Nvidia Hits All-Time High; Big Bank Earnings Preview

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1:32Bloomberg Audio Studios. Podcasts. Radio. News. Good morning. I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. And Karen, we begin with big news in the chip industry. NVIDIA plans to resume sales of its H20 AI chip in China. and that has shares of the world's most valuable company up four and a half percent in early trading to a record this morning. We get more on the late breaking developments from Bloomberg's Tom McKenzie. You just need to put this in the context of the last few years of continually tightening restrictions when it comes to export controls, both under the Biden administration and under the Trump administration.

2:15And the tightening of those export restrictions has not seen any let-up at all between both administrations until now. And now you have a U-turn on an export restriction that was implemented in April, cutting off the supply of these H20 AI accelerators. We haven't heard this directly from the US government, but NVIDIA put out a blog post saying they will, in short order, be able to resupply these H20 chips into the Chinese market, where, by the way, the CEO, Jensen Huang, currently is for a supply chain conference. And Bloomberg's Tom McKenzie says the move may add billions to NVIDIA's revenue this year, restoring its ability to fulfill orders it had written off as lost due to government restrictions.

2:53Nathan, we have new developments this morning in the global trade war. The European Union has finalized a list of countermeasures to target U.S. goods worth$84 billion. And we go to London and get the latest with Bloomberg's Ewan Potts. Ewan, good morning. Karen and Nathan, American cars, bourbon whiskey and Boeing aircraft, They're all on the EU's finalized list of countermeasures should it decide to retaliate against Donald Trump's tariff policy. In total, Brussels would target$84 billion worth of US goods. This after the EU's trade chief said that Trump's tariffs set to kick in on August 1st would be effectively prohibitive to transatlantic trade.

3:32Talks between the two sides are continuing. In London, I'm Ewan Potts, Bloomberg Radio. Turning back to markets now, Karen. Bank earnings are about to take center stage. J.P. Morgan, Chase, Wells Fargo, and Citigroup all report before the opening bell. We get a preview now from Bloomberg Global Financial correspondent Shinali Bassik. J.P. Morgan is kicking off big bank earnings, and the valuation has risen materially through the course of the year because investors expect more and more M &A deals to come through to fuel investment banking gains and net interest income to hold up strong with interest rates relatively high.

4:04Now, the question is, who's winning in the Wall Street game? Is J.P. Morgan going to bring in more trading revenue than its two big investment banking rivals, Morgan Stanley and Goldman Sachs, which report the following day. We'll also be hearing from Citigroup and Wells Fargo, and the question will be around how much more net interest income can be squeezed out of the U.S. consumer. In New York, I'm Shanali Bassick, Bloomberg Radio. All right, Shanali, thank you. It's also a big day on the economic front with a key reading on inflation this morning at 8.30 a.m. Wall Street time. We get the consumer price index for June and we get a preview with Bloomberg's Charlie Pellett.

4:39Wall Street will be focused on how much of an uptick we might see in inflation because of tariffs. Christina Hooper is chief market strategist at Mann Group. We could certainly get a significantly higher number. If we look at the Cleveland Fed now cast, core CPI is tracking at about 3 percent year over year. Economists surveyed by Bloomberg are looking for a year over year gain in the core CPI, excluding food and energy of 2.9 percent. In New York, Charlie Pellett, Bloomberg Radio. All right, Charlie, thank you. And as we await that key inflation report, speculation is growing about who will eventually replace Jay Powell.

5:18The Washington Post is reporting the White House economic advisor Kevin Hassett is emerging as a leading contender to become the next Fed chair. Hassett was a key advisor in President Trump's first term. The paper says the president thinks he'll be more responsive to lowering interest rates. Powell's term as chair doesn't expire until May. Karen, President Trump is threatening new tariffs on Russia over its war in Ukraine. The president aired his frustrations in an Oval Office meeting with NATO Secretary General Mark Ruta. We are very unhappy, I am, with Russia. But we'll discuss that maybe a different day.

5:54But we're very, very unhappy with them, and we're going to be doing very severe tariffs if we don't have a deal in 50 days, tariffs at about 100 percent. President Trump said the duties would come in the form of secondary tariffs. He's used that term before for import taxes on countries that do business with America's adversaries. The president also says the U.S. is sending top-of-the-line weapons to Ukraine paid for by NATO member states. Secretary General Ruta says all of it should send a message. to Russia. I would reconsider whether I should not take negotiations about Ukraine more seriously than I was doing at the moment, if I was trying to be put in.

6:32But when I'm in Ukraine, I think this is really great news for them. NATO Secretary General Mark Rutte says Germany, the Nordic states and Canada would play a major role in fulfilling Ukraine's military needs. Nathan, as President Trump and NATO look to support Ukraine, China is pushing to deepen its ties with Russia. Chinese President Xi Jinping met today with Russian Foreign Minister Sergei Lavrov in Beijing. China's Xinhua News Agency reports President Xi also met with top officials in the Shanghai Cooperation Organization, a group set up by both China and Russia. The Chinese leader is also putting a focus on his country's struggling property sector.

7:10Xinhua reports he called for a measured approach to renovating urban villages and dilapidated houses from this week's Central Urban Work Conference. Last year, the Chinese government promised to renovate a million older rundown homes in large cities.

7:27Time 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. Heavy rain caused damaging flash floods in New York, New Jersey, Connecticut, Pennsylvania, Virginia, and Maryland. Six to ten inches of water fell in parts of the East Coast. In Plainfield, New Jersey, the rapid rainfall turned streets into rivers stalled out cars, rushing past homes, and knocking down trees. I've never seen flooding like this. I'm sure the car, I mean, there's nothing I can do with it.

8:00It's ruined, so time for a new car. The storms prompted New Jersey Governor Phil Murphy to declare a state of emergency. In New York, multiple subway stations were inundated, forcing the MTA to suspend or severely delay operations across several lines. Residents across the Texas Hill Country are on alert as heavy rains produce more flooding and creeks are bursting their banks just 10 days after awful floods hit the area. The July 4th flash floods killed at least 132 people along the Guadalupe River. The number of people still missing has dropped to 101 as more victims have been identified and more of the missing accounted for.

8:42And officials warn the search could last up to six months. Kerr County Judge Rob Kelly. It's the tourists that came in for the fourth weekend, the concert, the fireworks. We don't know how many we lost. We've heard accounts of trailer after trailer after trailer being swept into the river with families in them. Can't find the trailers. Former New York Governor Andrew Cuomo officially announced that he will campaign for New York City mayor as an independent candidate. In a video posted to social media, Cuomo vowed to run against Democratic Socialist Zoran Mamdani, who defeated Cuomo in last month's Democratic primary.

9:18For the next few months, it's my responsibility to earn your vote. In a letter sent to supporters, Cuomo pledged that if the polls show that he is not the highest ranked challenger to Mamdani by mid-September, he will drop out of the race. 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. All right, Michael Barr, thank you. Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work.

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11:17Time now for the Bloomberg Sports Update, brought to you by Flushing Bank, and here's John Stashauer. John, good morning. Good morning, Karen. The Home Run Derby in Atlanta began with a 513-foot blast by the Pirates' O 'Neal Cruz. Cal Raleigh, Seattle's switch hitting catcher who leads MLB this season with 38 home runs, nearly knocked out in the first round he advanced in a narrow tiebreaker with the ace brent rookery then beat cruz in the semi-finals and raleigh defeated tampa bay's junior caminero in the finals 18 to 15. the yankees jazz chisholm finished a distant last he only managed three home runs nah yeah what do you mean was it fun i had a lot of fun i enjoyed every second of it she's in one of three yankees in tonight's game joining aaron judge and carlos rodano replaced is Yankee teammate Max Freed.

12:05The Mets have Francisco Lindor in the starting lineup. Also, Pete Alonzo, Edwin Diaz, and David Peterson. It was some controversy with the late addition of Milwaukee rookie pitcher Jacob Misurowski since he's only pitched 25 innings. He's only allowed 12 hits, has 33 strikeouts. His manager tonight is the Dodgers, Dave Roberts. This young kid to be named All-Star, I couldn't be more excited for him. He is thrilled to be here. I'm going to get him in there probably the fifth of the sixth inning, something like that, the seventh. And it's going to be electric, so the fans, the media, you're going to love it.

12:39Aaron Boone will manage the American League, who has won 10 of the last 11 All-Star games, 22 of the last 26. The Jets have locked up wideout Garrett Wilson with a four-year$130 million extension, 90 million guaranteed. He's now signed through 2030. Good news for the Spurs. Their young star, Victor Wimbanyama, cleared to play next season. He had stopped playing back in February due to a blood clot. John Stash, our Bloomberg Sports. Karen, Nathan. Coast to coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg.com and the Bloomberg Business app. This is Bloomberg Daybreak.

13:15Good morning. I'm Nathan Hager. It is a major reversal from the Trump administration that is giving markets a lift this morning, particularly in the tech sector. NVIDIA says it has the government's go-ahead to sell its H20 artificial intelligence chips again in China. a move that could add billions of dollars in revenue at what is already the world's most valuable company. For more, we are joined by Dan Ives, Global Head of Tech Research at Wedbush Securities. Dan, good morning. We are certainly seeing a positive reaction in the stock price for NVIDIA this morning. Your reaction, what does this mean in terms of NVIDIA's overall growth strategy?

13:52Good morning. I mean, it's a game changer. because what this means is that now you've got$30 billion plus of business that's backing the table for NVIDIA. Remember that China business, when that got taken away, that was given to Huawei in a silver platter. So this is not just bullish for NVIDIA. It's bullish for the tech sector. And I believe it's a positive tea leave around U.S.-China negotiations giving this chip on the table. How is it positive for the overall tech sector? What's the read-through from NVIDIA getting this go-ahead? Well, what this means is now you're going to have, call it, 30 to 40 billion more business for NVIDIA and potentially 50 billion and onwards over the next one, two, three years.

14:34There's a ripple effect for that across suppliers and across the whole NVIDIA ecosystem. The other thing that that's important is that you are essentially handing Huawei and a silver platter to this business. Now that's not happening. So it's very positive for the U.S. tech sector, even when you start to think about hyperscalers, chips, and call it the second, third derivatives that now play out relative to those dark days in April. When it comes to the AI arms race, though, between the U.S. and China, to have NVIDIA's backing for the Chinese AI sector, does that give China more of an advantage over the U.S.?

15:15I actually think it gives the U.S. more advantage over China. If you look at Beijing news, there's only one chip in the world fueling the AI revolution. It's NVIDIA. They want the best chips. They don't want necessarily Huawei chips. So this gives NVIDIA the advantage. The last thing you want is to basically X that out for NVIDIA and hand that to Huawei. And that would ultimately give China and make them more powerful when it comes to AI. And I think the Trump administration knows that when Jensen and Trump met last week. I think there's an understanding from the Trump administration that this is an important historical moment in this AI arms race.

15:59To your point, this does come just a week after Jensen Wang met with President Trump. What does this tell you about the relationship that Jensen Wang has with the president? Is it a good idea to have a close relationship with President Trump after what we saw with Elon Musk just a few weeks ago? Sure. I mean, I'm sure, look, some will make the comparisons. I think it's different because Trump needs Jensen, not just politically, but we saw it on the Middle East trip, right? who is right next to him. It was Jensen. But he understands that Jensen understands the AI market better than anyone out there.

16:41He needs Jensen support, just like the onshoring and all the job creation. But on the other hand, Jensen is not going to be on the outside looking in the China market. So it speaks to why this relationship is so important between Trump and Jensen. Could this relationship have some kind of effect on the ongoing trade difficulties that the U.S. and China still have even after the breakthroughs in Geneva and London? Oh, I think this is a positive signal around U.S.-China negotiations. Because the U.S. doing this, they're now letting NVIDIA sell into China is going to be a huge positive for deal negotiations.

17:28So what do you see going forward? I know that Jensen Wang is attending a government-sponsored conference in China as well. Could we see more breakthroughs coming after, you know, the U.S. hasn't really confirmed that this go-ahead for the H20 chips has gone forward? But could we see more coming NVIDIA's way? Oh, yeah. I would expect over the next 12 hours positive statements from China around this. that would choke further tea leaves. NVIDIA couldn't get more business. And let me tell you, it was not a happy camper. Huawei. Because they thought they had a green light. And now the big dog came back in.

18:08And that's NVIDIA. And of course, NVIDIA is trading at a$4 trillion market cap already, days after it was predicted. Do you see NVIDIA hitting a$5 trillion cap anytime soon? And if so, when? Look, me and you have talked about it, along with our good friend Gene Munster. I believe it's a matter of when, not if,$5 trillion gets hit. I mean, we think in 2026, or potentially, is when you see that. Because this just shows there's one chip in the world fueling it. It's NVIDIA. And I see a$5 trillion markup on the horizon. And as we say, NVIDIA is trading up 5 % in the pre-market right now following this news from a blog post from NVIDIA that it has gotten the go-ahead to sell the H20 chip once again in China.

19:04Dan Ives, thanks for joining us from the airport this morning. Really appreciate getting your time following this breaking news. Dan Ives, of course, is the global head of tech research at Wedbush Securities. It's coming up on 519 on Wall Street. Let's stay on the topic of tariffs. It is topic A for markets and for trading partners around the world, with the European Union in particular now racing to reach a trade deal with the U.S. before the August 1st deadline when the president says higher duties will kick in. Barring that, the EU has now put out a second list of U.S. goods that could be hit with counter tariffs.

19:42For more on this, joining us from Brussels is Bloomberg Daybreak Europe anchor Stephen Carroll. And Stephen, it's a pretty exhaustive list, more than 200 pages. Give us the highlights. Good morning. Good morning. Yeah, look, it's 72 billion euros, 84 billion dollars worth of goods that are targeted in this second package of retaliations. It's dominated mainly by industrial goods. So aircraft worth around 11 billion euros, machinery worth about 9 billion euros. Cars are in there as well. We've also got agri-food products. Around 6 billion euros worth of US agri-food products would be hit as well.

20:18Fruits and vegetables, alcoholic drinks in there too. There's also some precision equipment and instruments in there too. Even some toys managed to make the cuts as well. And musical instruments, if you can believe it. Now, some things we know are excluded from the list. Imported military products, for example, won't be subject to any duties. And this was a list that was drawn up in response to you'll have to go back a few steps in this trade dispute to find it. It was the 20 % reciprocal tariff before that was reduced to 10%, before it was upped again to 30%, if you're still following me. So this is a list that actually responds to an earlier move by the Trump administration to impose tariffs.

20:56It is like the other list that was responding to the steel and aluminum tariffs suspended until the 1st of August. But it is an attempt by the European Union to show that it is ready to respond. It's choosing not to for now because it's leaving space for negotiations with the US. But it is nonetheless showing, I suppose, a bit of teeth about what the EU could do if those talks don't go to plan. So as you mentioned, it doesn't include military equipment. So the list might not have been as exhaustive as it could have been. Is that the sense we're getting? Well, it was initially reduced. The initial value that was put on this list was 95 billion euros.

21:35That was the list of products that the European Commission had initially identified as this stage of its response. That got reduced to 72 billion euros. There were some things knocked off the list that was after consultation with industry and with member states as well. Because, of course, this is a list that has to be signed off by the 27 members of the European Union. So they get to have their say when the Commission makes an announcement like this as well. They still, by the way, have to sign off on this finalised list of 72 billion as well. but we're told this is where the compromise has arrived at.

22:06So they have scaled back some of those things that they're expected to hit or that could potentially hit with tariffs as well. And that's sort of an indication of there's some divergence of opinion among European countries about how exactly they want to respond to what Donald Trump is doing. We heard from all those trade ministers filing into a meeting yesterday morning here in Brussels talking about not being willing to hold back on retaliating for now to allow space for negotiations, but ultimately wanting to show that they were ready to retaliate if that became necessary. Now, the latest that we've heard in terms of talks, we know that Mara Shevchovic, the EU trade negotiator, was due to speak to his US counterparts late yesterday.

22:47We still haven't heard anything about how that particular meeting went. But Mara Shevchovic had said that the threat of 30 % that Donald Trump came out with over the weekend was unacceptable and prohibitive to any trade between the EU and the US. we know that European countries are very worried to differing degrees about what impact the tariffs could have if eventually they do come into force at the level they're currently threatened but I would just note a key survey coming out of Germany this morning the ZEW Industry Survey and Investor Confidence actually improving in the last month that they measured as well now it came before the 30 % tariff threat but the survey was done in early July so it's not that out of date either showing that actually despite the threat of tariffs the business sentiment in Europe's largest economy is turning more positive.

23:33And in our last minute, Stephen, this is coming, of course, after our earlier reporting that the EU was looking to expand its outreach to other countries that have come under the US tariff crosshairs. How does this list put that into context? I mean, look, it's an added thread of the strategy the European Union is working on. They're also, of course, trying to de-escalate with the US, but looking for alternatives. We heard that from Teresa Rivera, the European Commission's vice president who was in China yesterday talking about the possibilities that they might have to expand with Asian partners as well.

24:05There was a conversation between Mark Carney and Ursula von der Leyen yesterday as well. This is the EU, I suppose, keeping its options open, making sure that if things don't go as they planned, because although they're all sounding very hopeful, they're also quite worried as to how things might turn out between now and the 1st of August. They want to make sure that they have other options if things don't go well in those talks with the Trump administration. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m.

24:37Eastern each morning on Apple, Spotify, or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM channel 121. Plus, listen coast to coast on the Bloomberg Business app, now with Apple CarPlay and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow.