME TUMOR -- CONSUMER TO BE MORE CONFIDENT. HAIDI: I WANT TO ASK ABOUT AI. AUSTRALIA IS KIND OF THE ANTI-AI TRADE. WHEN THE OIL PRICE GOES UP, THE ENERGY TRADE COMES ROARING BACK. WE KNOW BOTH SIDES OF GOVERNMENT AT THE MOMENT HAVE TRIED TO COME TO PARTISAN CONSENSUS ON WHAT AI DATA CENTER BUILDOUT GUARD RAILS LOOK LIKE. ARE THERE OPPORTUNITIES FROM THIS ECONOMY AT AUSTRALIAN CORPORATE THAT MIGHT BENEFIT? >> I DO THINK SO, PARTICULARLY IN THE DATA CENTER SPACE. GOODMAN AND EXD CR TWO OF THE BIGGER ONES BUILDING OUT IN THAT SPACE. THERE'S ALSO A HUGE AMOUNT OF PRIVATE COMPANIES BUILDING OUT AND THAT WILL SUPPORT CONSTRUCTION COMMODITY COMPANIES. I THINK FOR US IF YOU LOOK AT HOW WE INVESTED AI GLOBALLY, WE LOOK AT THE VARIOUS DIFFERENT STAGES OF THAT AI ECOSYSTEM, AND WE LIKE TO INVEST IN DIFFERENT COMPANIES ACROSS THAT. WE DO THINK THAT THE GOODMAN GROUP IS A GOOD COMPANY, LONGER-TERM GROWTH, BUT ARE BETTING BIG ON DATA CENTERS. WE DO THINK THAT'S A GOOD OPTION. BUT THEN ON THE COMMODITY SIDE LIKE BHP AND COPPER, A COMPANY LIKE MAKE A PORT SEEN AS A NEO-CLOUD, THAT THERE ARE COMPANIES THAT ARE SEEN AS ADOPTING AIM ROLLING OUT AI PRODUCTS TO IMPROVE EFFICIENCIES. WE DO THINK THAT'S AN ENVIRONMENT WHERE CURRENTLY TO DATE IN THIS REPORTING SEASON, MORE THAN 60% OF COMPANIES HAVE TALKED ABOUT AI AND WHAT THEY ARE DOING. THE MAJORITY IS ABOUT IMPROVING EFFICIENCIES AND REDUCING COSTS. I THINK THE OVERALL ECONOMY WILL BENEFIT. I THINK BECAUSE TO PERCENT OF THE BENCHMARK SITS IN TECHNOLOGY, WE ARE NOT SEEN AS ONE OF THE MAJOR BENEFICIARIES OF THE AI BUILDOUT. PAUL: TO SOME DEGREE, DO YOU SEE THE ASX ACTING AS A HEDGE AGAINST THE AI STORY FOR GLOBAL INVESTORS? >> DEFINITELY I THINK SO. YOU CAN SEE THAT EVERY TIME THERE IS AN OFF AI DAY, AUSTRALIA IS BENEFITING. PAUL: TODAY, CASE IN POINT. >> [LAUGHTER] [LAUGHTER] EXACTLY, TODAY, CASE IN POINT. WITH THE ASIAN FLOWS, IF YOU THINK OF TAIWAN, SOUTH KOREA, THESE COMPANIES HAVE BECOME AI MARKETS, WHEREAS WE DON'T HAVE THAT. DEFINITELY WE ARE SEEING AS A HEDGE, AND TIME WILL ONLY TELL IF THAT IS GOING TO BE A GOOD THING OR A BAD THING OVERALL. I THINK FOR US, THE IMPORTANT THING IS STICK TO YOUR INVESTMENT PROCESS STICK, TO THE COMPANIES THAT YOU WERE LOOKING FOR, AND HAVE A DIVERSITY OF EXPOSURE TO IMPROVE EARNINGS PROFILES FROM HERE. HAIDI: TAKE US THROUGH SOME OF THE OTHER TOP PICKS STOCK WAS. >> ACROSS INDUSTRIALS, WE LIKE VENTURE SERVICES, IT IS MORE OF A SERVICING BUSINESS AND WHAT WE LIKE ABOUT THAT IS THEY ARE QUITE EXPOSED TO A NUMBER OF SECTORS IN. THE ECONOMY MORE RECENTLY THEY HAVE BEEN GOING BACK ON THINGS, SPENDING MORE ON DEFENSE. THAT'S A HIGHER MARGIN BUSINESS. AS I MENTIONED, THE AI OVERLAY ARE STARTING TO RULE THAT OUT. -- ROLL THAT OUT. WE HAVE STRONG MANAGEMENT WITH A CAPITAL MANAGEMENT PORTION WE ARE SEEING A LOT OF. I THINK SOME OF THE OTHER COUNTRIES THAT REALLY SURPRISED, WITH THE FINANCIAL SPACE, LET'S GO THROUGH QUITE A DIFFICULT PERIOD WITH A NUMBER OF EARNINGS DOWNGRADE. WE THINK OF THE TIME WHEN THEY HAVE GONE ACROSS CROSSED RESET. WE HAVE SEEN A LOT OF POSITIVE REVISIONS COMING THEIR WAY, NOT JUST ON THE STRATEGIC WEALTH BUSINESS, BUT ALSO A LOT OF WHAT THEY'VE DONE OVER THE LAST FEW YEARS HAVE RESET THE COST SPACE FOR THEM AND EXPANDING ON THE PLATFORM BUSINESS. ALL THAT INVESTMENT IN TECHNOLOGY IS COMING THROUGH. YOU SEE THE AMP NORTH PLATFORM BENEFITING FROM FLOWS, AND WHAT WE LIKE HIS OFFSHORE EXPOSURE ARE REALLY SEEING GOOD RESULTS FROM INVESTMENT IN CHINA. THERE'S A BIT MORE OF THAT TO COME THROUGH. CAPITAL MANAGEMENT, BUT ONE OF THOSE BUSINESSES THAT IN A TOUGH ENVIRONMENT THEY ARE DOING A LOT OF SELF-HELP AND TRADING AT A REASONABLE VALUATION SO THAT'S ANOTHER ONE WE'D LIKE AS WELL. PAUL: THANK YOU SO MUCH FOR YOUR VIEWS, ALFREDO YUNKER, CLIENT PORTFOLIO MANAGER AT ALPHINITY INVESTMENT MANAGEMENT. MORE AHEAD ON AUSTRALIA EVERY TUESDAY, IF YOU ARE WATCHING IN SYDNEY, THAT IS 8:40 A.M. IN HONG KONG. THIS IS BLOOMBERG. PAUL: THE TRUMP ADMINISTRATION IS PROPOSING A NEW WAY TO CHARGE COMPANIES UNDER THE H-1B PROGRAM FOR CANADIAN COMPANIES. THIS IS AFTER THE COURT STRUCK DOWN ITS EARLIER ATTEMPT IN JUNE. LET'S GET TO OUR IMMIGRATION REPORTER ALICIA CALDWELL FOR MORE. WHAT IS THE LATEST FOR THIS? REPORTER: THE ADMINISTRATION ANNOUNCED TODAY BY A TECHNICAL POSTING THAT THEY WILL NOW CHARGE 103,000 THEIR HOLDERS FOR ANY NEW H-1B CANDIDATE WHEREAS THE PREVIOUS RULE APPLIED TO THOSE OUTSIDE THE U.S., SO THIS IS OUT -- EXPANSIVE AND COVERS ALL AT 85,000 VISA SEEKERS WHO WOULD WEIGH IN ON THE LOTTERY EVERY YEAR. THE GOAL IS TO RAISE MONEY AND POSSIBLY REDUCE THE USE OF THESE PHASES. THE GOVERNMENT ESTIMATES IT WOULD GENERATE $8.8 BILLION AND WOULD BE USED FOR A VARIETY OF IMMIGRATION PROGRAMMING INCLUDING IMMIGRATION ENFORCEMENT AND ROUNDUPS WITH I.C.E. AND SO ON. HAIDI: WHAT DOES IT MEAN WHEN IT COMES TO THE FUTURE OF THE H-1B POLICY? REPORTER: THERE IS A LOT OF THE DIFFERING OPINION, BUT GENERALLY SPEAKING, A LOT OF FOLKS WHO ARE SUPPORTIVE AND THOSE WHO ARE NOT, SAY THIS WILL STRANGLEHOLD IT. IT WILL LIMIT COMPANIES WHO CAN USE IT AND LIKELY SHRINK IT. IN SOME INSTANCES, FOLKS TOLD US THIS WOULD SHRINK IT OUT OF EXISTENCE. ONE INDIVIDUAL DESCRIBED IT AS A BRAIN DRAIN POLICY AND ILLUMINATE FOREIGN STUDENTS WHO RELY ON THE AVENUE OR THE OPPORTUNITY FOR AN H-1B WHEN THEY DECIDE TO COME TO THE U.S. TO COMPLETE THEIR STUDIES. HAIDI: OUR IMMIGRATION REPORTER ALICIA CALDWELL WITH THE LATEST. WE ARE GETTING TO THE PART OF DAY-TO-DAY WHERE CHINA MARKETS COME ONLINE. A LITTLE BIT OF A DISCONNECT WITH A SERIES OF BLOCKBUSTER IPOS BUT THE BROADER MARKET REMAINS TO BE A LANGUISH ONE -- LANGUISHING ONE. THE FRESH TREASURY IS NEEDED FOR CHINA AND WILL THAT COME IN THE FORM OF ANY KIND OF FISCAL BAZOOKA? IT DOES NOT SEEM THAT IS HAPPENING. WE FED A SERIES OF COMMENTARIES BY THE NEWSPAPER SAYING THE SIGNATORY LOOKS LIKE THE BIG TIME STIMULUS WILL BE PRETTY LOW AT THIS POINT. AT LEAST AT THIS POINT BEIJING SEEMS TO BE DOWNPLAYING THE IMPACT OF THE SLOWDOWN SO THAT IS BAD TYPICALLY FOR THE STOCK INVESTORS RATE USED TO BE A SITUATION WHERE YOU GET THE BAD DAY IN THE MARKETS THAT WOULD RALLY BECAUSE IT'S A GUARANTEE TO SEE FISCAL SUSPENSION. WE WILL LOOK AT THE BROADER SELLOFF WITH SHIPS AND A 50 CHINA FUTURES LAGGING AS WELL. ALSO WORRYING ABOUT CAPACITY TARIFFS OF 7.5% FROM THE U.S., TOO. ♪