Memory Chip Squeeze Widens Gap; Alphabet's Global Debt Binge

0:00Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break.

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1:02Bloomberg Audio Studios. Podcasts. Radio. News. Good morning. I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, trading begins this morning with stocks at or near record highs, and chip companies are the ones doing some of the heavy lifting. Let's get more this morning from Bloomberg's John Tucker. John, good morning. Good morning, Nathan. Yeah, the Dow finished at a record. The S &P 500 drove to within a few points of its record close. But two of the strongest forces pushing the S &P 500 upward were NVIDIA up 2.4 percent. Broadcom surged 3.3 percent. Those are the beneficiaries of all that CapEx spending.

1:43But always lingering in the background, you have worries about whether all the huge spending on AI is going to produce enough profit to make the investments worth it. Andrew Slimat at Morgan Stanley marvels at how investors seem to climb a wall of worry. I think the biggest risk is we go into a kind of a real blow off stage. And every time I start to worry about it, you know, the market sells correct. So I think that's a healthy thing, and that's why I don't think we're end of cycle. One interesting feature of this market is the surge in memory chip prices. It's driven a vast divide between winners and losers.

2:18You have companies from Nintendo to big PC brands and even Apple suppliers seeing shares slump on profitability concerns. But the memory producers, they're soaring to unprecedented heights. In New York, I'm John Tucker, Bloomberg Radio. All right, John, thank you. Meanwhile, Alphabet is selling sterling and Swiss franc-denominated bonds for the first time, including an ultra-rare issue of a 100-year note following a$20 billion deal in the U.S. Bloomberg Tech co-anchor Caroline Hyde reports it's just the latest salvo in the AI spending spree. You've just got hot on the heels of Oracle having sold$25 billion of debt at the beginning of last week.

2:58They got$129 billion of demand, a record set. You might be bracing for$400 billion of investment-grade debt coming to Finance AI. And Bloomberg Tech co-host Caroline Hyde. Yesterday, Alphabet raised$20 billion in a seven-part dollar debt sale, exceeding earlier expectations for a$15 billion deal. The offering attracted more than$100 billion of orders at its peak, among the strongest ever for a corporate bond offering. Turning to the economy now, Karen. President Trump says his pick to lead the Federal Reserve, Kevin Warsh, could get the U.S. economy to grow at a rate of 15 percent. President spoke to Fox Business.

3:39If our new head of the Fed, who I think is going to be great, and he's he's a really high quality person. But if he does the job that he's capable, we can grow at 15 percent. I think more than that. President Trump says Kevin Warsh was his runner up in his last search for a Fed chair. He says it was a big mistake to pick Jerome Powell. Nathan, the Justice Department is facing new pressure to release more information about its investigation into Jeffrey Epstein. The lawmakers who sponsored the bill to compel the agency to unseal its documents were able to review the unredacted files. Republican Thomas Massey says what he saw could lead to more criminal prosecutions.

4:19The user interface is a little clunky at first, but what I saw that bothered me were the names of at least six men that have been redacted that are likely incriminated by their inclusion in these files. Republican Thomas Massey was joined by Democrat Ro Khanna. He described those six men as, quote, very powerful people who raped these underaged girls. Meanwhile, on Capitol Hill, Jeffrey Epstein's convicted former girlfriend Ghislaine Maxwell appeared for a video deposition before the House Oversight Committee, but it didn't last long. At any point during your personal relationship with Jeffrey Epstein, were you aware that Mr.

4:57Epstein was sexually abusing minors and adult women? I would like to answer your question, but on the advice of counsel, I respectfully decline to answer this question and any related questions. Glenn Maxwell repeatedly invoked the Fifth Amendment during the five-minute hearing. It led the oversight panel's top Democrat, Robert Garcia, to ask, who is she protecting? We turn now to Arizona, Karen, where the investigation into the disappearance of Today's show co-host Savannah Guthrie's mother, Nancy, is now into a second week. Authorities are investigating the apparent kidnapping with a ransom deadline set by her purported abductors, who sent ransom notes demanding money for her return.

5:39Savannah Guthrie released a video saying her family is at an hour of desperation. We believe our mom is still out there. We need your help. Law enforcement is working tirelessly around the clock trying to bring her home, trying to find her. She was taken and we don't know where. And we need your help. Investigators believe Nancy Guthrie was taken against her will from her home. there is growing concern about her health due to her need for daily medication and pre-existing medical conditions. Well, over in Europe, Nathan Keir Starmer shored up his position as UK Prime Minister at the end of a dramatic day in Westminster that at times seemed like he might be forced to step down.

6:20And we get the very latest of Bloomberg's James Wilcock in London. James, good morning. Good morning, Karen and Nathan. We learned yesterday that the Labour Party is deeply unhappy, but it isn't yet open to the idea of getting rid of the man in the top job Publicly, cabinet ministers backed the prime minister. Labour MPs in parliament were effusive. But privately, they told Bloomberg that challengers weren't yet ready to run rival campaigns and said that certain ministers had, quote, bottled it. Now, economic data is starting to improve in the UK, but political attention is left on the numbers and more on the dates.

6:56A special election in two weeks and a local one in May, which is seen as the next crisis points. In London, James Wilcock, Bloomberg Radio. James, thank you. Staying in the UK, Barclays says it'll return at least$20 billion to shareholders through 2028 as the bank continues to work through a long-term plan to slash cost and improve profitability. To hit its new targets, Barclays says it'll make efficiency savings including through artificial intelligence while allocating more capital to its UK business at the expense of the investment bank. Barclays CEO C.S. Svankata Krishnan tells Bloomberg the bank is firing on all cylinders.

7:31So I'm very happy they're all doing well. And, you know, each of the businesses produced double digit ROTEs in the last year, and we're expecting them to continue. The strongest performing parts have been the ones that have come from the furthest behind, which is our U.S. consumer bank, which has gone from 7 % to 11%, and our investment bank, which has also gone up. That's Barclays CEO Svankata Krishnan. The lender's earnings for last year beat expectations, helped by its best fourth quarter for traders since a reporting change in 2016. Well, shares of luxury goods giant Caring are up 11.5 % this morning, Nathan.

8:09The jump came after the French firm released results that suggest it is now on a path back to growth. Caring's Kiguchi unit saw sales fall less than expected in the final months of 2025, dropping 10 % in the fourth quarter. Meanwhile, annual recurring operating income at the label exceeded estimates. And Karen, billionaire Meta Platforms founder Mark Zuckerberg is planning to buy a property in the Miami area. Sources tell Bloomberg Zuckerberg and his wife Priscilla Chan are looking at purchasing a property on Indian Creek. That's a man-made island in Biscayne Bay known as Billionaire's Bunker.

8:43Residents of the ultra-secure enclave already include Jared Kushner, Ivanka Trump, Amazon founder Jeff Bezos, billionaire Carl Icahn and former New England Patriots quarterback Tom Brady.

8:57Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. Nurses and two major hospital systems in New York City have reached a deal to end a nearly month-long strike over staffing levels, workplace safety, and other issues. The tentative agreement involves Montefiore and Mount Sinai Hospital Systems. The three-year deal still needs to be approved by union members. Nurses remain on strike at New York Presbyterian, where Jennifer Lynch is a nurse practitioner in Upper Manhattan.

9:33NYP was the only hospital here in New York City to have mass layoffs last year. Maria Soy is a registered nurse at New York Presbyterian. What we want people to take away is that this is more than about money. The walkout began January 12th. The FBI says there is no credible threat to the public in Springfield, Ohio, following bomb threats Monday targeting the Haitian community sent to school and county offices. Governor Mike DeWine says the email threats were also received in other parts of the state with similar rhetoric, but it is unclear if they were from the same people. County offices in Clark County begin receiving bomb threats.

10:15talking about pipe bombs. These are threats that also referenced Haitians. There was the whole essence of the threats where the Haitians should be out, get rid of the Haitians. Governor DeWine called it a despicable act. In September 2024, bomb threats rattled Springfield after then-presidential candidate Donald Trump and his running mate J.D. Vance doubled down on false claims that Haitian immigrants were abducting and eating pets. Measles was declared eliminated in the U.S. over 25 years ago. Now a resurgence is on the rise. Health officials blame the record-breaking numbers on declining vaccination rates.

10:58The CDC says 20 states have reported cases from California to Florida, where at least two universities have reported cases. In South Carolina, at least 900 people have been infected. Global news 24 hours a day and whenever you want it with the Bloomberg News Now. I'm Michael Barr and this is Bloomberg. Karen. Thanks, Michael. Time now for our Bloomberg Sports Update. And for that, we bring in John Stashauer. Thanks, Karen. Arizona was a unanimous number one in college basketball. The Wildcats took their 23-0 record to Kansas and Arizona had an 11-point lead. Back came the Jayhawks, took their first lead midway through the second half, and Kansas won 82-78.

11:38Big fight in the NBA in Detroit's win at Charlotte. It happened in the third quarter. It started between Jalen Duren and the Pistons and Moussa Diabate of the Hornets. Isaiah Stewart of the Pistons left the bench. Four players were ejected. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. As markets move and headlines break, what matters most is context. A Bloomberg subscription gives you unmatched reporting, sharp analysis, and powerful tools that help you connect the dots. Visit Bloomberg.com slash podcast offer to learn more. Coast to coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg.com and the Bloomberg Business app.

12:25This is Bloomberg Daybreak. Good morning. I'm Nathan Hager. The market is trading close to all-time highs once again for stocks this morning after a volatile few days, particularly in the big tech sector. This week, the attention turns to a flood of economic data, starting with retail sales out this morning. For more, we're joined by Bloomberg News macro strategist Adam Linton. Adam, good morning. Have we shaken off the worst of the software sell-off? Good morning. Good morning, and thank you for having me. So, yeah, in terms of the software, obviously, that is incredibly thematic at the moment.

12:58But we did, of course, see some signs of life in the tech sector yesterday. Although looking at the pre-market indications, it does appear some of that enthusiasm is waning. I think it's just playing to more of a broader point that there's so much more nuance around the tech trade at the moment. And people just have a preference to rotate out of that, given the uncertainties surrounding the landscape. And, of course, we've seen so much attention on the shortage in memory chips. it's uh leading to a lot of winners and losers uh big gap there yeah definitely and again it's just playing to this point where the tech traders become increasingly more nuanced i mean last year we saw a bit of a divide between the likes of nvidia and google as some of those large language models came online then as you mentioned we've seen some new software you know plays and now we're seeing some of the memory chip plays as well so this is going to play into a broader point that the nasdaq could potentially continue to struggle relative to peers if you look at the nasdaq it's not hit a new high since October.

13:53And then you look at the equal weight S &P 500, that's hit 13 records without NASDAQ 100 hitting a single one. So it does suggest this rotation trade, as well as the tech nuance, very much remains in play. And of course, now with Alphabet tapping into the debt markets to try to finance its plans for$185 billion in AI CapEx this year, now going global with that, with this 100-year sterling note, What could that mean for the tech sector? Yeah, I mean, it's definitely interesting, given that we saw the selling in Alphabet shares off the back of some of their large capex plans. But I think this has kind of refocused minds a little bit.

14:31It shows that there is a real solid base of investors who are still willing to buy their debt. And if you take that sterling note, as you mentioned, you know, there's solid pension demand in the UK looking for that. If UK debt markets are on a sovereign level of faltering, you know, something that we have seen yesterday, then they could potentially be looking to diversify into some of these sectors. But in terms of some of the duration, I mean, if you take like the 100-year note that's going to be on offer, I mean, some people will balk at that and just not turn to that. But it does appear to be a solid investor base willing to buy it up.

15:01And in our last 30 seconds here, as I mentioned, we're going to get all this economic data starting with retail sales today, the delayed nonfarm payrolls report tomorrow. Are we looking for more volatility off the back of the economic data? Yeah, I think we definitely are. I mean, I think retail sales could provide some reprieve. I think we saw this message in from Hassek yesterday flagging the potential for softer jobs data. If that is the case, we could see a potential pricing for March, April, which are relatively low in terms of Fed rate cut bets. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond.

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16:16I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.