SoftBank Spooks Traders With Nvidia Exit: 3-Minute MLIV

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00:00What do you make of this depreciation story?

00:02Because this kind of ripples back into all of this, the fact, how quickly do you depreciate

00:05a chip?

00:06I've heard anything from two to six years.

00:07So this is what Michael Barry has been talking about, and this is what Cameron Christ has

00:10been talking about in his opinion column today, which is well worth reading.

00:15Because he's kind of done a historical analysis going back to the beginning of this century

00:19on depreciation and the spend on capex and how that has adjusted with the hyperscaler

00:24spent.

00:25The depreciation is real, and so there is a real question mark is, are they marking this

00:28correctly, the hyperscalers, in terms of how quickly these AI assets, particularly the

00:34AI accelerators themselves, the chips themselves, actually depreciate in value.

00:38So you can sink US$100 billion into AI accelerators one year, they're not going to be worth that

00:42amount 12 months later, and then you push out three years down the line.

00:47So for the accountants out there, that is a question worth scoring over.

00:52Are they marking it correctly is a question that Cameron Christ in his piece today is putting

00:56on the depreciating AI assets and whether that's going to become more of a concern going forward.

01:00Tom, thank you.

01:01Tom McKenzie with The Tech Beat this morning.

01:04Let's widen the conversation, talk about the markets in three minutes.

01:06Joining us are Bloomberg Executive Editor for Asia Markets, Paul Dobson, who has a head start

01:11on us here in Europe.

01:12Paul, very nice to see you.

01:13Thank you for joining us.

01:14So let's talk about Treasury markets.

01:15We've got Treasuries responding, it would seem, to the weakness in the US labour market data and further

01:21expectations of rate cuts from the Fed.

01:24Anything unusual in the moves this morning?

01:28Well, absolutely, Anna.

01:29It's unusual that they move so much in our time zone.

01:32But the reason is that the cash bond market at least was closed yesterday.

01:36So this is the first time that the Treasury market is able to respond to those ADP figures showing that

01:42continuing trend of weakening labour market and giving the market, therefore, a little bit more

01:47confidence that the Federal Reserve will go ahead with another rate cut in December.

01:51It's still very split among the Fed's speakers, right?

01:55We hear from some of them talking about the concerns about sticky inflation.

01:59We hear some of them talking about concerns about the labour market.

02:02And what we really need to know is which way is that middle ground, the middle patch, which

02:08probably includes Jerome Powell himself, which way is it going to turn?

02:12And so I think it's going to be really interesting if we do get the US reopening,

02:16then we'll start to get some of the official data trickling through as well.

02:19We'll get probably September labour data as one of the earliest indicators.

02:22And that's going to give us some fresh signals.

02:24But it's also probably likely to give us more volatility.

02:26At the moment, though, lower yields, a little bit more hope that the Fed will cut again.

02:31Paul, am I watching my yen screens for intervention?

02:34Is that next?

02:37Yeah, I don't think that we're that close yet.

02:40But there definitely is that sense.

02:43The government is getting a little bit more worried about the yen.

02:46And no surprise.

02:47It's at the weakest level since February today, continuing to dribble, approaching 155.

02:52Now, the Japanese officials tend to have a couple of rules of thumb that they use to judge

02:57when they would actually need to take physical intervention, i.e.

03:00stepping into the market and buying the yen to sort of stabilize things.

03:03Either a 10 yen move over the course of about a month.

03:07We're not really at those levels.

03:09Not until we get towards the 160, depending on how much you squint at the chart.

03:13Or a 4% move over the course of a couple of weeks.

03:16And again, you know, we'd need to get up into the 158 levels, something around there, before they come in.

03:21Nonetheless, the rhetoric that we're getting, the pushback that we're hearing from the administration,

03:25from Kasiyama, the finance minister, is getting louder.

03:27And the yen is still under pressure as well.

03:29So one to watch there.

03:31Let's circle back to a conversation we actually just had with our colleague, Tom McKenzie.

03:36But, Paul, there's a lot of concern about what the SoftBank's selling of NVIDIA stake actually means.

03:42What's the take in the region?

03:44Yeah, I am going to be completely honest with you, Kriti, and don't really know.

03:50And that's why I think it's so fascinating.

03:51And I heard your debate with Tom about it all.

03:53And I think that you covered a lot of the salient points.

03:55But the fact of the matter is, in the ADR market, so in the U.S. trading yesterday, SoftBank was up.

04:01Today, it really bombed at the open. And it has been starting to come back again.

04:05But there's all of this uncertainty about how exactly do you value these AI companies at the moment, including OpenAI,

04:11which it holds and wants to invest more in.

04:14At least it's sort of like, you know, managed to cash in on NVIDIA.

04:18But then people are saying, well, is that some sort of sign that it worried that it's at the top?

04:22Or what's it going to do next with its resources?

04:24So all of those AI valuation issues still playing out in the background, even as the market continues to rally.

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