Jackson Hole, Anthropic’s Court Win and PayPal Deal Collapse | Bloomberg Tech 8/28/2026

ANNOUNCER: "BLOOMBERG TECH" IS LIVE FROM THE HEART OF SILICON VALLEY WITH ED LUDLOW IN SAN FRANCISCO. TIM: I'M TIM STENOVEC IN FOR ED LUDLOW. ALL EYES ON JACKSON HOLE AFTER KEVIN WARSH DELIVERED HIS FIRST ADDRESS OF THE SYMPOSIUM. WE WILL ALSO HEAR FROM ANDREW BAILEY A LITTLE LATER THIS HOUR. PLUS, U.S. JUDGE RULES THE TRUMP ADMINISTRATION MUST LIFT ITS BAN ON ANTHROPIC SAY I FEDERAL AGENCIES AND ADVENT STRIKE OTHERS DECIDE TO ABANDON THEIR PURSUIT OF PAYPAL IN A DEAL THAT COULD HAVE RANKED AS ONE OF THE BIGGEST EVER LEVERAGED BUYOUT. FIRST OF, A CHECK ON THE MARKETS. ISABELLA IS STANDING BY FOR MORE. >> SHARES ARE JUMPING AROUND 8%. EARLIER IN ACTUALLY JUMPED DOUBLE DIGITS. THE COMPANY WORKED TOWARD EARNING THAT THE ESTIMATES. THE COMPANY ANNOUNCED PLANS THAT WILL EXPAND SOME OF ITS SERVICES SO YOU SEE A NICE LITTLE BOOST. UNDERPERFORMING MAGNIFICENT 7, BUT LET'S CUT THEM SOME SLACK BECAUSE ON WEDNESDAY THEY DID REPORT EARNINGS. IT WAS JAW-DROPPING, BETTER-THAN-EXPECTED, SO IT IS NORMAL TO TAKE A BREATHER AND WE KNOW THAT YESTERDAY NVIDIA ADDED NEARLY $450 BILLION IN THE COMPANY'S STOCK, THE SECOND LARGEST ONE-DAY GAIN IS TRAILING AFTER MICROSOFT. SO LET'S ZOOM OUT AND LOOK AT THE BROADER EQUITY MOVES. WE HEARD FROM KEVIN WARSH SAYING THAT EVAL IS TO KEEP INFLATION UNDER 2%. WE KNOW WE HAVE A SPECIAL COVERAGE ON THAT. KEVIN WARSH ALSO SAME FINANCIAL RESTRICTIONS , UP BY NEARLY SEVEN BASIS POINTS. THE 10 YEAR YIELD OF MAYBE FLAT, I WOULD CALL THAT. TIM: MAX JOINING US ON BLOOMBERG BUSINESSWEEK DAILY AND THE 2:00 HOUR. THE RESERVE CHAIRMAN KEVIN WARSH NOTED INFLATION ISN'T MEANINGFULLY SLOWING. SPEAKING IN JACKSON HOLE, WARSH SAID POLICYMAKERS MUST BE CONFIDENT THAT IT IS. OTHERWISE, THE CENTRAL BANK HAS "WORKED TO DO." LET'S GET OUT TO MICHAEL MCKEE ALSO IN JACKSON HOLE. I THINK A BIG QUESTION GOING INTO THIS SPEECH YESTERDAY AND THIS MORNING WAS IF WE FIND OUT THE DIRECTION OF RATES FOR SEPTEMBER AND FOR THE REMAINDER OF THE YEAR. FAIR TO SAY WE DID? MICHAEL: I THINK THE MARKETS ARE TELLING YOU THAT THEY HAVE, IT'S JUST A QUESTION OF WHETHER YOU ARE INFERRING OR TAKING DIRECTION. IN THIS CASE, WARSH DID NOT PROMISE THAT RATES ARE GOING UP. BUT HE DID SUGGEST THAT IF INFLATION DOESN'T COME DOWN, THE FED HAS WORK TO DO WHICH THE MARKETS ARE READING AS RATES WILL GO UP. IT'S A QUESTION OF WHEN. WE OBVIOUSLY GET THE CPI THAT WILL BE A BIG FACTOR IN WHAT THEY DO ON THE SEPTEMBER 16 MEETING. THAT WOULD PUT A LOT OF PRESSURE ON THE FED TO START RAISING RATES. AND YOU CAN SEE THAT IN THE WAY THE YIELD CURVE IS FLATTENING TODAY. TIM: THERE'S A LOT THAT WE CAN GO THROUGH WITH THE SPEECH THAT HE GAVE. WE ARE GOING TO BE GETTING TO THE AI AND TECHNOLOGY AND PART OF IT LITTLE LATER IN THE PROGRAM ON BLOOMBERG TECH TODAY. ONE THING THAT STUCK OUT TO ME WAS ABOUT FORWARD GUIDANCE AND SLOWING POLICY RESPONSE. HE REFERENCED THAT IN 2021 HE THINKS THAT FORWARD GUIDANCE ACTUALLY SLOWED A POLICY RESPONSE TO INFLATION. CAN YOU EXPLAIN HOW THAT COULD HAVE OCCURRED? >> THIS NOT EMPIRICAL EVIDENCE OF THAT, BUT WHAT HE'S BEEN SAYING ABOUT FORWARD GUIDANCE ENDED UP MAKING PROJECTIONS ON THE ECONOMY . THEY MAKE SOME FORWARD GUIDANCE THAT WHAT IS GOING TO HAPPEN THE RATES AND BECAUSE THEY'VE DONE THAT, THEY ARE WEDDED TO THAT PAST FORECAST. A LOT OF PEOPLE ON THE FED WOULD DISAGREE, BUT YOU NOTICE ON A REGULAR BASIS THAT PEOPLE IN MARKETS ARE ALWAYS SAYING THE FED IS BEHIND THE CURVE, BECAUSE THEY MAKE THEIR FORECASTS BASICALLY ONCE A QUARTER. THE MARKET UPDATES ITS FORECAST EVERY FIVE SECONDS. IT IS WHETHER PEOPLE MAKING THE DECISIONS HAVE CHANGED THEIR MIND AND THEY DON'T GET THAT SIGNAL ON A REGULAR BASIS. HE THINK THAT IS BECAUSE THEY DON'T WANT TO SAY THEY CHANGED THEIR MIND. WE WILL HAVE TO SEE IF HE CAN CONVINCE THEM OF THAT, BUT HE CERTAINLY WANTS TO CHANGE THE WAY THE FED OPERATES, AND WE MIGHT SEE SOME CHANGES CERTAINLY IN THE DOT PLOT WHICH IS THE FORWARD GUIDANCE THAT HE DOESN'T LIKE. TIM: MIKE MCKEE OUT THERE IN JACKSON HOLE. WE WILL HAVE MUCH MORE FROM A JACKSON HOLE IN THE LATER THIS HOUR. THIS GET YOU MORE ON HOW TECH MARKETS ARE LIKELY TO INTERPRET THE COMMENTS AND HOW THEY ARE DIGESTING THIS WEEK'S EARNINGS. MAX HAS A $1.8 TRILLION IN ASSETS UNDER MANAGEMENT AS OF JULY. MAX, GOOD TO HAVE YOU TODAY. I WANT TO GO RIGHT IN THE FED CHAIRMAN'S SPEECH BECAUSE THERE WERE QUITE A FEW REFERENCES TO AI. HE SAID WE RECOGNIZE THAT AI HAS A NEW VARIABLE, POTENTIALLY A NEW FACTOR. HIS QUESTIONS, OR THE APPLICATION OF AI BECAUSE A SIGNIFICANT, SUSTAINED RISE IN PRODUCTIVITY ACROSS THE ECONOMY AND IF SO, WHEN? THOSE ARE THE OPEN-ENDED QUESTIONS HE ASKED. I'M WONDERING IF YOU HAVE ANSWERS TO THOSE QUESTIONS. >> I CAN CERTAINLY DO MY BEST. I THINK ONE OF THE KEY THING FED CHAIRMAN WARSH SAID IS THAT IS A FACTOR OF PRODUCTION. IT IS AN ENTIRELY NEW AVENUE WHICH WE CAN BOOST PRODUCTIVITY, IN WHICH WE CAN CHANGE THE ECONOMY. MY ROLE IS UNIQUE IN THAT BOTH INVEST IN THE COMPANIES THAT ARE DRIVING THE AI TRADE AND ALSO I'M DEPLOYING TECHNOLOGY USING THE SAME COMPANIES AS WELL AS THINGS WE ARE BUILDING ON OUR OWN AND WHAT I CAN TELL YOU IS WE ARE SEEING MEANINGFUL PRODUCTIVITY GAINS. WE HAVE AN AGENTIC WORKER WHO SITS WITH ME AND WORKS JUST LIKE AN ANALYST, EXCEPT AN ANALYST THAT HAS PERFECT RECALL THAT IS ABLE TO SYNTHESIZE DATA IN REAL-TIME AND HELP US MAKE BETTER INVESTMENT DECISIONS. SO THAT IS REALLY STARTING TO DRIVE CHANGE AND WE CAN SEE THAT CHANGE IN THE RESULTS OF OUR PORTFOLIOS. TIM: IS IT COMPLEMENTING THE WORKFORCE, SUPPLEMENTING THE WORKFORCE? ARE YOU HIRING FEWER ANALYST ON YOUR TEAM AS A RESULT OF THAT? >> I THINK IT IS CHANGING WITH THE ANALYST ROLE IS RATHER THAN FACT CHECKING FOR DOING A LOT OF WHAT WE WOULD CALL DESK WORK LIKE BUILDING MODELS. THE ANALYSTS TAKE A LOT MORE TIME TO TAKE MEETINGS WITH OTHER RESEARCHERS TO DEBATE WHERE THIS AGENTIC COWORKER CAN SIT AND CHIME IN PROACTIVELY OR REACTIVELY. IT'S REALLY LIKE HAVING A VERY POWERFUL COWORKER IS PERFECTLY HAPPY TO DO VERY IMPORTANT BUT LESS EXCITING WORK THAT HUMANS WOULD PREFER NOT TO DO. >> THIS GO TO THE SIDE EFFECTS. THE FED CHAIRMAN SAYING THAT BUSINESS IS RISING RAPIDLY. HE SAID MORE THAN HALF OF THE GROWTH THIS YEAR CAN LIKELY ASCRIBE TO THE BILL THAT RELATED TO AI. SHOULD WE LOOK AT THE PRODUCTIVITY OF THAT THAT COMES FROM THAT DIFFERENTLY IN A DIFFERENT TYPE OF? >> WE SHOULD, BUT WE ALSO REALLY NEED TO LOOK AND UNDERRATE THE FINANCING. WHAT WE'VE SEEN IS WE'VE GOT TO RUN PAST FREE CASH FLOW THAT THE HYPERSCALERS HAVE HAD, AND NOW MOST OF THIS, MOST OF THE MARGINAL AFTER CAPEX IS GETTING FUNDED THROUGH DEBT, AND A LOT OF IT IN PRIVATE CREDIT. AND A GOOD EXAMPLE OF THIS WAS ACTUALLY WHAT WE SAW IN ALPHABET VERSUS AMAZON EARNINGS WERE ALPHABET SAID WE ARE GOING TO LOSE SIGNIFICANTLY, NOT REALLY DRIVING THAT THE DEMAND. AMAZON SAID WE ARE BOOSTING MEANINGFULLY, WE SEE THE DEMAND COMING IN FROM AWS, THEY HAVE A GREAT RESULT IN TERMS OF THE PRICE ACTION. I THINK IT IS A VERY HEALTHY DEVELOPMENT. INVESTORS ACTUALLY UNDERWRITING THE SPEND, AND I THINK WE NEED THAT FISCAL PRUDENCE IN MARKETS RIGHT NOW BECAUSE NOT ALL CAPEX IS CREATED EQUAL. WE ARE KIND OF PAST THE INITIAL PHASE OF SPEND EVERYTHING YOU'VE GOT AND THE DEMAND WILL,. NOW THAT WE ARE IN THE PRODUCTIVITY PART OF THE STORY, WE NEED TO START TYING IT TO CONSUMER DEMAND, WE NEED TO UNDERSTAND HOW IS THAT GOING TO DRIVE THE ROI? >> SEVEN WHERE IS THE RIGHT PLACE TO INVEST IF THAT IS WHAT YOU ARE LOOKING FOR RIGHT NOW? >> WE REALLY LIKE THE CHIPS, LOOK PAST EVEN NVIDIA TO SOME EXTENT ALTHOUGH WE DO LIKE NVIDIA, AND LOOK AT WHO NVIDIA IS USING TO BUILD, WHICH IS REALLY IN SOUTH KOREA AND TAIWAN. IT'S SK HYNIX, SAMSUNG, TSMC. THESE ARE NAMES THAT CONDITIONALLY HAVE HAD WORSE MARGIN THAT HYPERSCALERS ON THE SOFTWARE SIDE AND NOW THAT HAS SHIFTED BECAUSE WITH DEMAND FOR MEMORY AND GPU SHOOTING PROFITABILITY OF SO MUCH, EVEN NVIDIA IN THEIR AMAZING EARNINGS CALL, MARGINS MIGHT TAKE A VERY SMALL HIT. BECAUSE EVEN THOUGH THE PAST ALMOST ALL THE COST TO OUR CONSUMERS, PEOPLE HAVE TO EAT A LITTLE BIT OF MARGIN BECAUSE OF MEMORY PRICES AND THAT THE TELLS YOU THE TOP DOG IN THE SUPPLY CHAIN IS. TIM: MAX, OUT THERE IN HER SAN FRANCISCO BUREAU THIS MORNING. GOOD TO SEE YOU. COMING UP, SPIRIT AI CEO SAYS HE'S PLANNING A CHATGPT FOR ROBOTS WITHIN THREE YEARS. MORE ON THAT, NEXT. THIS IS BLOOMBERG. TIM: THE CONSORTIUM HAVE DECIDED TO ABANDON THE PURSUIT OF PAYPAL ACCORDING TO SOURCES. THE POTENTIAL DEAL WOULD HAVE RANKED AS ONE OF THE BIGGEST AVERAGE LEVERAGED BUYOUTS. RHEINGOLD JOINS US FOR MORE. PAYPAL SHARES UNDER PRESSURE, DOWN 12%, AS A RESULT OF THE NEWS. WHY ABANDON THE DEAL? >> WE HAVE BEEN TRACKING THIS SINCE FEBRUARY. WE REPORTED STRIPE WAS INTERESTED IN ACQUIRING ALL OF PAYPAL. IN STRIKE CAME OUT, IT BECAME KNOWN THEY PUT AN OFFER IN TO PAYPAL. THAT IS WHEN PAYPAL RECKONED IT WAS UNDERVALUING THE STOCK. THE SHARE PRICE IS INTERESTING TO LOOK AT. THIS WAS A COMPANY VALUED IN THE REGION OF $300 BILLION AT ONE POINT. THAT DEAL PUT THEM AROUND THE $50 BILLION MARK. FOR A STOCK THAT HAS BEEN AROUND SO LONG AND SO INCREMENTAL TO ITS SPACE, YOU CAN MAKE THE CASE PERHAPS THERE IS SOMETHING MORE TO BE DESIRED WITH THE BID. TIM: LOOK NO FURTHER THAN THE PAYPAL MAFIA AND WHAT THOSE GUYS HAVE GONE ON TO DO. I'M CURIOUS, IF WE LIVE IN AN ALTERNATE UNIVERSE AND THIS DEAL HAPPEN, WHY THEY WOULD HAVE WANTED THE COMPANY AND WHAT THEY WOULD HAVE DONE WITH IT? RYAN: THEY ARE PIONEERS IN FINTECH, PARTICULARLY IN PAYMENTS. ADVENT IS A BIG FINTECH INVESTOR IN THE PRIVATE EQUITY WORLD. IT IS ONE OF THE BIGGEST, PRIVATELY HELD, MANAGED BY PARTNERS. THEY HAVE A BIG NETWORK OF PAYMENTS BUSINESSES. PAYPAL COULD FIT ONTO EXISTING PLATFORM BUSINESSES. TIM: DOES THIS MEAN PAYPAL IS IN PLAY FOR OTHERS? PRIDE: A LOT OF ANALYST REACTION HAS HAD THE FOCUS WILL MOVE BACK TO CHALLENGES WITH GROWTH. THE CEO THEY BROUGHT IN RECENTLY IS IN THE MIDST OF A TURN AROUND PLAN. IF YOU ARE A STRATEGIC PLAYER IN THE FINTECH SPACE, YOU WOULD BE LOOKING OVER YOUR SHOULDER SOMEWHAT. IT HAS BEEN A HARD PLACE TO BE SINCE THE PANDEMIC. I THINK PAYPAL WILL SEE WHERE IT SETTLES. THE DOWNSIDE OF ELECTORAL DEAL WILL PUT PRESSURE SHORT-TERM -- THE LACK OF A DEAL WILL PUT PRESSURE SHORT-TERM. TIM: STAY TUNED AND STAY TUNED TO RYAN'S REPORTING ALONG WITH PAIGE SMITH. THANK YOU SO MUCH. THE CEO OF THE CHINESE ROBOTICS START-UP SAYS CURRENT ROBOTS CAN ALREADY COMPLETE OFFICE TASKS, SKILLS UNIMAGINABLE HALF A YEAR AGO. LET'S LISTEN AS THE CEO SPEAKS WITH BLOOMBERG. >> CURRENT ROBOTS CAN COMPLETE TASKS LIKE DELIVERING PAPER TO AN OFFICE PRINTER, PLACING ITEMS LIKE PAPER THE PINS, AND WATER ON DESKS, AND PUTTING UNUSED TAPE OR INTO A SHREDDER. THESE SKILLS WERE UNIMAGINABLE HALF YEAR AGO. BUT NOW, WE CAN HAVE A I-DRIVEN ROBOTS AUTOMATICALLY COMPLETE THESE TASKS IN OPEN AND RANDOMIZED SCENARIOS. THE EVOLUTION OF THE ROBOT BRAIN WILL GET FASTER AND FASTER IN THE FUTURE. >> YOU TALK ABOUT THE SPEED OF DEVELOPMENT. RIGHT NOW, THE DEXTERITY AND FLEXIBILITY OF HUMANOID ROBOTS IS NOT AS GOOD AS REAL HUMANS. WHAT DO YOU THINK IS THE ADVANCEMENT IN CAPABILITIES OF THE ROBOTS IN THE NEXT FIVE YEARS? >> FIRST, FROM A TECHNICAL PERSPECTIVE, WE WILL DEFINITELY WELCOME THE CHATGPT MOMENT FOR ROBOTS IN THE NEXT THREE YEARS. THAT MEANS FOR A ROBOT, YOU CAN TEACH IT SIMPLY TO LEARN A NEW TASK USING ONE OR TWO MINUTES AND SIMPLE ACTIONS. WHEN YOU PLACE IT IN A SCENARIO IT HAS NEVER SEEN BEFORE, THEY CAN LEARN NEW TASKS FOR JUST A FEW MINUTES OF LEARNING AS WELL. THIS MEANS PEOPLE CAN DEPLOY A ROBOT INTO NEW FIELDS AT VERY LOW TIME AND MONETARY COSTS. IN THE NEXT FIVE YEARS, I THINK ROBOTS WILL USHER IN LARGE-SCALE COMMERCIAL APPLICATIONS IN INDUSTRY, COMMERCIAL SERVICES, HOTELS, RETAIL, AND LOGISTICS. >> RIGHT NOW, THERE ARE ROBOTICS COMPANIES IN CHINA. THE MARKET LEADERS ALSO HAVE THEIR OWN ADVANTAGE. HOW DO YOU EXPLOIT YOUR ADVANTAGE IN SUCH A CROWDED FIELD? >> THOSE COMPANIES HAVE AN ADVANTAGE MAKING THE PHYSICAL BODIES. AT SPIRIT AI, WE MOSTLY FOCUS ON THE ROBOT'S BRAIN ADVANCING FROM WALKING TO TRULY WORKING. THE CORE KEY TO THAT IS THE BRAIN. >> I KNOW YOUR COMPANY HAVE PARTNERED WITH LARGER COMPANIES. SHARE SOME OF YOUR USE CASES AT THESE COMPANIES. >> NOW, ROBOTS ARE USED TO DO WORK LIKE LOGISTICS SORTING. THESE JOBS WERE ORIGINALLY DONE BY HUMANS. THESE JOBS REQUIRE HANDLING ENVIRONMENTAL CHALLENGES. AND LOGISTICS SORTING, WE MIGHT NEED TO SORT TENS OF THOUSANDS OF PRODUCTS. IF WE USE TRADITIONAL PROGRAMMING METHODS, IT WILL BE IMPOSSIBLE. IT REQUIRES A MODEL THAT CAN RECOGNIZE TENS OF THOUSANDS OF PRODUCTS, PRECISELY PICK THEM UP, AND PUT THEM INTO THE TARGET PACKAGES. OUR ROBOTS HAVE ALREADY BEGUN EARLY COMMERCIAL TRIALS IN INDUSTRIAL AND LOGISTICS FIELDS. >> SHARE WHAT YOUR SALES NUMBERS ARE LOOKING LIKE. HOW MANY ROBOTS ARE SELLING IN THE YEAR FOR QUARTER? WHAT SEVERAL HUNDRED UNITS. >> ISSUE BUSINESS MAINLY IN CHINA? DO YOU HAVE PLANS TO EXPAND OVERSEAS? >> OUR CURRENT MARKET IS IN CHINA BECAUSE WE HAVE THE RICHEST APPLICATION SCENARIOS IN THE WORLD. IT ALLOWS US TO TRAIN BETTER MODELS. CHINA ALSO OFFERS SIGNIFICANT ADVANTAGES IN SUPPLY CHAINS AND ENGINEERING TALENT. NATURALLY, GLOBALIZATION STRATEGY IS OUR LONG-TERM STRATEGY. TIM: THERE YOU HAVE IT. THE SPIRIT AI CEO. YAHAIRA, TAKE IT AWAY. YAHAIRA: IT IS TIME FOR TALKING TECH. TITUS MOST VALUABLE STOCKS POSTED -- CHINA'S MOST VALUABLE STOCKS POSTED TO JUMP IN REVENUE WITH PROFITS ALSO SURGING. THE CHIPMAKER SAYS TIGHT GLOBAL SUPPLIES AND MEMORY CHIPS HELP TO DRIVE THE GROWTH. RESULTS COME A MONTH AFTER CSM SEAT PULLED OFF CHINA'S SECOND-BIGGEST IPO IN SHANGHAI. SOFTBANK IS SEEKING ANOTHER $10 BILLION LOAN TO HELP REFINANCE DEBT TIED TO INVESTMENTS IN OPENAI ACCORDING TO PEOPLE FAMILIAR WITH THE MATTER. IT IS THE LATEST ROUND OF FINANCING WITH SOFTBANK EXPECTED TO INVEST CLOSE TO SIX TO FIVE DOLLARS I -- $65 BILLION IN OPENAI BY SEPTEMBER. THIS COMPANY POSTED ROUGHLY $400 MILLION IN OPERATING PROFITS. ANALYSTS HAD BEEN EXPECTING A LOSS OF MORE THAN $100 MILLION. THAT COMES AFTER COMPETITION IN CHINA STARTS TO EASE, MEANING THEY ARE SPINNING LESS ON DISCOUNTS AND INCENTIVES TO WIN OVER CUSTOMERS. T THANK YOU SO MUCH. A U.S. JUDGE RULING THE TRUMP ADMINISTRATION MUST LIFT THE BAN ON ANTHROPIC AI TECH. WE WILL HAVE MORE COMING UP NEXT. THIS IS "BLOOMBERG TECH." TIM:TIM: A U.S. JUDGE RULED THE TRUMP ADMINISTRATION MUST LIFT THE BAN ON ANTHROPIC FOR FEDERAL AGENCIES. THE JUDGE FOUND IT IS NOT ADEQUATELY JUSTIFIED, BASED ON THE DESIRE TO MAKE A PUBLIC EXAMPLE OUT OF ANTHROPIC FOR ITS CRITICISM OF THE GOVERNMENT. RACHEL METZ HAS DETAILS. IS IT JUST AS EASY AS FLIPPING A SWITCH AND SAYING NOW THE GOVERNMENT IS USING ANTHROPIC TECH AGAIN? >> IT IS NOT QUITE THAT EASY. ANTHROPIC HAVE BEEN FIGHTING A LEGAL BATTLE ON TWO FRONTS. IT GOT A DECISION THAT WAS POSITIVE FOR ANTHROPIC IN THE CALIFORNIA COURT. HOWEVER, IT NOW NEEDS TO GET APPROVAL OR THE GOVERNMENT WILL GETS ITS WAY IN A D.C. COURT. BASED ON THAT DECISION, WE WILL SEE WHAT HAPPENS NEXT. IT IS NOT THAT SIMPLE. TIM: WE HAD TO GO BACK TO WHAT IS AT ISSUE. THAT WAS THE CONCERN ABOUT WHAT ANTHROPIC THOUGHT IT'S TECHNOLOGY COULD BE USED FOR AND WHAT IT DID NOT WANT IT USED FOR. MASS SURVEILLANCE OF AMERICANS OR GOVERNMENT DEPLOYMENT OF WEAPONS. IS THERE ANY CLARITY ON THAT FRONT? RACHEL: I THINK THE ONE THING THERE WAS SOME CLARITY ALMOST IN A PIECE OF THE JUDGE'S RULING. SHE MADE IT CLEAR THAT THE DEFENSE DEPARTMENT IS NOT PREVENTED FROM TAKING LAWFUL ACTIONS AVAILABLE BEFORE IT SET THE SUPPLY CHAIN RISK DESIGNATION AGAINST ANTHROPIC. THE ORDER OF THE JUDGE MADE THE OTHER DAY DOES NOT MEAN THE DEFENSE DEPARTMENT HAS TO USE ANTHROPIC'S PRODUCTS. IT COULD USE ANOTHER SUPPLIER. IT DOES WORK WITH OTHER AI COMPANIES SUCH AS OPENAI. AS LONG AS IT DOES THOSE THINGS CONSISTENT WITH THE REGULATIONS, THE JUDGE SAID APPLICABLE RELEASE AND STATUTES AND CONSTITUTIONAL PROVISIONS. TIM: SPEAKING OF ANTHROPIC, GET ALONG WITH OPENAI AND A HUNDRED OTHER ORGANIZATIONS ARE WARNING BUSINESSES AND GOVERNMENTS MUST DO MORE TO PREPARE FOR AND DEFEND AGAINST AI-ENABLED HACKS. THEY ARE URGING ACTION AS AI MODELS IMPROVE. WHAT SPECIFICALLY ARE THEY CONCERNED ABOUT AND CALLING ON THE GOVERNMENT TO DO? RACHEL: WHAT WE HAVE SEEN OVER THE LAST SEVERAL MONTHS IS A HAND FLIP INCIDENTS INVOLVING -- A HANDFUL OF INCIDENTS INVOLVING SOME OF THE CYBER CAPABLE AI MODELS FROM ANTHROPIC AND OTHER MODELS. THE COMPANIES ARE SAYING WE MADE THESE MODELS. THEY ARE SO GOOD AT DEFENDING AGAINST CYBER SECURITY THREATS, BUT THEY ALSO COULD BE USED FOR THE OPPOSITE TO PERPETRATE THOSE TYPES OF THREATS. BECAUSE OF THAT, WE THINK GOVERNMENTS AND ORGANIZATIONS, COMPANIES, COULD SHORE UP THE DEFENSES THEY HAVE BECAUSE THE COMPANIES ARE CONCERNED THE MODELS COULD BE USED POSITIVELY BUT ALSO MISUSED BY BAD ACTORS. RACHEL: RACHEL METZ IN SAN FRANCISCO. CHECK OUT RACHEL'S AND THE ENTIRE TEAM'S REPORTING ON BLOOMBERG.COM. WE ARE GOING BACK TO WYOMING FOR MORE ON WHAT WE LEARNED FROM KEVIN WARSH AT THE SYMPOSIUM. THIS IS "BLOOMBERG TECH." TIM: WELCOME BACK TO "BLOOMBERG TECH." MORE FROM JACKSON HOLE IN JUST A MINUTE. FIRST, A CHECK ON THE MARKETS. ISABELLE LEE IS STANDING BY FOR MORE. >> I WANT TO BRING YOU SOME INDIVIDUAL MOVERS. YOU SEE SHARES UP BY 8%. ACTUALLY ROSE DOUBLE DIGITS EARLIER IN THE DAY, THE HIGHEST SINCE AUGUST 2025. THE ESTIMATES ESPECIALLY ON REVENUE. ALSO ANNOUNCED TO LAUNCH SOME OF THE SERVICES IN AUSTRALIA. A GOOD, HEALTHY GAIN. IN NVIDIA, WE ARE SEEING THE OPPOSITES THREE BUT YOU HAVE TO GIVE NVIDIA A BREAK. WE SAW A RALLY YESTERDAY WHERE THE STOCK ADDED NEARLY 450 MILLION DOLLARS TO ITS MARKET CAP, THE SECOND LARGEST ONE-DAY GAIN IN HISTORY EVER. AND ON WEDNESDAY WE SAW FANTASTIC EARNINGS FROM THE VIDEO WITH BLOOMBERG INTELLIGENCE SAYING THE OUTLOOK WAS JAW-DROPPING AND J.P. MORGAN SAYING IT WAS BETTER THAN ACTIVE. LET'S ASSUME OUT AGAIN TO LOOK AT BROADER MARKETS. S&P HIGHER BY FOUR TENS OF 1% AND THE NASDAQ HIGHER BY THREE TENS OF 1%. WE ARE ABOUT ONE HOUR AFTER FEDERAL RESERVE CHAIR KEVIN WARSH GAVE HIS SPEECH, HIS FIRST MAJOR SPEECH AS THE HEAD OF THE CENTRAL BANK IN THE U.S. AND HE SAYS HE VOWS TO KEEP INFLATION AT 2%. HE SAYS FINANCIAL CONDITIONS TO HIS NEW ARE CURRENTLY NOT RESTRICTIVE AN INTEREST RATES ARE THE PRIMARY TOOL IN KEEPING INFLATION STEADY. OF COURSE, THAT PUSHED YIELDS HIGHER. NEARLY 10 BASIS POINTS. THIS IS MORE SENSITIVE TO EMINENT POLICY MOVES AND USING 10 YEAR YIELDS HIGHER BY JUST TWO BASIS POINTS. TIM: ISABEL MENTIONING JACKSON HOLE. FOR TOO TO JACKSON HOLE WHERE WE ARE WAITING FOR FED CHAIR KEVIN WARSH. LISA AND MICHAEL ARE BRAVING THE ELEMENTS AND JOINING US FOR MORE. LISA, WHAT DID WE LEARN THIS MORNING AT THE DUST SETTLES FROM CHAIRMAN WARSH'S FIRST ADDRESS I JACKSON HOLE? >> WE ACTUALLY LEARNED QUITE A LOT. REALLY, WE DID SEE SOME SORT OF HAWKISH RESULT FROM THIS FED CHAIR KEVIN WARSH. HE CAME OUT AND SAY WE WILL NOT TOLERATE ABOVE TARGET INFLATION FOR THIS LONG, WE ARE NOT SATISFIED. HE DID TALK ABOUT HOW THAT 2% TARGET IS ABSOLUTE, THEY ARE NOT LOOKING TO REALLY UNDERMINE THAT IN ANY CAPACITY, AND HE TALKED ABOUT THE COMPONENTS OF PCE. AND IT SOUNDS GRANULAR, BUT THAT IS GETTING MARKETS WITH THEY WANT, A GAUGE OF EXACTLY HOW MUCH YOU ARE SEEING INFLATION COME THROUGH IN DIFFERENT WAYS THAT GOES BEYOND JUST OIL PRICES AND TARIFFS AND EVEN THE AI SHOCK BUT IS CONCERNING AN UNACCEPTABLE AND IT DOES SQUARELY GO WITH IT. HE GAVE A LOT THAT WE COULD ACTUALLY FEED INTO AND GIVES US A SENSE OF WHAT HE LOOKING FOR. TIM: LET'S PLAY A LITTLE BIT OF SOUND FROM THAT SPEECH THAT ENDED JUST ABOUT ONE HOUR AGO. >> THERE WAS ONE SIGNAL NOBODY CAN MISS. RESPONSIBILITY FOR 65 MONTHS OF SUSTAINED ELEVATED INFLATION SITS SQUARELY WITH THE CENTRAL BANK. AND THAT IS WHERE IT BELONGS. SO HERE IS MY STANDARD. WE MUST BE CONFIDENT THAT UNDERLYING INFLATION IS MOVING TO OUR OBJECTIVE CLEARLY AND AT SUFFICIENT SPEED. OTHERWISE, WE HAVE WORK TO DO. THAT IS OUR JOB, THAT IS OUR MANDATE, AND THAT IS OUR CHARGE TO KEEP. TIM: THAT WAS KEVIN WARSH JUST IN THE LAST HOUR FROM JACKSON HOLE. MICHAEL MCKEE, I WANT TO BRING YOU HERE BECAUSE SOMETHING THAT STUCK OUT TO ME, HE SAID HERE IS MY STANDARD. IS THIS STANDARD ANY DIFFERENT FROM PREVIOUS FED CHAIRS? >> NOT PARTICULARLY. WHAT HE WAS BASICALLY SAYING IS THAT INFLATION IS THE MAIN GOAL, SO IF WE ARE NOT MAKING PROGRESS ON INFLATION, WE ARE NOT MEETING OUR MANDATE, ESPECIALLY AS HE SAYS WE ARE MEETING OUR MANDATE ON THE LABOR SIDE. IT MADE IT CLEAR TO THE MARKET THAT HE GETS THE CONCERNS. IT WAS NOT FORWARD GUIDANCE, BUT IT WAS GUIDANCE IN THE SENSE OF HE IS TELLING THEM HE DOES WATCH THE INFLATION DATA AND THAT THE INFLATION DATA ARE NOT COMING DOWN FAST ENOUGH. IF THAT CONTINUES THE FED WILL HAVE TO ACT. HE DIDN'T SAY THE WORDS RAISE RATES, BUT THAT IS WHAT THE MARKET IS INFERRING AND WHY YOU ARE GETTING THAT REACTION AND I THINK THAT IS WHAT HE WANTED TO DO TODAY. HE SEEMS TO BE SUCCESSFUL IN WALKING BACK SOME OF THE CONCERNS. LISA: HE MENTIONED HIKES IN TWO CAPACITIES. WHETHER IT IS A RATE HIKE OR WHETHER POTENTIALLY IT WITH THE OTHER KIND OF HIKE THAT LOOKS PRETTY AND AUSPICIOUS RIGHT NOW. MICHAEL: DOESN'T LOOK LIKE THAT IS HAPPENING. TIM: I FEEL BAD FOR YOU GUYS OUT THERE BECAUSE TYPICALLY, WE ARE SEEING SOME BEAUTIFUL MOUNTAINS IN THE BACKGROUND. THAT IS LISA BROWN WITHIN MIKE MCKEE BRAVING THE ELEMENTS FOR US AND HOPEFULLY THE SUN COMES OUT IN JUST A BIT. JACKSON HOLE IS OUR FOCUS BUT ALSO NVIDIA BECAUSE TODAY AFTER NVIDIA'S BLOCKBUSTER EARNINGS, IT SHOULD MAKE AS PROJECTED SALES GROWTH OF 70%. SHARES NOW DOWN ABOUT 1.8%. YESTERDAY JUST A MASSIVE DAY FOR NVIDIA GIVEN HIS OVER $5 TRILLION MARKET CAP. WE SAW MORE THAN $400 BILLION ADDED TO THIS COMPANY IN A SINGLE DAY. THE DUST HAS SETTLED A LITTLE BIT, WE ARE GETTING MORE AND MORE ENDLESS NOTES. WHAT ARE YOU HEARING ABOUT THAT REPORT? >> I'M NOT HEARING ANYTHING NEGATIVE REALLY AT ALL ABOUT NVIDIA. I THINK THEY REALLY BLEW THINGS OUT OF THE WATER AND I HEARD A FEW PEOPLE REALLY COMPARE THIS TO THE START OF THE AI ERA WHEN IT NVIDIA WAS DELIVERING THESE UPSIDE SURPRISES OF 50, 100% ABOVE WHAT WAS EXPECTED. THAT IS THE KIND OF UPSIDE THAT WE SAW EARLIER THIS WEEK, AND PEOPLE REALLY WORKED POSITIONED FOR THAT KIND OF MASSIVE UPSIDE SURPRISE, WHICH IS WHY WE SAW THE STOCK MOVE AS DRAMATICALLY AS IT DID AND REALLY LIFT THE WHOLE AI ECOSYSTEM. EVERYONE SORT OF VIEW THIS AS AN ABSOLUTE BLOWOUT AND A REAL INDICATION THAT AI SPENDING IS DURABLE AND PERSISTENT, REALLY GOING OUT SEVERAL QUARTERS. TIM: I'M GLAD YOU MENTIONED THE VISIBILITY BECAUSE MY NEXT QUESTION IS WHAT THE NEXT CATALYST IS FOR PEOPLE TO UNDERSTAND THE DURABILITY AND SUSTAINABILITY OF THIS. >> A FEW WEEKS AGO WHEN WE GOT RESULTS FROM ALL THE HYPERSCALERS, THEY REALLY CAME OUT AND SAID A LOT OF AGGRESSIVE AI TARGETS. SPENDING LOOKS PRETTY DURABLE AND LOOKS LIKE IT IS GOING TO BE CONTINUING FOR SEVERAL QUARTERS GOING OUT THERE. A LOT OF POSITIVE COMMENTARY ALL AROUND. TIM: RYAN OUT THERE IN CHICAGO. CHECK OUT RYAN'S REPORTING ON THE TERMINAL AND AT BLOOMBERG.COM. COMING UP, SOUTH KOREA'S SECOND MOST VALUABLE COMPANY SK HYNIX IS MAKING CLOSER TIES WITH JAPAN'S INDUSTRY. MORE ON THAT, NEXT. THIS IS "BLOOMBERG TECH." TIM: LET'S GET BACK OVER TO JACKSON HOLE WHERE WE ARE SEEING KEVIN WARSH LEADING CENTRAL BANKERS ON THEIR TRADITIONAL WALK. YOU CAN SEE THE CENTRAL BANKERS THERE. NOT QUITE THE SUNSHINE WE ARE USED TO. THERE'S THE FED CHAIRMAN ALONG WITH HIS FELLOW CENTRAL BANKERS, ONE OF WHOM WE WILL HEAR FROM IN JUST A FEW MINUTES. LISA BROWN WITHIN MIKE MCKEE ARE JOINING US FOR MORE ON WHAT WE LEARNED THIS MORNING. A LOT OF TRADITION OUT THERE, AND A LOT OF POMP AND CIRCUMSTANCE. WHAT EXACTLY IS GOING ON RIGHT NOW? LISA: RIGHT NOW YOU SEE THREE BANKERS WITH KEVIN WARSH GETTING VERY WET BECAUSE IT IS POURING HERE AND THEY ARE DOING THIS HISTORIC WALK WHICH HAS A LOT MORE CONTEXT ON HISTORY. BUT THEY ARE DOING IT REGARDLESS OF THE WEATHER, SHOWING A DISPLAY OF UNITY. THIS IS SORT OF AN INTERESTING THING. MICHAEL: THE FED DOES NOT CALL IT THE PERP WALK AND THEY INSIST IT IS A TOTALLY SPONTANEOUS DECISION BY THE CHAIR. IT ALL BEGAN MAYBE 10 YEARS AGO BEFORE THEY STARTED TELEVISING THE CHAIRMAN'S SPEECH WHEN IT BECAME SUCH A BIG THING FOR WALL STREET THAT THE CHAIRMAN WAS SPEAKING. STILL FOR THE NEWSPAPERS AND THE TV PEOPLE WE SAID WE NEED A PICTURE OF THE CHAIR, AND SO WE TALKED TO THE FED AND SAID CAN WE DO SOME SORT OF PHOTO OP? AND THEY CAME UP WITH THIS IDEA OF DOING A WALK AND IT HAS BECOME TRADITION EVER SINCE. CHAIR GRABBED ANOTHER CENTRAL BANKER AND THEN WALK AROUND AND PRETEND THEY ARE LOOKING AT THE SCENERY. THIS IS THE FIRST TIME I CAN EVER REMEMBER IT READING LIKE -- RAINING LIKE THIS AND I WOULD POINT OUT THAT ANDREW BAILEY AND KEVIN WARSH ARE THE ONLY TWO PEOPLE IN TEAM NATIONAL PARK OR WEARING SUITS AND TIES TODAY. SO IT IS UNFORTUNATE. TIM: AND I NOT BEING SERVED BY MY MEMORY, DON'T WE OFTEN SEE FOLKS WEARING VESTS IN SITUATIONS LIKE THIS RATHER THAN SUITS AND TIES? >> THAT IS WHAT THE REST OF THE AUDIENCE IS WEARING. THEY ARE IN JEANS AND CASUAL SHIRTS. IT IS A CASUAL DRESS CONFERENCE EXCEPT THAT THIS CHAIRMAN IS A LITTLE MORE FORMAL THAN WE HAVE SEEN IN THE PAST. SO HE IS WEARING A SUIT AND TIE. HE TALKED ABOUT IT LAST NIGHT AND HE SAID THIS IS ME AND I'M NOT GOING TO GIVE IT UP. TIFF MACKLEM AT LEAST NOT WEARING A TIE, ONLY IN A SPORT COAT, BUT HE IS A CANADIAN OUTDOORS KIND OF GUY. LISA: LOOKING AS THOUGH IT WASN'T POURING, BUT IT ACTUALLY INCREASED THE PACE OF PRECIPITATION AS THEY WERE WALKING. TIM: LISA ABRAMOWICZ AND MICHAEL MCKEE OUT THERE IN JACKSON. A LOT MORE FROM JACKSON IN JUST A FEW MINUTES. IN THE MEANTIME, TAKING A LOOK AT THESE MARKETS ON THIS JACKSON HOLE FRIDAY. WE DO SEE THE S&P 500 HIGHER BY TWO TENS OF 1%, UP 16 POINTS. THE NASDAQ 100 JUST UNDER A LITTLE BIT OF PRESSURE, DOWN EVER SO SLIGHTLY. WE CAN AROUND THAT TO 1/10 OF 1% LOWER. NASDAQ 100. EXCUSE ME. SK HYNIX IS THE SECOND LARGEST MEMORY MAKER IN THE WORLD. IT IS EXPLORING WAYS TO DEVELOP CLOSER TIES WITH JAPANESE CUSTOMERS AND SUPPLIERS IN THE MEMORY INDUSTRY AMID THE GLOBAL AI HARDWARE BOOM. MIKE SHEPARD JOINS US NOW WITH MORE. MIKE, WHAT DID WE LEARN FROM SK HYNIX AND THIS POTENTIAL FOR STRONGER RELATIONSHIPS? >> WHAT WE HEARD YESTERDAY WAS FROM THE CHIEF EXECUTIVE OFFICER WHO IS IN WEST LAFAYETTE, INDIANA OF ALL PLACES TO BREAK GROUND ON A NEW PACKAGING FACILITY. THE COMPANY IS PLANNING IT, IT IS WORTH $4 BILLION AND WILL BE THE FIRST OF ITS KIND HERE IN THE U.S., BUT AS HE WAS ADDRESSING REPORTERS FOLLOWING THE EVENT, HE CAST HIS EYES GLOBAL AND HE TALKED ABOUT THE PARTNERSHIPS THAT HE WOULD LIKE TO FORGE WITH JAPANESE COMPANIES SPECIFICALLY IN THE AREA OF FLASH MEMORY. THIS IS A TYPE OF STORAGE THAT ALLOWS YOU TO PRESERVE DATA EVEN WHEN THE POWER IS OFF AND IT IS BECOMING INCREASINGLY IMPORTANT AS WE HIT THIS NEXT PHASE OF THE AI BOOM, AND THAT IS ACTUALLY TAKING TRADE BONDS AND PUTTING THEM TO WORK. THE IDEA IS THAT YOU WOULD HAVE A MODEL STORE ON A FLASH, AND IT WOULD SAVE SOME OF THE BANDWIDTH NECESSARY, WHICH IS WHAT SK HYNIX MAKES, AND WHAT SK HYNIX IS PUTTING INTO ALL NVIDIA CHIPS, AND THAT HAS HELPED THE COMPANY ARRIVED TO THAT HIGH VALUATION WE'VE BEEN SEEING LATELY. >> IN THAT CONNECTION TO US HAS TO DO WITH HIGHER PRICES FOR CONSUMER PRODUCTS THAT USE MEMORY. LOOK WHAT WE HEARD FROM APPLE JUST BACK IN JUNE. WE ARE GOING TO SEE HIGHER PRICES ON THESE IPHONES IN SEPTEMBER AND EVEN ON PRODUCTS THAT ARE ALREADY ON SHELVES AS A RESULT. THOSE HIGHER PRICES FROM A CONSUMER STANDPOINT? >> THAT IS SOMETHING HE TALKED ABOUT. HE SAID THAT THE MEMORY SQUEEZE THAT WE ARE SEEING IS SOMETHING THAT WILL LAST THROUGH 2030. THIS IS A SQUEEZE THAT HE TALKED ABOUT LAST MONTH WHEN WE SAT DOWN FOR AN EXCLUSIVE INTERVIEW WITH HIM ON THE DAY THAT SK HYNIX MADE ITS DEBUT IN U.S. MARKETS. YOU OVER MEMBER IT RAISED $26.5 BILLION WITH A SALE OF U.S. TRADED SHARES. THOSE RECEIPTS DEPOSITORY RECEIPTS ARE UP FROM LAST MONTH. THAT IS AN INDICATION OF HOW MUCH DEMAND THERE IS NOT ONLY FOR THEIR SHARES BUT FOR THEIR PRODUCTS. WE ARE SEEING AN HISTORIC SHORTAGE OF MEMORY FUELED IN PART BY THE AI PUSH NO DOUBT. THAT IS HAVING A RIPPLE EFFECT ON THE CONSUMER SPACE AND ON IPHONES AS WELL. WE HAVE HEARD APPLE AND MICROSOFT TALK ABOUT NOT ONLY THE NEED TO RAISE PRICES BUT ALSO THE COMPLICATIONS IT IS POSING FOR SUPPLIES. TIM: MICHAEL SHEPARD, THANK YOU FOR THAT REPORTING. LET'S GET BACK OUT TO JACKSON HOLE, WYOMING, WHERE LISA ABRAMOWICZ IS WITH THE BANK OF ENGLAND GOVERNOR ANDREW BAILEY. LISA: I AM HERE WITH ANDREW BAILEY WHO IS THE GOVERNOR OF THE BANK OF ENGLAND. JUST A LITTLE BIT WET AFTER WALKING. IT WAS REALLY IMPRESSIVE. HE JUST KEPT POURING ON YOU -- IT JUST KEPT POURING ON YOU. >> WE HAVE NO MOUNTAINS TODAY. LISA: MAYBE WE COULD TAKE SOME OF THIS BACK TO ENGLAND. WHAT WAS YOUR TAKEAWAY FROM FED CHAIRMAN KEVIN WARSH'S SPEECH? WAS IT A MESSAGE YOU WERE HOPING FOR OR YOU THOUGHT WAS APPROPRIATE? >> IT IS A CARDINAL RULE WE DO NOT COME ON SHOWS AND DISCUSS. I THINK THE POSITION HE TOOK WAS OF REAL SUBSTANCE. HE MADE SOME VERY IMPORTANT POINTS. HE MADE VERY IMPORTANT POINTS ABOUT FORWARD GOINGS AND HOW HE IS THINKING ABOUT THIS. I COMMEND HIM BECAUSE I THINK IT WAS A SPEECH OF REAL SUBSTANCE. LISA: HE TALKED ABOUT FORWARD GUIDANCE BEING SOMEWHAT ANTIQUATED TO A MOMENT MORE COMPLICATED. COMPLICATED MONETARY POLICY MIGHT HAVE LED TO THE 2021 DELAY RAISING. DO YOU THINK FORWARD GUIDANCE MIGHT HAVE OUTLIVED SOME PURPOSE? >> WE ALL WRESTLE WITH THE ISSUE. IT IS AN IMPORTANT ISSUE. THE DISTINCTION I TRY TO DRAW IS THIS. WE CANNOT INFLUENCE WHAT INFLATION IS GOING TO BE TOMORROW. WE CAN INFLUENCE INFLATION FURTHER IN THE FUTURE. WE HAVE TO LOOK IN THE FUTURE AND DESCRIBE OUR POLICY IN TERMS OF THE FUTURE. CHAIR WARSH MADE THIS POINT. THERE IS GREATER UNCERTAINTY AT THE MOMENT ABOUT THE IMMEDIATE SITUATION. THERE IS ALWAYS UNCERTAINTY. THEREFORE, O IT IS ALWAYS CONDITIONAL. I THINK CONDITIONAL STATEMENTS ABOUT POLICY ARE A DANGER. I AGREE WITH HIM. WHETHER IT IS OUT OF DATE, GOOD QUESTION. I THINK THE 2021 POINT IS COVID WAS SUCH A HUGE SHOCK. THERE WAS HUGE DEMAND ON US TO STEP FORWARD AND PUT THE TOOLS TO WORK AND DO EVERYTHING WE COULD TO PUT ALL OF THE TOOLS TO WORK. WE ARE NOT IN THAT WORLD NOW. I DON'T THINK UNCONDITIONAL STATEMENTS ABOUT POLICY WORK IN THAT SENSE, BUT WE HAVE TO DESCRIBE WHAT WE ARE DOING IN TERMS OF OUR VIEWS ON THE FUTURE. LISA: IT WAS NOTABLE TO ME KEVIN WARSH TALKED ABOUT THE COMPONENTS OF PCE AND IT WAS BROAD-BASED IN THE U.S. IS IT AS BROAD-BASED IN THE U.K.? IS IT A DIFFERENT INFLATIONARY BACKDROP DUE TO AI, THE INVESTMENT THEY ARE, AND SOME OF THE GROWTH BACKDROP THAT IS DIFFERENT FROM THE U.S.? >> IT IS A DIFFERENT GROWTH STORY. HAVING SAID THAT, I THINK AI IS CRITICAL HERE. WE NEED TO SEE FASTER GROWTH IN THE U.K., FASTER UTILITY GROWTH. I THINK AI AND ROBOTICS ARE A CRITICAL SOURCE OF THAT. I THINK THE POINT CHAIR WARSH MADE, WHICH IS VERY IMPORTANT, I WILL APPLY THIS TO THE U.K., HE MADE THE KEY POINT HE IS LOOKING TO SEE WHETHER UNDERLYING INFLATION IS GOING BACK TO TARGET AND OVER WHAT PERIOD OF TIME. THAT IS OUR ISSUE AS WELL. WE ARE LOOKING AT SECOND ROUND EFFECTS OF THE ENERGY SHOCKS. DO WE EXPECT INFLATION TO RETURN TO TARGET? IS THAT TIME AND TREND SUSTAINABLE AND CONSISTENT WITH THE INFLATION TARGETS? IN THE U.K. SITUATION AT THE MOMENT, I WOULD SAY SO FAR, WE ARE SEEING SUBDUED SECOND ROUND EFFECTS. WE ARE SEEING A SOFTENING LABOR MARKET FOR SOME TIME. SECOND ROUND EFFECTS AT THE MOMENT ARE SUBDUED. THAT IS WHY I HAVE TAKEN THE VIEW WE CAN WATCH THIS SITUATION FOR THE MOMENT. EVERY MEETING WE HAVE, WE HAVE TO FALL BACK TO IT. LISA: HOW MUCH DOES IT FORCE YOUR HAND IF THE FED HIKES INTEREST RATES? DOES IT PUT PRESSURE ON YOU TO MATCH THAT IN SOME CAPACITY, PARTLY BECAUSE OF THE CURRENCY DIFFERENTIALS, PARTLY BECAUSE OF THE RACE FOR CAPITAL? >> I THINK CHAIR WARSH MADE THE POINT. WHATEVER THE FED DOES, IT WILL DO IT BASED ON ITS RESPONSIBILITIES FOR THE U.S. WE WILL TAKE DECISIONS THAT HAVE TO DO WITH THE U.K. WE HAVE AN OPEN ECONOMY. WE ALL SEE THE EFFECTS OF WHAT GOES ON IN THE REST OF THE WORLD ON OUR INFLATION OUTLOOK. THAT IS THE WAY WE DO IT. WE DO NOT SAY THEY HAVE DONE THIS SO WE HAVE TO DO AS WELL. WE SAY, WHAT IS THE OVERALL IMPACT OF THIS ON OUR INFLATION SITUATION? LISA: ONE THING THE U.S. HAD NOT HAD TO DEAL WITH AS MUCH AS YOU WAS A DIVIDED COMMITTEE. IT WAS NORMAL TO GET UNANIMOUS AFTER UNANIMOUS DECISION. THEN WE WOULD GET THE BOE DECISIONS AND IT WOULD BE FOUR PEOPLE VOTED FOR THIS, THREE PEOPLE SAID THEY WERE NUTS, ONE PERSON SAID WHY AM I EVEN HERE. I'M WONDERING, FROM YOUR PERSPECTIVE, IS THERE ANY ADVICE YOU WOULD GIVE CHAIR WARSH ON THE CENTRAL BANK COMMITTEE? [LAUGHTER] >> LET ME SAY, EACH OF US TAKES OUR OWN APPROACH TOWARD CHAIRING COMMITTEES. I THINK IT IS IMPORTANT THAT THERE IS A PLURALITY. THE WHOLE REASON WE HAVE NINE MEMBERS ON THE COMMITTEE IS TO HAVE A PLURALITY, TO HAVE DIFFERENT VIEWS, TO HAVE DELIBERATION. IT IS KEYED TO THE PROCESS THAT WE SIT IN A ROOM THAT WE SIT IN A ROOM AND DELIBERATE AND REACH A CONCLUSION. IT IS IMPORTANT WE HAVE TRANSPARENCY ABOUT THAT. WE HAVE INTRODUCED A CHANGE TO OUR TRANSPARENCY AND NOW HAVING PARAGRAPHS GIVING INDIVIDUAL VIEWS OF EACH NUMBER. THE MONETARY POLICY STATEMENT IS THE VIEW OF THE MAJORITY. I THINK THAT CLARIFIES THE DIVISION OF VIEWS. MY VIEW IN OUR SETTING IS I THINK IT IS VERY IMPORTANT WE ARE TRANSPARENT. I ENCOURAGE THIS PLURALITY. THEN I HAVE TO TRY TO' STEER IT TO A CONCLUSION. LISA: WE HAVE HEARD FROM A LOT OF HAWKS TODAY. YOUR OWN COLLEAGUE DESCRIBED HERSELF AS ON THE HAWK Y SIDE. WE HEARD BETH HAMMOND TALKING ABOUT HOW IT HAS BEEN TOO HIGH FOR TOO LONG WHEN IT COMES TO INFLATION. DO YOU FEEL YOU ARE IN THE MINORITY SAYING WE NEED TO WATCH THIS BECAUSE WE DO NOT WANT TO TORPEDO THE ECONOMY BEFORE IT HAS A CHANCE TO RIGHT SIZE? >> I DO NOT CHARACTERIZE MYSELF AS A DOVE. THE MAJORITY OF THE COMMITTEE HAS BEEN IN SIMILAR PLACES. I THINK WE ARE SEEING AT THE MOMENT RELATIVELY MUTED SECOND ROUND INFLATION EFFECT. BUT OBVIOUSLY, THIS IS AN EVOLVING SITUATION. I CANNOT GIVE YOU ANY TRANSPARENCY ON FORWARD GUIDANCE. I CANNOT GIVE ANY PROMISE THAT WILL CONTINUE. OUR JOB IS TO GET INFLATION BACK TO TARGET. WE WILL DO THAT. WE WILL CONSIDER HOW LONG THAT PATH TAKES AND IS THAT CONSISTENT WITH PRICE STABILITY. LISA: HOW COMPLICATED IS THE JOB OF CENTRAL BANKERS GLOBALLY, PARTICULARLY FROM DEVELOPED MARKETS GIVEN HOW MUCH DEBT HAS BEEN INCURRED FOR DECADES? DOES THAT CREATE A DIFFICULT ISSUE WITH ACCUSATIONS OF QUALITIES ASIAN -- PALLETIZATION GIVEN WHAT THE FED OR THE BANK OF ENGLAND DOES HAS AN EFFECT ON THE OVERALL BUDGET OF DIFFERENT GOVERNMENTS? >> PROBABLY THE MOST GOVERNMENT -- COMPLICATED AREA IS BALANCE SHEET DEVELOPMENT. WE HAVE BEEN REDUCING BALANCE SHEETS. WE WILL HAVE A DECISION IN DECEMBER. MY VIEW IS IT IS IMPORTANT WE HAVE A BALANCE SHEET THAT GIVES US THE SCOPE TO DO WHAT WE NEED TO DO IN THE FUTURE. IT IS IMPORTANT WE ALSO REDUCE THE INTEREST RATE RISK ON OUR BALANCE SHEET. THE DEBT QUESTION I THINK YOU HAVE TO PUT INTO THE BROADER CONTEXT OF THE CHALLENGES WE ALL FACE IN DEVELOPED ECONOMIES. THERE BIG LONG-TERM CHALLENGES. AGING POPULATIONS IS A BIG LONG RUN CHALLENGE. THE TURNAROUND OF THE POST-COLD WAR DEFENSE EXPENDITURE IS A VERY BIG CHALLENGE. THEY ARE NOT DIRECT CHALLENGES FOR MONETARY POLICY BUT THEY ARE CHALLENGES FOR ECONOMIC POLICY AND HAVING AN IMPACT ON FISCAL POLICY AND DEBT LEVELS. YOU LOOK AT THE LONG RUN PROJECTIONS, THEY TELL YOU THESE ARE ISSUES WE ARE GOING TO HAVE TO SERIOUSLY MANAGE. LISA: IT IS NOTABLE THAT MUCH MORE -- THIS IS MUCH MORE ATTENDED BY GLOBAL CENTRAL BANKERS. A LOT OF PEOPLE HAVE TO GO TO ASHEVILLE FOR THE G20 MEETING THAT YOU ARE HEADING OFF TO TOMORROW MORNING. IT IS NOTABLE AT THIS MOMENT, IT IS WEIRD FOR THIS MEETING TO BE SO CLOSE TO THAT MEETING BOTH IN LOCATION AND TIMING. IT SORT OF INDICATES THE MOMENT WE ARE IN AND THE IDEA THE FISCAL BACKDROP CANNOT BE EXTRICATED AS CLEANLY FROM MONETARY POLICY AS IT COULD BE 20 YEARS AGO. >> NORMALLY, WE HAVE THE G20 MEETINGS IN FEBRUARY AND JULY. THIS YEAR, WE ARE HAVING IT AT THE END OF AUGUST. IN SOME WAYS, IT HAS WORKED QUITE WELL BECAUSE WE ARE IN THE U.S. AND IT CUTS DOWN ON THE EXTENSIVE TRAVEL WE DO. I WOULD NOT ATTRIBUTE IT TO ANYTHING MORE STRONGLY. LISA: IN THE U.S., PEOPLE ARE TALKING ABOUT AI BEING THE HOLY GRAIL OF PRODUCTIVITY. DO YOU SEE AIS BEING MORE DISINFLATIONARY IN THE UNITED KINGDOM -- DO YOU SEE AI AS BEING MORE DISINFLATIONARY IN THE UNITED KINGDOM? >> I THINK THE INTERESTING QUESTION IS THERE WILL BE BOTH DEMAND SHOCKS AND SUPPLY SHOCKS FROM AI. IF YOU LOOK BACK AT GENERAL FOCUSED TECHNOLOGY INNOVATIONS IN THE PAST, IN TERMS OF THE SEQUENCING OF SHOCKS, IF WE GET THE DEMAND SHOCKS AHEAD OF THE SUPPLY SHOCKS, YOU WILL GET PRESSURE ON INFLATION. THOSE CAN COME THROUGH IN TERMS OF ASSET MARKETS. IF YOU GET THE SUPPLY SHOCKS FIRST, YOU GET THE UPTURN. LISA: WE HAVE MORE FROM JACKSON HOLE ON BLOOMBERG AFTER THE BREAK. THANK YOU SO MUCH GOVERNOR ANDREW BAILEY. THIS IS BLOOMBERG. ♪