Nvidia’s Upbeat Sales Forecast Shows AI Boom Remains Strong

20:16Tim Stenovec:And in fact, we're seeing Broadcom, TSMC, and Micron shares follow NVIDIA higher. Jay Goldberg, come on in here and talk a little bit about the broader repercussions of a print like this. outside of NVIDIA? What's the signal that it sends, not just to hardware makers, but to the entire market? I think there are always concerns about how long the spend is going to keep going. And we certainly had some positive data points about that two weeks ago when the hyperscale is reported, Facebook reported. They have very strong CapEx numbers. This just continues that trend. And I don't want to say it's a rising tide that lifts all boats, but it is$600,$700 billion dollars in capex this year and that's going to that's going to spread across the entire ecosystem

20:57Carol Massar:no and i want to go back to and and i totally get like gaming not important but i was like looking to see if there's any supply constraints in the rest of their universe and i just thought it was kind of interesting that i haven't seen anything along those lines it was just in regards to gaming so is that a good sign that we haven't seen anything that the company has said so far in terms of supply constraints yeah for the rest of the business or or i don't know is it not that important?

21:20Tim Stenovec:Well, I, you know, I, I leave it to, to the analysts to model money left on the table, if there were any, so to speak, but like given the, the outlook in terms of sales and where it, where it came in relative to consensus, you know, Nvidia it's an enviable position to be in, right? Where demand exceeds your ability to supply anyway, but going back to that five-year handbag analogy of a few moments ago, you know, the other argument that, that gentlemen and Nvidia have made quite consistently is that if you tell your suppliers what you plan to do five years in advance, then the rest of the supply chain can help prepare with you and keep up.

21:58Tim Stenovec:And recently, that's been most difficult in memory, but memory shows up in pricing. And if you're Jensen Wang, I'm sure you can make a phone call and make sure that the corresponding high bandwidth memory that you need is there or thereabouts.

22:13Carol Massar:Quick check on Nasdaq 100 e-mini futures here in the aftermarket and they're up about 1.8 percent so we're certainly seeing a lift uh to the overall market jay gulbert come on back in what do you what's top of mind when we get to this uh conference call in terms of what you want to hear i know we talked a lot about margins earlier um but what is it yeah i mean i think this this margin stuff is important because what i'm

22:37Tim Stenovec:sort of reading between the lines is they had to negotiate pricing with the memory got memory makers and the memory makers have the most leverage they've had in a decade and we don't see any impact on nvidia's numbers compare that to pretty much any other electronics company out there today which is warning about memory i'm sure that nvidia is feeling some of that but the fact that their gross margins are guiding to at least in line tells me that they're just going to price on those memory increases to their customers which is a testament to their to the to their pricing power to their power, their market position.

23:12Tim Stenovec:Jay Goldberg. Jay, we're gonna have to leave it there. We're gonna give you time to get ready to jump on that call. Jay Goldberg is senior analyst, semiconductors and electronics for Seaport Research Partners. Once again, Jay, the only analyst tracked by the Bloomberg terminal who has a sell rating on NVIDIA. Ed, I want to give you the last word. You've spoken to Jensen Wong many, many times. What's a question that you would have for him on the earnings call tonight? Yeah, like ultimately, it just always comes down to a projection of confidence that all of the stories we've been over in more than the last year are still intact.

23:46Tim Stenovec:You know, that the great build out of AI infrastructure is early, that they have long horizon visibility into what's going on. All NVIDIA can control, I suppose, is the roadmap to go from one generation of compute to the next. And so they talk about in the CFO document margins being supported by the ramp up in Blackwell and mix of new products. Well, when does that mix change? When does Vera Rubin really kick in and then go beyond that? That's kind of how the street would look at it, I think.

24:17Carol Massar:All right. We're going to leave it there. Ed, we know you're busy as well. Ed Ludlow, thank you so much as we awaited those numbers and helping us break them down. Co-host of Bloomberg Tech, of course, on Bloomberg Television. Catch it at 11 a.m. Wall Street time, Monday through Friday.

24:31Tim Stenovec:Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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25:04Tim Stenovec:Visit LifeMD.com slash goodlife. Hello, hello. I'm Malcolm Gladwell, host of the podcast Smart Talks with IBM. I recently sat down with IBM's chairman and CEO, Arvind Krishna, and I asked him, how can companies use AI to its fullest potential to create smarter business?

25:26Carol Massar:My one advice to them, pick areas you can scale.

25:29Tim Stenovec:Don't pick the shiny little toys on the side. For example? If anybody has more than 10 % of what they had for customer service 10 years ago, they're already five years behind. If anybody is not using AI to make their developers who write software 30 % more productive today, with the goal of being 70 % more productive.

25:57Carol Massar:Yeah. Wow.

25:58Tim Stenovec:So we are not asking our clients to be the first experiment on it. We say, you can leverage what we did. We're happy to bring out all our learnings, including what needs to change in the process, because the biggest change is not technology. It's getting people to accept that there's a different way to do things. To listen to the full conversation, visit ibm.com slash smarttalks.

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27:28Tim Stenovec:You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 p.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

27:42Carol Massar:NVIDIA shares continuing to trade higher. A couple of headlines also crossing that we want to bring to you. Nvidia says it's secured supply to meet demand for several quarters. So we talk about supply constraints often when we're talking about Nvidia and the AI demand. Also, Nvidia is saying the United States granted a license to ship H200 chips to China-based clients. So they've granted a license for specific China-based customers. The U.S. license is to ship small amounts of the H200 to China. So we were looking for some clarification on its business in China, something that they've certainly been looking for.

28:19Tim Stenovec:We got a great Bloomberg Intelligence Roundtable. Nandeep Singh is Global Head of Technology Research for Bloomberg Intelligence. He joins us here in the Bloomberg Interactive Brokers Studio. He covers NVIDIA. He covers Snowflake and more. Also, Anurag Rana is Senior Technology Analyst for Bloomberg Intelligence. He joins us from Chicago, and he covers Salesforce. So we're going to talk software. We're going to talk hardware. Nandeep, I want to start with your reaction to NVIDIA. It was a beat. It was, I mean, a very good quarter. Your reaction to margin and what is actually holding out margins here?

28:50Tim Stenovec:Because 75.2%. Yeah, no mention of any impact related to memory costs, which is surprising. Why is that surprising? I know memory costs have gone up, but NVIDIA is such a big company. Don't they have pricing power? They do. Or purchasing power, rather? They clearly did a great job in terms of securing that supply, and they don't have to pay the premium that everyone else has to pay on the hardware side. They said secured supply to meet demand for several quarters. What's several? Well, I mean, in this case, at least. This is like the Fed.

29:21Carol Massar:But they're saying that they've got it. That's a good thing.

29:23Tim Stenovec:They have got it. And they're guiding to, you know, mid 70 % gross margin for next quarter as well. So clearly memory, not, you know, an impact at all in terms of the margins. The thing that is clear is they are selling to existing customers not just GPUs, but systems. And that's the big difference between an NVIDIA and an AMD. AMD wants Meta to use their chips and integrate it. NVIDIA is actually selling to their customers entire systems that have higher ASPs. They are helping them reduce the token costs. And that's where the customers don't mind paying that extra premium that NVIDIA is charging, because overall, the total cost of ownership is lower than if you were to standardize on any other chips.

30:16Tim Stenovec:And that's what's reflected in their print is, look, their customers see the value.

30:21Carol Massar:So well done, NVIDIA, right?

30:22Tim Stenovec:By doing the whole thing. And the Blackwell architecture, that's really taken off. I mean, all the concerns around the migration from Hopper to Blackwell, I mean, they just proved that Blackwell will be probably a bigger product in terms of their chip architectures.

30:38Carol Massar:Does this in your mind, I mean, I always feel like you're like the calm voice of saying the AI spend is still happening, like everybody relax a little bit.

30:46Tim Stenovec:It's accelerating now.

30:47Carol Massar:But it's accelerating. That's what you're getting from this.

30:50Tim Stenovec:I mean, look at NVIDIA's growth in the last fiscal quarter. It was around mid-60%. 60%, they're pointing to 77 % growth in their fiscal 1Q. So that goes to show, and the proof point you can see in the hyperscaler CapEx. The hyperscaler CapEx seems to be going up as well. So it's underpinned by healthy fundamentals. We know why NVIDIA's top line is accelerating. Right. Because the CapEx seems to be accelerating. And all this points towards more inferencing, more demand for AI compute. And we are hitting that phase where it's not just, you know, about training or whether it will happen or not. It's happening.

31:30Carol Massar:So the ROI, the usage, right? We're seeing it. The usage is happening. And companies are consuming the compute.

31:37Tim Stenovec:It's going to get reflected in the cloud revenue next quarter. It's going to get reflected in all the possible forms of where inferencing will show up. We're going to bring Anurag in in a second and talk Salesforce because I think that's a good transition to talk about what companies are doing with AI and the message, at least, that Salesforce is trying to make with agentic AI. But before we get there, Mandy, if I do want you to weigh in on what Carol mentioned earlier about the China business. H200 shipped under a new program subject to a 25 % tariff. NVIDIA discloses U.S. government in a 10K filing granted license by the U.S.

32:10Tim Stenovec:in February of 2026. the U.S. license to ship small amounts of H200 to China for specific China-based customers. What does our investing audience need to understand about what it can sell to China and the impact on that financially? I mean, China used to be mid-single-digit percentage of NVIDIA's overall data center revenue. And Jensen has said China is about a$50 billion addressable market when it comes to chips. And so the fact that they're allowed to sell something now to China doesn't mean it's going to grow at the same rate as their overall top line, which is, you know, 77 percent. And that excludes the China number.

32:51Tim Stenovec:But it's all incremental revenue. And this print shows there is just insatiable demand for NVIDIA's chips. And whoever can get it will buy it. So it's just a question of whether NVIDIA is willing to sell it to them or not.

33:05Carol Massar:All right. So let's go to Salesforce. We do want to bring in our Anurag Rana, Senior Technology Analyst at Bloomberg Intelligence. He's in Chicago. Shares of Salesforce at Anurag are down about 4.5 % in the aftermarket. Some of the red headlines that we crossed on the Bloomberg company in terms of the outlook sees first quarter revenue of$11.03 to$11.08 billion. That's above the street estimate of$10.99 billion. Also increasing its share buyback authorization to$50 billion. dollars. Walk us through because this company has certainly been under a lot of pressure. It's down about 50 % since late 2024.

33:44Tim Stenovec:So there are two things that are happening right now. The first is given so much spend going into AI, the non-AI spending is the one that's under pressure. And that is hurting companies like Salesforce, Workday, Accenture, and so forth, because companies have or the clients don't have that much money to spend in terms of how they're allocating AI spending versus non-AI. The second big piece right now is the market's extremely worried about software companies getting disrupted by all the model providers and all the AI native companies. So Salesforce are getting hit by two different ways. But the results, frankly, I mean, I wouldn't say they were disappointing.

34:22Tim Stenovec:I would say they were stable in line in terms of what they were saying they're going to do. So from our side, you know, it is just going to take some time to sort out. So Anurag, the question I think a lot of people have, excuse me, about a company like Salesforce. And, you know, we could go through any other software company, not any other, but many other software companies and ask you the same question is about the threat from artificial intelligence. Mark Benioff was very clear in the press release to say that this is a company that has like relaunched. I don't have the exact wording in front of me, but relaunched as an AI, an agentic AI company.

35:01Tim Stenovec:Is it really under threat? And specifically, like, what is the threat from Claude, from Anthropic or from OpenAI that investors are so worried about? And is it warranted? So the question is the answer to the if is it warranted? I mean, I think it's going to take some time to play out because if the models get really smart, then why do you need a manufactured software like this? That software can do a lot of what you need to do in terms of managing your Salesforce or customer service. Now, the question is, in our view, when a company like Salesforce is there, there are a handful of their products that they have that they sell into the enterprise, whether it's customer service cloud or sales automation cloud.

35:43Tim Stenovec:Those are the ones I think they have a little bit better position of not being disrupted, but they have other visualization tools or some other smaller products that may not be the ones, but anybody would pay for it. So I think there is a lot that needs to be done from Salesforce in terms of adding more AI capabilities to its core product and not change the narrative around it.

36:06Carol Massar:You know, the narratives have been so interesting on AI, as you really well know. So looking at names like Snowflake down about 1.3 % here in the aftermarket, we're talking about Salesforce and that stock. Just a real quick rehash here on the Bloomberg. We're seeing that stock still down about 4.5 % here in the aftermarket. And then, of course, we've got NVIDIA up about 2.3%. You put out some great research this week, Anarag, you and the team about the haves and have-nots in AI disruption. What do we need to know at this point, especially when everyone says, folks, we're still early in on this.

36:39Carol Massar:We don't really know how it all plays out.

36:44Tim Stenovec:You know, I think that's the most important thing is we are very early in the inning. But at the same time, you know, when people are worried, they'll entirely sell the entire sector. We have seen that numerous times. So when we looked at this thing, I mean, the entire team worked on creating a framework of, you know, when we see a company, does it have high market share? Does it sell to very large companies versus smaller companies? Is it a platform? Is it a system of record? All those things takes into account, you know, kind of the history of a company. So let's say a company like SAP that's been around for 50 years.

37:15Tim Stenovec:You, you know, use it for your core accounting reasons, supply chain. I think something like that is better entrenched than a very small company that's probably doing, you know, one particular function or selling only to the small and medium customers.

37:29Carol Massar:Hey, final question here on Salesforce. just going back as we watch this stock down 4.6%. Top of mind, I know I always ask you guys this, but when the call starts with the company and the C-suite and analysts and investors, what must be asked?

37:43Tim Stenovec:I think the biggest thing is going to be like what are you doing to change the narrative around them being disrupted by AI and how are they adding more AI capabilities across their entire suite?

37:55Carol Massar:All right, love it. Anurag, thank you so much. Anurag Rana, his research, certainly on the AI world and also on Salesforce. We'll be looking for that later on today. Anurag Rana, Senior Technology Analyst at Bloomberg Intelligence out there in Chicago.

38:10Tim Stenovec:This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg 1130.

38:29Carol Massar:Geopolitics, some certainly mentioned in President Trump's speech last night. The president, in his State of the Union speech, focused on the economy and his view, included statements about what we just talked about with our own Mike McKee. Inflation is plummeting, he said. He said incomes are rising fast. And he also talked about Friday's Supreme Court decision that struck down the president's global tariffs.

38:51Tim Stenovec:An unfortunate ruling from the United States Supreme Court. It just came down. It came down. Very unfortunate ruling.

39:01Tim Stenovec:But the good news is that almost all countries and corporations want to keep the deal that they already made. I used these tariffs, took in hundreds of billions of dollars to make great deals for our country, both economically and on a national security basis. I introduced the great health care plan. I want to stop all payments to big insurance companies and instead give that money directly to the people. The roaring economy is roaring like never before. Our country is winning again. In fact, we're winning so much that we really don't know what to do about it. People are asking me, please, please, please, Mr.

39:44Tim Stenovec:President, we're winning too much. Our nation is back bigger, better, richer and stronger than ever before.

39:55Carol Massar:All right, everybody. That, of course, was President Trump last night at the State of the Union address. We should point out his speech was criticized by Democrats, including U.S. Senator Elizabeth Warren, who said he had nothing to say about issues like capping credit card interest rates and making child care more affordable. Let's get a policy view of last night's address from President Trump and what policies and actions that may still be coming that could impact the future outlook for the United States. Great to have back with us. Libby Cantrell, she is Managing Director, Head of Public Policy for PIMCO.

40:25Carol Massar:She joins us from PIMCO's offices right here in New York City. Libby, welcome back. Great to have you here. Let's just talk broadly about this speech. What stood out for you and what do you think should stood out for the investing public, American citizens at large, the business community? And I think about American citizens who still think about this affordability issue. So what stands out on those fronts?

40:50Tim Stenovec:Yeah, nice to be with you. I mean, this was, you know, there was more performance here than policy, we would argue. There was a bit of a spiking of the football in terms of really sort of reinforcing some of what President Trump has perceived as victories. The one big, beautiful bill closing the border. Some of the other immigration policies that he has pursued. And also some of the foreign policy wins that he is characterized, at least as wins. So I think that this was in some ways a lot of kind of red meat for his base as as these addresses oftentimes are. Now, he did talk about tariffs, as you as you mentioned.

41:34Tim Stenovec:I think that to the relief of many Republicans in that chamber, he did not call on Congress to take a vote on tariffs. I think that is something that probably would have failed anyway, but also would have been politically difficult for for Republicans. But by and large, this was, I think, a pretty typical State of the Union address in many ways. It was, again, more of a rehashing of sort of the political winds and pretty light on policy details and light on kind of a roadmap, I think, for a lot of congressional Republicans heading into the midterms. Yeah, I'm really glad you went to the midterms because that's exactly where I want to go.

42:14Tim Stenovec:And try to understand from you if it actually moved the needle on how people could vote come the midterms. Because that's what Republicans and Democrats are focused on right now. I think it was a bit surprising that there were not arguably more policies that he'd actually highlighted in other speeches, in other venues, highlighted in last night's speech. He did talk about this ban that he wants Congress to codify in terms of institutional investors investing in single family homes. But he didn't really talk about some of the other proposals to Senator Warren's criticism. She remarked that he did not talk about capping credit cards and what have you.

42:59Tim Stenovec:Now, I don't think any of those will actually get effectuated into policy. Those need Congress anyway. But in terms of really leaning into that affordability sort of framework and theme, he didn't really give Republicans all that much. Again, I think what his hope is and what a lot of Republicans hope is, is that voters sentiment around the economy will be different come this fall. And of course, that one big, beautiful bill, people will be getting refunds on average, you know,$4 ,000, about$1 ,000 extra in terms of a refund relative to last year. So I think the hope is that there will be more optimism and that folks will have a different perception of affordability.

43:41Tim Stenovec:And so maybe he won't need to lean into some of those policies. I think that was maybe last night was maybe a tell of that of that thinking.

43:48Carol Massar:Libby, you did focus on the stock market, certainly something we focus on here at Bloomberg. But, you know, talking about how good that was right and wealth created and good for our investors. But is that always a good read or is that even a good read on kind of the state of the U.S. as a nation and as an economy?

44:07Tim Stenovec:Well, I think there are lots of examples where voters have one view of things and the stock market is doing something different. I think if you talk to President Biden, I think that was one of his frustrations and his economic advisor's frustrations is that actually the market was doing quite well and the economy objectively was doing pretty well. But voters just didn't feel it. So perception is reality here. And going into these midterm elections, again, I think there is a hope that voters will feel better about things. And I think to President Trump's credit in terms of the Trump accounts that were codified into one big, beautiful bill, this idea of broadening that out and giving folks access to retirement accounts who may not have access to traditional 401k.

44:55Tim Stenovec:But so I think he is trying to tie the stock market performance to kind of everyday people's lives. However, you know, we'll see there's a lot of distance between here and there in terms of getting that actually effectually into policy.

45:08Carol Massar:I think a lot of folks think what a great idea, right, to get if we talk about wealth creation, this is a great way to do it. But I do also think about how do we pay for all this stuff? And when do we think about kind of the fiscal house and when that's going to matter? I know, you know, go back a decade or so, and it was in every conversation I talked about here at Bloomberg or even longer than that. Then it went away and now it's back again. So I just think about when do we have to kind of when does that all come home to roost or is it already?

45:36Tim Stenovec:Yes, I think if you contrast this speech with the speech last February, where President Trump was really leaning into this idea of doge and cutting federal spending and talking about the deficit, there was no mention of the deficit last night. And in fact, he talked about how important Social Security and Medicare were and how those would not be touched. As you all know, those are important programs. Bipartisan, you know, why bipartisan support? However, they're both very expensive as well. You know, our view here is that while there is no kind of immediate fiscal reckoning, I mean, the bond market, as you all know, hasn't necessarily, the bond vigilantes haven't necessarily come out here.

46:19Tim Stenovec:and discipline Washington. But it's probably a question of, you know, when, not if, that there will be an inflection point where members of Congress will have to actually do something in terms of sort of the fiscal trajectory. It doesn't look like it's close. There's not a lot of political appetite to increase taxes or reduce spending. You know, our view is a sort of 6 % to 7 % deficit as a percentage of GDP. There will be a limit to that. And whether it's the bond market that is imposing that discipline or when it's, you know, Social Security trust fund starting to kind of go bankrupt, so to speak, which is expected to happen in the early 2030s.

46:59Tim Stenovec:So we do think this is, you know, again, a question of when, not if. But it's just the win is probably not, you know, under President Trump's term, at least as, you know, if what the market signals are saying now.

47:11Carol Massar:You know, Libby, you know, you've seen different market cycles, different economies under different presidents. We've talked about this a little bit earlier with our own Mike McKee. How do you describe the Trump economy? Is it a good one?

47:23Tim Stenovec:Well, I think that, you know, and again, there is a limitation to how much a president can actually impact the economy. So this is, you know, for better or for worse, presidents, President Trump included, they like to take, you know, take sort of credit for when things are going well, but also to sort of avoid any of that, you know, blame when they're not. I think we would characterize this economy, this sort of K-shaped, two-speed economy is quite real. Where our, you know, if you just look at the components of GDP, obviously, you know, AI-related CapEx fueled a lot of growth last year, as did the high-end consumer.

48:06Tim Stenovec:I think there is a hope in 2026, and again, this is what I think Republicans are banking on, that the breadth of that economic growth is broader. and that this sort of the consumer at the kind of middle to lower end starts feeling better about things and starts participating in the economy. But if you if the economy just is predicated on kind of AI related capex and the high end consumer, that makes for a relatively fragile economy. And if you sort of see any kind of wobbles in the labor market, for instance, that could have maybe a nonlinear impact. So, you know, I think it's a stronger economy.

48:46Tim Stenovec:It's been a resilient economy for sure. Right. But again, I think Republicans are hoping that you can sort of broaden out the source of that growth and that they'll actually be rewarded then, you know, come November.

48:57Carol Massar:But that AI spend, the impact on the market, sending it higher, and then, you know, the wealth created among affluent spenders, that is something that Greg Daco has certainly talked about a lot for us from EY Parthenon and the importance. And if that starts to come undone, that could be problematic, Tim.

49:13Tim Stenovec:Hey, Libya, I want to shift gears a little bit and talk geopolitics because ahead of the speech, the president and he's gotten quite a bit of criticism in recent months, even from within his own party, about focusing too much on geopolitics. And while he didn't talk too much about geopolitics, what he did frame last night was, you know, Venezuela and the ouster of Maduro, that being a win for oil companies and Americans who are getting oil and will get oil from Venezuela. And just now we are learning that Cuba has shot four dead in a clash with a Florida speedboat. That's just breaking news just in the last few minutes.

49:46Tim Stenovec:I'm wondering about geopolitics, though, and the political risk for a president who came in and said, you know, no more on a platform. No more foreign wars wants to end wars for focusing so much on geopolitics within his first year in office. Is that alienating some of his base? I think I think I think it's confused some of his base for sure. As you said, that there is a wing of the Trump base that is more isolationist. I think those folks thought that President Trump would be sharing in that view. He obviously talked about ending the war in Ukraine. That has not happened. He's talked about bringing kind of peace globally.

50:28Tim Stenovec:I think you could sort of quibble about whether that has actually been true or not. And then to your point, he has focused on, you know, some of these more specific operations. Now, I think, you know, Venezuela, the way that they would characterize the White House would characterize this as this is an extradition, kind of a high profile arrest, if you will, that required a lot of resources of the U.S. government, but was quite different from regime change. We'll see kind of how that how that plays out. But I do think, Tim, you're right to sort of focus on this politically because midterms are all about turnout.

51:02Tim Stenovec:It's not about persuasion. Right. You need to get your base turned out. You need them to get excited. Whereas a general election, it's about sort of persuading folks who might be kind of on the fence. Again, midterms all about kind of your base turnout. And if your base is at all, you know, feeling maybe a little bit less enthusiastic about you, they may not turn out. And so I do think this, you know, we'll sort of see how this kind of movie plays out. But you could see President Trump, you know, maybe kind of be forced by his own party to be less focused on these issues because it just doesn't have doesn't have sort of the galvanizing effect as, you know, the kitchen table, gas and grocery issues you typically you typically have.

51:43Tim Stenovec:The last thing I'll just say, though, is I think President Trump was quite clear about what his framework was he was using yesterday as it relates to Iran. He definitely did not close the door on potential intervention. He also didn't necessarily endorse that he was going to do this either. So he was using sort of this clear framework about Iran's ability to develop a nuclear weapon and what have you as kind of a litmus test. So I think he's trying to be more clear about what it would require to engage. But again, politically, he may be forced to back off this as we get closer to the midterms.

52:18Carol Massar:Libby, going back to the affordability issues, we know President Trump and Vice President J.D. Vance are hitting the road tomorrow and I believe on Friday to kind of test their affordability message with voters in Texas and Wisconsin this week. So things like, you know, obviously the tax cuts that are already part of his big, beautiful bill, these new savings accounts for kids, maybe banning of institutional investors from buying homes, you know, although we didn't get anything more on that. Are there policies or clarifications of policies or implementation of policies that are likely to come leading up to the midterms that you think kind of improve the affordability issues for those who will be voting?

53:02Tim Stenovec:I think the reality is, is that even if President Trump wants to see some changes, it's going to be very difficult for Congress to get anything done before the summer, which is really the de facto end of this Congress. That's when they will adjourn for their sort of summer, traditional summer recess for them to really go back to their districts and to campaign. So in terms of the runway to actually effectuate policy, we are talking about a very short one to July, basically. And we don't see Congress moving. We don't see them passing another tax bill, another spending bill, another bill that prevents institutional investors from buying single family homes or what have you.

53:47Tim Stenovec:There is a housing bill that they may be able to pass both chambers and get signed into law. But that is likely going to be it. So I think kind of for all intents and purposes here, Trump will have to lean on those policies he can effectuate unilaterally, which is the agencies buying agency MBS. That is one thing that he did not talk about in his speech. It's kind of for us bond nerds over here. But but, you know, we do think that's actually that and deregulation. Those are two things that he can and will, we think, continue to lean on to help, you know, improve, you know, at least mortgage rates and and sort of, you know, the rate environment in general and hope hope that that will actually trickle down to some kind of the perception, again, of affordability among voters.

54:32Tim Stenovec:But outside of that, we do not expect Congress to move really, period, before between now and the midterms. All right. I don't recall seeing mentions of agency MBSs on the prediction markets. Wait, that's when they all stood up. Remember when they like the... Exactly. The only bipartisan moment we saw was at our agency MBS. Bringing the parties together.

54:53Carol Massar:Libby Cantrell, you rock. Managing Director, Head of Public Policy over at PIMCO, joining us right here in New York City.

55:01Tim Stenovec:Stay with us. More from Bloomberg Business Week Daily coming up after this.

55:09Hello, hello.

55:10Tim Stenovec:I'm Malcolm Gladwell, host of the podcast Smart Talks with IBM. I recently sat down with IBM's chairman and CEO, Arvind Krishna, and I asked him, how can companies use AI to its fullest potential to create smarter business?

55:25Carol Massar:My one advice to them, pick areas you can scale.

55:29Tim Stenovec:Don't pick the shiny little toys on the side. For example, if anybody has more than 10 % of what they had for customer service 10 years ago, they're already five years behind. If anybody is not using AI to make their developers who write software 30 % more productive today with the goal of being 70 % more productive.

55:57Carol Massar:Yeah. Wow.

55:58Tim Stenovec:So we are not asking our clients to be the first experiment on it. We say, you can leverage what we did. We're happy to bring out all our learnings, including what needs to change in the process, because the biggest change is not technology. It's getting people to accept that there's a different way to do things. To listen to the full conversation, visit ibm.com slash smarttalks.

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58:16Tim Stenovec:Cuban forces killed four people and wounded six others who were traveling in a speedboat with Florida tags after they opened fire on the island's border patrol, the government said. With us is Dan Cancel, BN Bloomberg News, Miami Bureau chief. He joins us from our Miami Bureau. Dan, we're trying to understand what exactly is going on, who these individuals were and what they did. And we're hoping you can shed some light on it. What do we know about the four people who were killed? Yeah, very little. You know, the source of the information as of now comes from the the Cuban military. As you mentioned, the statement dropped about, you know, an hour or so ago where they, you know, mentioned that this boat with Florida registration carrying 10 passengers ran into this incident conflict with the Coast Guard with four dead and six injured.

59:06Tim Stenovec:They haven't identified the nationality of these individuals, obviously released any names, and on the U.S. side, we don't have any information, you know, either kind of corroborating that information or providing new details. So as of now, it's a bit of a sit and wait to see if the Cubans release additional information. But obviously, there's a big backdrop here, right, to what's happening between U.S. and Cuba relations.

59:29Carol Massar:Let's talk about that because we did know, I think earlier today, the U.S. announced that it would ease restrictions on Venezuelan oil exports to Cuba's private sector for humanitarian reasons. We know Canada has announced an aid package for Cubans because of President Trump's oil blockade. So kind of where are we? I mean, tensions are high right now between the U.S. and Cuba.

59:52Tim Stenovec:They are, yeah. I mean, since January 3rd, when Maduro was captured in Caracas, obviously Venezuela was the biggest ally and benefactor for the Cuban regime. And so taking those oil flows and that support away from the Cubans has created a lot of tension and obviously the situation on the ground in Cuba has deteriorated in terms of energy supplies and other sorts of supplies. So the U.S. has not come out with a real clear strategy in what they hope to accomplish in Cuba, but clearly there are some new headlines about supplying the private sector with fuel versus so trying to kind of go around the regime in helping the people and avoid a bigger humanitarian crisis.

1:00:41Tim Stenovec:Yeah, I mean, again, the information we have, Dan, on this is very limited. And you make a good point about the backdrop of this and what it means in the context of everything that's happened in 2026 thus far. That said, there has been reporting around where this boat at least was registered to. What can you tell us about that? and if that offers any indication about who who was actually in the boat yeah listen so far all we have is is that is a registration number which you know curiously the cubans did provide in their in their statement um it's not right you know it's not returning anything solid uh as we look into that and report on it um you know so you can you know you can kind of imagine this could be people out for you know fishing but you know apparently they were armed right so maybe not uh we could be talking about people trying to bring supplies, you know, to to Cubans, whether, you know, whether it's food goods, whether it's illicit, right, kind of smuggling operation.

1:01:41Tim Stenovec:So it's really kind of up to our imaginations here, you know, in terms of what could have been happening. And the fact that the U.S. Coast Guard has not issued a statement or verified this is something that we're obviously waiting for.

1:01:54Carol Massar:We do have U.S. Representative Carlos Jimenez out on social, and he's saying Cuba, the Cuban government must go to, quote, the dustbin of history. He posts this after Cuba clashing with the U.S. speedboat and he calls, quote, again, his words, murder, Cuba killing of U.S. speedboat crew. But as you said, we don't know a lot. We have to be very careful. The devil is always in the details and we are waiting some kind of statement from the U.S. government, correct?

1:02:22Tim Stenovec:Absolutely. He's I'd say he's among the more hardline of the Cuban Americans in Congress. And so it's not rare that he'd have that rhetoric today. And again, we need to figure out exactly who these people were, you know, from the U.S. perspective. Are they U.S. citizens? You know, are they Cubans? And so we just there's so many things that we need to figure out here. I think the one thing, again, is, you know, what's changed recently is that the private sector in Cuba is now authorized to import fuel, right, for for the first time. And so, you know, could people be running, you know, big jugs of gasoline or diesel, right, across the less than 100 miles that separate the two countries?

1:03:06Tim Stenovec:So again, it's just a theory or one possible scenario, right? I just don't know.

1:03:11Carol Massar:One more line from Representative Jimenez's statement on social. He's calling for an investigation of the Cuba incident, but we would all concur that we need to know some more in terms the details and find out exactly what happened before we can move forward. Dan Kinsell, thank you so much. He is Bloomberg News Miami bureau chief joining us from our bureau in Miami. We're going to kind of stay on, I don't know whether you want to call this geopolitics or just tensions, global tensions, and just finding our way forward when it comes to relationships between countries, but also throw things like technology and military in it, kind of all gets interesting and a little tough.

1:03:47Tim Stenovec:This is the Bloomberg Businessweek Daily Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

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