UK inflation data reveals that headline CPI of 2.8% in April was lower than the 3% market expectation, primarily due to a 7% reduction in the energy price cap, while services inflation at 3.2% remained above the 2% target. This mixed picture suggests the Bank of England may delay rate hikes despite the lower headline figure, as core inflation and producer input prices (7.7% year-over-year) indicate underlying price pressures that could trigger second-round effects, potentially requiring rate increases in July.
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Squawk Box Europe - 20-May-26Ajouté :
Welcome to Squawkbox Europe. I'm Karen Cho with Steve Cedric and Ben Bulas.
These are your headlines. Inflation in focus. A fixed income selloff puts new attention on today's readings as investors continue to dump bonds across the continent.
>> Mixed messages on the Middle East.
President Trump threatening Iran. Here we go again with another big hit. But Brent pulls back after tankers managed to exit the straight. And vice president JD Van says the two sides are in pretty good place.
And Google debuts its latest AI models as it races to keep pace with competitors. But all eyes on Invidia today. The US chip giant expected to report a near 80% surge in revenue when it posts numbers after the bell.
We kick off the show this morning with big focus on inflation and the data point has come through lower than anticipated. So the breaking news for April CPI in the UK 2.8% yearoveryear. A Reuters poll thought we would see a drop to 3%. So it dropped even further than anticipated. But this is thought to be down to Ovcom lowering the energy price cap from the start of April by 7%. So that having a fairly large swing factor here in March we are running at a rate of 3.3% on the inflation level well above the 2% target. So 2.8% certainly welcome news at this point. Just picking my way through some of the other numbers here. Services CPI for April this is at 3.2% 2% year-over-year. Again, lower than the three and a half% that the market was pricing in today. The month-over-month rate was.9 of a percent below the 1.2% anticipated. So, services often seen as one of the drivers when it comes to some of the inflation pressures. Producer input prices 2.4% on the month. Again, this is lower than what was anticipated. So, those numbers coming through uh much better. The the April core producer prices index 2.4% 4% year-over-year versus March of 2%. So, what we're seeing here on Sterling Reaction 13380, we are sliding about a tenth of a percent. Let's get to Josie Anderson who is European economist at Neimura. Josie, thank you so much for joining us as we pick our way through the numbers. The fact that the headline is lower than anticipated and clocking a two-handled, not a three. Is that positive for the Bank of England?
>> Yeah, well, actually, this is in line with our forecast, but I'll take you back to February before the Iran war.
The Bank of England was expecting inflation to print much closer to 2% about 2.1% averaging around 2% this quarter. So even at 2.8% it shows what a different situation we're in and it's all to do with energy prices. Um as mentioned the offterm energy price cap was actually lowered in April um despite the Iran war happening and that's because it's decided a few months in a few weeks in advance um of the month that it happens. So, we're going to see the impacts of the Iran war in the July uh print and uh on household energy bills. But today, we have seen um well, likely I haven't seen the figures yet, but we have seen uh a rise in uh the petrol and diesel prices. So, that continues to put strong upward pressure on inflation after that March print it did as well. And and then in April, lots of different things happen uh in in the UK that affect inflation. Um so a year ago there was a change in vehicle excise duty and that matters for what happens in the print today. Um because that's the base effect. So inflation is an annual print. So so that will also have had an impact on >> Josie. I had the the pleasure of chatting to you beforehand. So I know exactly where to go on my question and that is this is the calm before the storm isn't it? And it's just a question of whether those when those massive prints hit and they will be big prints that are hit because all the factors we are concerned about will inevitably lead to inflation as well. Can the Bank of England hold their nerve and not hike as many times as the market fears they will?
>> Yeah. So that's an important question and lots of economists are comparing this crisis to 2022 uh when we also saw wholesale energy prices rise and we saw a number of rates rises from the Bank of England. So, will they increase rates again? Well, an important factor in that is the fact that interest rates are now already so much higher than they were in 2022. The Banking of England was trying to normalize them by bringing them lower prior to the start of the Iran war. Um, and so now they're they're more comfortable waiting to see what happens um before deciding if they need to raise their policy rate. And a key factor that will drive them to increase it is evidence of second round inflation effects. That they know that petrol and diesel prices are rising and they can't really do much to affect them. The question is will workers start demanding higher wages? Will that mean that services businesses who don't have large energy costs will start putting their prices up? If that happens and the Bank of England start to see evidence of it, then that is when they are likely to raise.
>> Just jump in on that point because there's evidence there. If you look at the input prices, 7.7% year-over-year. A Reuters pulse saw 5.9% on the output prices side 4% versus Reuters saying 2.8%. So there's evidence there of the pricing pressure that could be coming through the system.
>> Yeah, precisely. But at this stage, we're most likely to be seeing those direct energy effects and perhaps indirect effects as well. One thing I'll be looking at when I get to my desk um is airfares um because they have obviously been very driven um by uh jet fuel costs. And so that's kind of indirect effects um the impact on on consumer prices of of airfares um that we class classify that as indirect effects whereas it's those effects that aren't quite so driven directly by uh impacts of the Iran war that we uh that the Bank of England can actually do more about with its policy rate.
>> Yeah. And there's I have to say there's an excellent jet fuel uh deep dive on the CNBC website. Someone put it together. I don't know who it was, but it's brilliant. Absolutely brilliant. Um but Josie, just to pick up on the points that you make in the note. Um you uh you're expecting the Bank of England probably to raise rates in July. Is that right? That's your your expectation. But we've seen that softer uh labor market data uh this week, haven't we? And the drop in payrolls. If you look at core CPI, I appreciate you don't have uh the the access to the the the numbers that we have uh on the screens in front of us, but core CPI in April came down to 2.5% down point uh from 3.1% in March. Does that still lay the ground for a rate rise in July?
>> Yeah. Well, I mean, as I as I said, these numbers actually printed off the top of my head 2.8% is what we were forecasting for the headline. the core we were also expecting to slow and and a lot of this is to do with dynamics as I said base effects from a year ago pricing dynamics um heading into April um that don't necessarily have much to do with the Iran war and and pressures on inflation can take time to build um and so even though these figures were roughly in line with our forecast albeit slightly below consensus uh we are still forecasting inflation to rise particularly heading into Q3 when we get that rise in the offjem price cap Um, and so today's figures are good news because they were lower than market expectations. Um, and and probably mean that a June hike, which is not what we're forecasting, that's less likely to happen in combination with yesterday's um, softer labor market data. But July is still in play. We will get more data before then. Um, and also we and the Bank of England are expecting inflation to rise um, from this 2.8% figure. Um and that's all to do with um more price pressures likely coming through later in the pipeline.
>> Okay. And I suppose the the challenge now is investors are not just looking at the the economic data that we've had out this week. They're also looking at the political going on in the UK and how that feeds into borrowing costs. We've seen the sell off in bonds. We've seen the UK already at higher borrowing costs than um other G7 countries. what's your take on sort of the direction of travel and where things go from here on that front?
>> So the most important thing in terms of politics no matter who is prime minister or chancellor is that for the bond market is that they commit to fiscal rules um because bond traders they don't want to see the potential um for debt to become unsustainable. That is when they become very concerned um about buying bonds. Um and uh for instance, if Andy Bernham were to become prime minister, he has committed u now over the last few days to keeping the current fiscal rules and and that is what bond traders are particularly concerned about. Um so actually that commitment potentially from a potential prime minister is important and now we have seen that that is probably good news. I hear you. And yet finding growth has been problematic, should we say, for Star and Reeves and will be problematic for Streeting Star or Burnham, especially when you get lines like this. Um, and you and I were talking about this earlier on about the Treasury. Uh, Clive Black from Shaw Capital came out with this particularly piffy comment which I like this morning.
Whilst the UK is on the ropes electorally, the government, it appears to be losing its mind in mind in an orgy of neo Soviet policy ideas seem seemingly popular to elements of the electorate in Camden. Um, but these kind of things, price control, I've never heard such nonsense. What do you think?
>> Well, yeah, I assume this was related to headlines yesterday um supermarket pricing caps on essential goods. Yeah, the chancellor um I I think um is is due to uh announce some some measures to help households deal with with the cost of living and and the crisis that we're currently going through that's already impacting um fuel and diesel prices but will likely impact household energy bills in July and and many other prices.
We've talked about jet fuel and so the chancellor, you know, it it's her job to to um help people out um in terms of the the broad economy uh keep fiscal responsibility, but she will want to u be thinking about what she can do to help with the cost of living. But the important thing here actually uh for the bond market, as I mentioned, is she's got to keep the fiscal rules. So, she won't have much money uh to to play with in terms of uh you know, potentially uh helping people out with that. So, one thing she's been looking at, it's been reported, um, is potentially, uh, trying to persuade supermarkets to voluntarily limit price increases. So, we'll see what happens there. As far as I'm aware, they they haven't yet agreed to that, so it might not even happen. Um, but that would potent food is 10% of the inflation basket. So, so changes in food prices will have big impacts on inflation.
>> It won't have got lost on our viewers that you are European economists rather than UK economists. So why don't you put it in context to what we're seeing elsewhere? We we in the UK or certainly the scribes in the UK from the red tops who suddenly discover business every now and again think that we are in our own unique bubble of crisis at the moment.
We're not. This is going on around the world and others are worried about bond yields from Japan to United States to elsewhere in Europe as well. So just kind of put it in context for us.
>> Yeah, that's true. Yields have risen across the world because of concerns about the Iran war. Right. That's what's driving bond yields even in the UK even more than politics. Um and and all sorts of countries um are very concerned about the fiscal impacts of um of of higher energy bills. Um what that will mean for the fiscal situation and and for inflation. Of course, that is the most important thing, the first area that we're likely to see um the impacts of the old war come through for all of these countries. Um and the question is for across the world, will central banks raise their policy rates? Uh we're also forecasting the European Central Bank uh to raise rates in June and July in response to this.
>> Lovely. What a what a great um conversation. Josie, thank you very much indeed for that. Really nice to see you today. Josie Anderson who is a European economist at Namura. Right. Talking of the bond yields.
>> Yeah. Let's take a look at what we're seeing this morning on the 10-year across the board as bond yields don't forget marching higher over the course of the last week or so. The 10-year note we are now seeing at 4.65%.
Buns 318. So we've peeled off about 2/10 on that paper. The JGB rate down 2/10en of a percent. But where we are seeing some elevated behavior is on guilts up a fraction 5.13 on that 10 year. The 30 years we cast the net out a little bit wider and take a further look down the line. You can see we're 5.17 of the 30.
The paper out of Germany 3.7 slightly higher there. flipping lower on JGB's 4.1 the handle and also longerterm guilts. We're saying a slight drift there too in terms of the yield. Now I want to take you to what we're seeing on US markets. The investors are taking note of the bond market and that is having an impact on what you're seeing in terms of the equity market performance this week. It's taking some of their steam out of the technology trade. The question is whether Nvidia can revive that later on today. NASDAQ down 8/10 plus in the trading session.
Alphabet actually one of the underperformers despite some very strong news flow around search in the last 24 hours. We are seeing a reversal there.
Want to take you to the Asian market.
This is a state of play across the region today. Japanese stocks down more than 1% along with South Korea a slightly more modest tone out of the Shanghai composite down about a quarter of 1% and Hong Kong losing territory. So red is the color of the day across in Asia. Well, European futures on the back of what was modestly a firmer session on the European boards. We clocked high by about 2/10 of a percent, fourth positive session out of five yesterday. But again, if you look at some of the uh individual markets, we gave back territory on Italian and French stocks.
It was just the footsie and the DAX out of the core markets that traded high yesterday. This morning, we look like we will step up into negative territory.
The DAX seen down 6/10 of a percent out of Germany this morning.
Still to come on the show, President Trump suggests he was just an hour away from attacking Iran, reiterating his threats if a deal is not reached. Dan will have the latest from Abu Dhabi.
Plus, it's Nvidia Day with investor attention on the AI darling earnings set to cross the wires after the market close stateside. We'll look ahead to the numbers and we'll also discuss the impact of the war in the Middle East on the global economy with the World Bank Group's managing director, Pascal Dono.
that conversation at 9:15 London time.
You know how it is to negotiate with a country where you're beating them badly, they come to the table, they're begging to make a deal cuz they're begging to make a deal. I hope we don't have to do the war, but we may have to give them another big hit. We may have to give them another big hit. I'm not sure yet.
Uh you'll know very soon. How close were you to striking around?
>> Uh I was I was >> I was an hour away.
>> We were all set to go. You're talking about yesterday. Yes.
>> We were going to be striking very It would have been happening right now.
>> Yeah. I was all done. The boats, the ships are all loaded. They're loaded to the brim and we're all set to start.
>> Oh, apologies for the background noise there. It was a property developer doing his extension. Uh moving on. US President Donald Trump says they're they're doubling down on his threats against Iran while suggesting Tan is eager for a deal very eager. Meanwhile, two Chinese tankers carrying roughly 4 million barrels of oil exited the straight of Hummus today according to Reuters citing shipping data. Oh Dan, both stories absolutely fascinating. I mean the timing of the Iranians letting through two Chinese tankers that will not be lost on you or anyone else in the region. And once again, the president saying the Iranians are desperate, desperate, desperate to do a deal. What do you think, Steve? Good morning. Well, markets obviously watching to see where this latest rhetoric from both sides takes this conflict, which is really showing no signs of progress as we track into the 3month mark next week. President Trump keeping up the threats towards Iran. As you've just heard, he said overnight, and I quote here, "We may have to give Iran another big hit. I'm not sure yet. You will know soon. The president also now setting another new deadline, giving Tyrron until Friday or Saturday to show meaningful progress in negotiations or face fresh strikes. The president said he was just an hour away from giving that strike order on Monday before standing down at the request apparently of the Gulf leaders. At the same time as well, Iran not backing down here at least publicly. The foreign minister Abbasaraki responding with his own warning saying Thrron has gained military knowledge from previous hostilities and I quote here a return to war he says will feature many more surprises. Again, markets have seen this movie before. Axios also reports the latest Iran counter proposal did not show significant progress and Axios says today that many US officials now admit they're confused about which direction Trump is actually heading. And then also this morning a new data point out of Reuters on the state of play inside the straight of Hormuz that is important to watch. Two Chinese tankers carrying roughly 4 million barrels of oil have exited the straight. That's according to new shipping data. It's a notable development and worth watching really closely. Whether this represents a deliberate signal from Beijing following last week's summit with Trump or simply a commercial transit that Iran has chosen to allow is not yet clear. But of course, 4 million barrels moving through the straight that has been effectively closed for nearly 3 months is not a small number. markets now watching and looking out to determine whether this is going to be a one-off or perhaps the beginning of something much more. It's back over to you >> Dan. Can I ask about the Iranian negotiating position, what they're seeking at this point because it feels as though despite all the twists and turns in the story in the last couple of weeks, they haven't budged very far from some of their initial proposals. Is that your reading, too?
>> That's exactly right. And on top of that list is war reparations, for example.
The Iranians also not budging on the American hard line, which is this request from President Trump that they can never have a nuclear weapon. It seems as if it's a position that Iran is yet to soften on and perhaps may never will. They have long suggested that their own nuclear ambitions are within the remitt of their own rights as a sovereign nation. And of course, for the United States and for Israel, that is simply a non-starter. So the nuclear issue is one thing. And then on top of that, you also have other major sticking points like Iran's missile and drone program and of course other key issues.
Perhaps also near the top of the list is the fact that the straight of Hormuz and who controls it into the future is an issue that's also still largely unresolved. So, as we come into this 3month milestone next week, obviously a lot of contentious issues yet to be narrowed and the gap between the United States and Iran remains wide, which is why we have ultimately seen these threats continue to ratchet up on both sides. Dan, what are your thoughts about the medium-term on this one and about the production that will be coming out of the coming out of the Gulf? because we know that UAE are not constrained by OPEC anymore. The Iranians presumably as part of any deal will want to sell as much product as they possibly can. Saudi will be championing at the bit uh to sell product aggressively. Just your thoughts on what you're hearing from oil experts about what could actually happen physically in terms of crude once this is over.
Well, Steve, I thought one of the most in convers one of the most important conversations we've had on the network this week was your conversation and Ben's conversation with Jeff Curry, uh, former top commodities analyst at Goldman Sachs, now weighing in from the AAX markets perspective, saying that in the next couple of weeks, perhaps as soon as the 4th of July in the United States, we could be reaching that critical juncture when it comes to supply and storage. And the fear is that we could see airline bankruptcies in Europe for example if we begin to see genuine shortages of fuel and products and of course crude supply as well. The the main issue is the time frame here.
The longer the street of Hormuz remains closed then the higher the risk is. And when I speak with experts in this part of the world and also analysts who have been weighing in on the state of play, the thinking on the supply side is that when the street of hormuz does eventually open up and normalize, then perhaps we will see quite a significant rush to market. there's going to be a big focus on OPEC unity, for example, and whether or not we're going to see compliance staying intact because all of these producers who haven't been able to get their product to market are obviously going to be very keen to begin monetizing their natural resources once again. And then at the same time as well, just because Hormuz reopens, it wouldn't necessarily mean that we'd see an immediate normalization either because it's going to take a long time to get that backlog flowing again. In fact, the transit could take many more months off the back of uh freshly reopened Hormuz. So, this doesn't really seem to be normalizing anytime soon. And we're already starting to see that now spill over into other risk assets. The surge in yields off the back of higher energy prices and the expectation that we'll see inflation staying higher for longer is a case in point now. So, this is really starting to have an impact. I think we're going to have to watch and wait to see exactly what happens next on the diplomatic side or whether we see a resumption of military hostilities here.
But the general sense in the region right now is that this is nowhere near over at this point and perhaps has many more months to run.
>> Dan, excellent work. Thank you very much indeed for that. Um I just want to tell you that you can see on the screen in a couple of seconds after we've uh said goodbye to Dan. Um we have President Xi and President Putin this very second.
Our timing was perfect for once. Um coming in to conduct their press conference after their meetings. Now look, as we saw with President Xi and Trump, there will be platitudes. There will be platitudes about the relationship going forward about how they have to coexist, how they've overcome many issues. But the fact of the matter is President Putin is in the far weaker position and he's doing to a certain degree what the US president was doing was trying to see what kind of level of support he can get from the Chinese president for various initiatives. Now the key for Russia, let us be brutally honest about it is the fact that it is shut out from selling a vast amount of product on the world markets and specifically uh via Nordstream. It cannot sell its gas to Europe. although it is of course still selling LNG which is uh interesting hypocrisy from the European Union.
Anyway, the point being is what he really wants, what he would love, what would be the absolute peach on top of everything would be that if he could get the Chinese to agree to a second pipeline, East West pipeline to supply vast amounts more gas to China. This been something that's been on the table, the power Siberia 2 I think it was called for many, many years, but the Chinese have been really hard ball on terms on this one as well and as of yet have held back. Now I haven't seen anything yet that says that that deal um is getting any closer to being inked because the deal obviously uh from the Chinese point of view they are in a very strong position and want an incredibly low price of product as well. But it' be very interesting to see whether we see any progress on that. That aside, I quite frankly expect more platitudes.
>> There was a lot of commentary in the last 24 hours about how she thought about Ukraine and whether he'd made some comments suggesting that Putin would regret the invasion. Uh the Chinese side has been pushing back saying that it's completely fabricated. So again, smoking mirrors around what was said between that conversation between she and Trump whether there was any weighing in by the Chinese president. of course very difficult optics now as uh Putin arrives on the ground whether that was part of the conversation and whether the Chinese will help when it comes to geopolitics for Putin or whether they will stand back and don't forget there's an incredible amount of technology that the Chinese now have at their disposal the amount of defense capabilities that they have and whether this weaponry technology is freely available to the Russians. M it was interesting a moment ago we saw the two leaders there exchange the folios which presumably contain some of the details of uh some of the points that they've agreed on. It will be interesting to see when commentators pick apart the two versions whether we have the same sort of disparities that we saw between or or the uh detail on one side from say the US read out and then the slightly more vague versions of uh the agreements from um from from the Chinese side and and whether these this time the two versions align more closely and what that tells us about the relationship and the talks that have gone on. can't help but wonder whether on his way there Putin read that uh FT report about the uh conversation between President Xi and President Trump and >> controversial >> well it's the most it's the most four years of of of which has been shut Russia out of the world system has caused economic calamity. I don't care what the the the bluster says on the surface. They have hundreds of thousands if not millions of young men especially who are coming back maimed from a war that was unnecessary. Many aren't coming back. Hundreds of thousands of dead as well. An economy which has had to be geared towards industrial production towards a military-industrial complex as well where actually they've drained their resources. They've drained their rainy day fund as well. Is it is it surprising that an even if it's offthe cuff comment from two world leaders said, "Yeah, I bet he's regretted this four and a half years later on when look I remember February 2022. You remember it and you remember it. We all thought we all thought, let's be honest about it, that the Russians would be in Ukraine in Kev on the streets within a couple of weeks. There was no one thought the Ukraine could hold back.
Certainly not the Russian generals."
>> And if that had been the case, then it would have been a clear easy win for Putin. But it was not the case. And if you think back before that, all those trips that you used to take to Russia, all the trips that international business people would take to Russia, it was very much part of the global economy. It was bringing in more investment was setting itself up for the future. Now all that of course has come to a standstill at one of the times when you've got the biggest technology investment in generations. So is Russia missing out on this technology wave around AI? Has it really put itself in the slow lane for for decades to come because of the war? Yeah, the point about what President Xi says being uncontroversial as in friendship, as in global diplomacy, you know, you can speak the truth, but people would rather you say it to their face rather than to someone who is their uh perhaps uh their rival behind their back, you know, and the fact >> But was it that big a deal? I mean, it Yeah, he's regretting it. for for someone who doesn't make that sort of personal comment. Remember the weight of words when President Xi says something, you know, in international diplomacy, I think it does carry weight. I think it does, especially when he's on he's on his way to roll with you on this one.
Sorry, we got to go to break in within the next half an hour. I'm going to roll with you on this one. What does it mean?
If he did say it, so what?
>> If he did, what what's Putin going to say? I wish you hadn't said that. Then then what?
>> Well, no, but it's it's it's about setting the tone for the conversations that are about to happen.
>> No, no, but Ben, hang on. I'm I'm all powerful she which he is pretty powerful at the moment. We all agree with that.
He he makes an aside. Let's say he makes let's let's go with and the Chinese are saying he didn't say it but let's say he did just for the sake of this argument.
I bet he's regretting that. And Trump goes, "Yeah, I bet he's regretting that." And then and then Putin goes to Beijing and says, "I wish I hadn't said that." And he says, "Well, I didn't say it." Then what?
>> But is who cares? How is that going to change the relationship between Russia and China? It's not.
>> Is it calling the outcome of the war?
because the hint of regret suggests that you're the losing party that you're also not going to get an outcome.
>> No, I've made loads of things I've regretted in my life, but actually they've turned out okay. So, I don't know if he is calling. All I'm saying is Putin's in such a a a dreadful position.
If if if your mate, let's say they're on the same side, they've got this eternal friendship between Russia and China.
Let's say he did say it and your mate says, "Well, I bet you regret that." I mean, yes. So, what what's what's Putin going to do? I'm not going to sign that big gas deal that I need now or I'm not going to desperately require some other trade deals with you to shore us up because our economy is teetering. It >> I'm not sure the relationship is a matey as you would like to portray it. I think it's a very >> Well, I'm I'm going down a a trite line, but the fact of the matter is they do have they have signed these huge SinoRussian deals or or or compacts of eternal friendship which quite frankly I think are being challenged.
>> Yeah. I don't know. Final point, uh the face saving um element for the Chinese, there's a huge one. And so if he's indicating that there's been a loss of face from Putin around entering the war, that is quite a serious connotation from the Chinese perspective. Uh but we've got a park there. Coming up on the show, we'll take a closer look at some new AI announcements from Google and reveal which tech companies have made our annual CNBC Disruptor 50 list. Stay with us. We'll be right back.
A very warm welcome to Schoolbox Europe.
I'm Steve Sedick with Karen Chan, Ben Bulos. And these are your headlines.
Sterling dips after UK inflation eases.
Uh well, I say it's dipped. Look at that. 01% mega fair. Anyway, uh UK inflation eases to 2.8% in April below market expectations, whilst European futures point to a weaker start to equity trading as a fixed income selloff puts pressure on stocks. Mixed messages on the Middle East. President Trump threatens Iran with yes, another big hit. But Brent pulls back after tankers going to China by the way uh managed to exit the straight. And Vice President JD Bance says the two sides are in a pretty good place. Plus, Google debuts its latest AI models as it races to keep pace with competitors. But all eyes on Nvidia today. The US chip giant expected to report a near 80% surge in revenue when it posts numbers after the bell.
It feels like the AI crown is up for grabs. That is by market cap and by technology prowess. And it feels as though Google is having a stab at it.
Now Google has unveiled new AI powered features in its search and announced a faster, cheaper version of its Gemini model at the annual IO developer conference. The tech giant is aiming to take on rivals Anthropic and OpenAI as it continues to focus on enterprise customers. Alphabet, the parent company of Google, also lowered the cost of its AI ultra subscription plan. Uh we'll talk about this a little bit more, but a significant headway as it they roll out agents in search. Our next guest says a structural shift is underway in European services with AI enabling a new kind of company that doesn't fit the software or PE playbook. Zanep Wilson joins us, partner, general analyst at an American venture capital firm that has $43 million in assets under management.
Zenv, thank you very much for joining us today and let me just get into what you're talking about here on services because we've been talking about platforms, we've been talking about use cases with AI, but do you think it's transformational when it comes to services? Just explain why.
>> Yeah. So, taking a step back at General Catalyst, we're investment firm, but we're also a transformation company. So, when the chatbt moment happened, we took a step back and said, where is going to be the biggest impact? And it was quite clear to us that AI was going to really improve the quality of service delivery particularly in services like property management, real estate agencies, accounting, insurance. These are very voice and text heavy workflows. So we saw that as an opportunity to say AI is going to change these services and we want to be a part of that change and how can we help drive that change. So that was effectively how we got started on this AI transformation of services. This is fascinating because the announcements from Anthropic in recent months caused a flight of capital from parts of the public markets and we saw that around real estate services and the market was talking about whether the middleman effectively just got removed here from the process. They all argued that was not the case that they can use the technology too. So just explain how you're thinking about who gets disrupted and who doesn't.
>> This is exactly how we think about it.
So when we did our work initially we looked at about 70 services industries and we picked the top 10 that we thought 40% of the works can be transformed with AI and and can become more efficient.
But the truth is we're we're drawing the transformation in these AI services industries because we think there will always be a human in the loop. If you think about categories like accounting, insurance brokerage, property management, a lot of them are also regulated. So you will always need to have a person in the loop. And so the opportunity here is not about you know it being run completely by machines and AI but the opportunity is actually to make people more productive and make people enjoy their jobs more.
>> Um Zenob you you talk about um AI enabling a new kind of company that doesn't fit the existing playbooks um when it comes to services. Flesh that out for us. What what do you mean by that? You know, when we say that, we're really thinking about like what does the business look like at a steady state because what we do in our AI rollup play in in the AI transformation of services is really a twoact play. So in act one, we go find exceptional teams. We bring them together. Sometimes maybe they've met each other before, but we put together the team, invest in the technology so they can start building the automation. In act two, we help them on distribution. So what I mean by that is that they will go and start acquiring these services businesses getting the books of customer and see if they can deploy that automation and drive that efficiency. So what's happening there is two things. One when you drive uh efficiency and put in these AI workflows one you can handle a lot more tasks. So you effectively don't because the constraint of growth of these services businesses is very much headcount in and people. So if people can do work and are three times more productive then you have this growth opportunity right. The second thing that's happening is that you're driving um also better customer value. So the customer experience is much better and that ultimately leads to organic growth and now you can kind of capture that organic growth because you are not bounded by the necessity for hiring uh people at scale. So then your P&L changes, right? Your P&L is now looking different because previously, you know, you've had very high operating costs that effectively now comes down.
And that's why we're saying, you know, this business doesn't look like a software business. This business doesn't look like a services business.
>> So it's effectively a new category that's been created.
>> And in terms of how Europe's performing relative to other regions, is it doing enough? Is it going fast enough with these sorts of innovations? Um we're trying to we're trying to make it go faster. So if you um and this is why effectively we're doing the work. Um we we've funded a number of companies now to attempt this work in a number of categories like real estate agency space uh is one accounting insurance wealth management. So we're still very much in the early innings of building of the technology. Um we've backed a company for example called Duelia in the UK. They're doing AI transformation in the real estate agency industry in the in the UK and within two years of our investment now they've become one of the top 15 players in the UK uh in real estate agency space. So we're going we're trying to kind of increase that speed of execution and delivery of value.
>> Zena how goes the Parto principle i.e. the power law i.e. the principle of which your industry is based on. I'm very interested to see what the hit rate looks like at the moment. um your industry bases itself on 80% of the sales coming from 20% of the companies i.e. you know you're going to get eight failures and you're going to get a couple of wins and then you get your exponential growth from that. How how sits that at the moment because it's become a very crowded place.
>> H um I would say that it hasn't changed drastically.
>> So you're still getting two wins for every 10. I think we're getting more wins and I think that's happening because of AI because we are in the middle of this incredible technology shift that's happening.
>> Now just tell me something. Are those wins resales or or getting to IPO or actually are those wins companies that are actually making money?
>> Those are company those are companies that are actually making money. And I think that this is the thing that's so special about what's happening today with technology. We're having two things happen. One, we have this incredible AI technology that is so cap capable and has incredible adoption. And two, we're seeing revenue growth at scale that we've never seen before. So you look at an anthropic. They've ended last year at 9 billion revenue and you know in two months or three months they were at you know 20 billion. So that's a revenue growth right? It's not just technology.
And then one of the companies that we've been partners with since very early days, Stripe, that we backed, you know, that they powered the internet economy and now they're powering the AI economy and they're seeing the fastest rate of, you know, the fastest speed of reaching 100 million AR on their platform.
Companies like Lovable hit 8, you know, in eight months they were at 100 million of revenue. I think cursor hit 100 million revenue in in three months. So I would say we are seeing real growth. I just pick up on that point because even though the growth is very quickly coming into the mix, is it very quickly then potentially going out? I mean lovable you cited. I know some have watched the tra trajectory of lovable and thought it's incredible but it too is able to be disrupted very quickly. So you worried about the other side?
>> So this is um this is this is a good question. I think durability is something that we always think about and that's why by the way in our work of you know AI transformation in services I'm very confident about that right because we know that these services industries are not going anywhere people will be buying property will be renting and this is very much touching day-to-day lives on everything else the truth is it's very hard to know we don't have a crystal ball and we're living in this kind of peak ambiguity where you know there are step changes in technology that we can't No.
>> Yeah.
>> So, we don't know whether we're going to be vibe coding with lovable for the next 10 years or whether we're going to be using anthropic in a month's time.
>> Exactly.
>> Right. Yeah.
>> Okay. Z, thank you very much. Zip Yavas Wilson, partner at General Catalyst.
Well, staying on that theme, Anthropic has claimed the number one spot on the annual CNBC disruptor 50 list. AI continues to dominate among the companies that have made the list with 43 of the 50 firms saying the technology is essential to their disruptive business models. Julia Boston filed this report.
Number five, RAM. Valued at $32 billion, the fintech giant now has more than 50,000 companies using its platform for everything from corporate cards and expense management to vendor payments.
Number four, Androll. The $61 billion defense tech giant uses AI to build next generation autonomous weapon systems. In March, the company won its biggest contract yet, a 10-year deal worth up to $20 billion with the US Army. Number three, Data Bricks. The analytics giant now serves 20,000 customers, including 70% of the Fortune 500. Valued at 134 billion, Datab Bricks has strategic partnerships with OpenAI, Anthropic, and others. Number two, Open AI. Since kickstarting the AI boom with Chat GPT back in 2022, the platform has grown to more than 900 million weekly users. Open AAI recently closed a record $122 billion funding round, valuing the company at $852 billion.
Number one, Anthropic. Despite being labeled a supply chain risk in its legal battle with the US government, the AI startup has seen historic growth with revenue and usage increasing by 80 times in the first quarter of 2026.
Anthropic's rise has been fueled by the explosion of its Claude code tool, which is revolutionizing software development.
The company is currently in talks to raise even more capital at a whopping $900 billion valuation. We're thrilled to be in a position where we have so much demand for the cloud models and I think we are uh you know always diligently working around the clock to make sure that we're able to meet customer demand you know as it comes along.
Well, Arjun spoke to Anthropic head of Claude Code and joins us now with more from the interview and just through us sitting here chatting amongst ourselves.
Anthropic facing some real competition now. Google hoting up its efforts to park it park its tanks on Anthropic's lawn.
>> Certainly the competition is so intense right now when it comes to the pace of development of AI models and where anthropic has really tried to uh push and take a lead here is around this idea of coding. Claude Code was amongst one of its first products out to the market.
It's this assistant that helps uh developers uh with coding, but they've tried to push this even further into what they're calling an agentic experience, i.e. code uh developers able to sort of autonomously ask these AI assistants to write uh some of that code for them as well, which unlocks some interesting use cases as well. I had a chance to catch up with Boris Churnney, who is the creator of Claw Code and the head of Claw Code. He actually said that he uses the product to write all of his code that goes back into claude code and I started by asking is that something uh that is happening across the broad in enterprise. Let's listen in. Quad code is 100% written by quad code. Quad co-work is 100% written by quad code across anthropic. I think probably around 90% of the code across entropic at least is written by quad code. Um and we're starting to see this for a lot of our customers also. Everyone from the smallest startups and indie devs to the largest companies 100% of their code is starting to be written by hot code. So ultimately that begs the question on a couple things. I'll tackle the first one. One is what does that mean for the way businesses approach right now their software spending and the spending they're doing on a number of different SAS companies. There's been a big concern amongst investors in the market that actually this could be the death of SAS. Um so when you uh assess the landscape is clo clawed code able to replace a lot of the software right now that companies are using the the biggest shift that we're seeing right now is companies using cloud code in a very sophisticated way are able to move move much faster with the same level of quality. So they can build the same product but they can do it like 10 times faster than they could before. And this is just the single biggest shift. And because of this, you can build things faster. You can get things to market faster. You can adapt faster. But also, all of those ideas that companies wanted to try that were on the back burner, they can now just build. And so, there's a lot more room to experiment and to try new ideas that just couldn't before.
When you look at the the impact this is going to have on the makeup of organization. A lot of people look at what you say and say, well, does this mean the traditional software job is effectively obsolete? um where do you see the changes happening in terms of engineers in terms of software developers within an organization?
>> We're seeing a couple shifts right now.
So one one thing that we're seeing is people that are not traditional engineers are coding and you know on the cloud code team our designers code, our engineering managers code, our finance guy writes code, every everyone writes code. At at Anthropic, we had a we had a lawyer who made a little app and it's a little sidescrolling game where you can play it and it teaches you how you work with the legal department at Anthropic and it was built for employees and you know he built this. He has no coding experience and we're starting to see this across the industry. Um you know like ramp reported this in a in a blog post that they had that their product managers are coding and we're we're hearing this just from everyone and everyone is starting to code.
>> Couple of interesting points from Boris Churnney there. one was that uh software development is happening a lot quicker he says but also interestingly people who are not software developers non-technical folk are now beginning to use tools like claude code as well which obviously has potential implications for the makeup within an organization but there's a few readroughs one uh is that you know there is adoption happening on the enterprise level around these coding calls uh this also continues to raise concern around SAS businesses that has been a concern for markets uh but also uh the question is what does this mean for compute requirements? This has been a huge bottleneck for the industry as well and we've heard it from AI firms where there's demand outstripping supply of com of compute and that seems to be continuing as usage of AI tools continues and for investors that is a lot of food for thought into into how to play this um and um you know where the money is going to be going into so far it's gone so much into those infrastructure plays memory in particular has had a huge runup as well and so there are questions given uh some of the the continued usage of AI where now investors are going to begin to play this >> anthropic is going for many different pieces of the pie, but so too is Google in terms of hitting back. I mean, yesterday in the announcements, anti-gravity, which is its coding assistant, this is part of the mix. Not the same level in terms of reasoning that Claude does, but still important when it comes to workflows. But the Google announcements too were about locking down search. It felt like they were just plugging those agents in, using the incredible technology that has been evident behind the scenes, but just rolling it out to the public at a much cheaper price. How do you view how relevant the announcements were in terms of it owning search into the future?
>> Yeah, I think very very important announcements from Google on a few fronts. One is of course around solidifying uh its its position within the search market and uh you know one of the big uh concerns for Google investors last year was with all this proliferation of all these bot uh chat bots is Google search dominance going to be eroded and and clearly Google fighting back against some of those criticisms as well and it's shown that it can continue to be a strong player.
The other point here is is about the broader Google ecosystem. I think when you look at at some of the models Google has released, one of the things they've tried to do is uh put those AI tools across all of these different products whether it's uh Chrome, search, Gmail, etc. and try to lock in users further into that uh to create and push forward towards the industry keeps talking about this agentic AI world that is a lot more um knowing of of your how you're using AI that can give you more relevant information etc isn't it? So you shouldn't have to hop out of one app to go into another to go and search. The the whole process is just more organic.
>> Exactly. And it's all about that locking into the Google ecosystem. I think that was the sort of broad underlying message really uh from what we heard at Google IO.
>> Coming up on the show, it's Nvidia Day with investor attention on the AI darling earnings set to cross the wires after the market closed state side.
We'll look ahead to the numbers.
Hello, welcome back. SpaceX has chosen Goldman Sachs to lead its highly anticipated IPO. According to multiple reports, Goldman will take the lead left position on the deal, followed by Morgan Stanley with Bank of America, Cityroup, and JP Morgan Chase also assisting. What a lineup. The reusable rocket company valued at $1.25 trillion could reportedly make its prospectus public as soon as today. Well, speaking with space, our US colleagues will have an exclusive interview with Jeff Bezos live from the Blue Origin rocket factory in Florida today. That interview is coming up at 1 p.m. London time.
>> Nvidia will publish its first quarter results after the bell today with the chip giant expected to see a 79% surge in revenue according to Lseg estimates.
That would be its fastest growth in more than a year. Investor focus will be on the outlook amid rising competition from other chip players and tech giants developing their own AI chips. Our US colleagues will be speaking to Jensen Huang in a few hours. Can't guess what it'll be wearing. Um I'm I'm going for a a yellow. No, let's go for black leather jacket. Uh you can catch that interview from midnight tonight. All right. Well, let's take a little look at where the U E European futures are looking for the equity market. We are currently trading lower on the Footsie, the DAX, and the stocks 50 futures. A bit of a an overcast day here in London, but we'll leave you with a look uh at the London skyline as we go to break.
Uh right, let's take a look at these European markets and once again there are the same dual concerns perhaps leading to a touch of red at the start of trading and those dual concerns are what it means for the equity market from the bond market selloff and of course the wars we are seeing and what it means for inflation and what it means for the ability for the market to go northwards again against that perhaps still the abullance that we're seeing in the tech sector Karen >> Steve we're certainly stepping into the red this morning those bond yields that you cited the 16-month high on treasuries still overshadowing the market no progress in the Middle East and of course waiting it out for Nvidia later on today but basic resources moving towards the top of the index we're up almost 9/10 of a percent. The oil trade too around the geopolitics.
Those big three the themes that we mentioned very much playing out across the board here. Utilities and technology are slightly ahead. So that wait and see approach for Nvidia later on today. But some big announcements of course from Google overnight moving the needle on the sector. What we're seeing in terms of the red, the amount of reading behind me seems to be fairly strong this morning. in terms of the sectors that it's falling on. If we can switch over the charts, you can see just how active some of the movement is this morning around media stocks up a day earlier and now fading. So very bumpy road for media. Household goods 710 down, retail giving back some territory and food and beverage. We're talking about the UK inflation numbers this morning which came through lower than anticipated, but there's still concerns around the food space and what everyday consumers are facing because of the war in Iran. Now the European boards in the starting point yesterday we were up about 2/10en of a percent on the benchmark the stock 600 the big movers to the upside really were the German stock market doing a lot of the heavy lifting and a little bit of action on the Footsie 100 this morning what we're seeing uh this starting point for the individual markets the Footsie is down by about a third of a percent so giving back those faint gains from yesterday the Zetradax already open out of the gates is down modestly not giving back all of its territory yesterday still holding on to some of that green, but it is a slightly softer start today and you're seeing that on French stocks and across on the Italian stock market.
It was one of the underperformers yesterday, third negative session in a row. So this morning it is looking to try and push off that base and uh you're seeing a slight increases so far. Ben, >> UK inflation came in less than expected in April with the headline figure at 2.8% on the year. That's down from March's 3.3% figure and lower than the 3% that was the consensus that economists had pencileled in. But producer input prices came in far higher than expected, up 7.7% on the year compared to expectations of a figure just under 6%. Uh Marcus Morris it is portfolio manager at Alliance Bernstein and joins us now. um just give us your take on those figures and and and what they spell particularly the producer input prices.
>> Yeah, good morning Ben. I think it's it's it's somewhat surprising um to see to see inflation heading this direction but I don't think we should get ahead of ourselves here. Um there are there are some one-off factors in terms of the dates of various holidays in including Easter that contribute to this. And look, you can see the the move in in bond yields globally that the market is still incredibly worried about the direction that inflation is heading and and the big inflation drivers, namely Iran and and oil don't seem to be um altering any anytime anytime soon. And we've seen equities proving some somewhat resilient to put it mildly uh given everything that's going on in the world. Um in terms of earnings, um what's your overview? What's your takeaway from what we've seen and what that tells us about the underlying picture and performance of these companies?
>> Yeah, earnings have been remarkably resilient actually considering everything that's going on at the world in the world at present. Uh in Europe uh during Q1 season 25% net companies uh beat expectations. Uh and and when you move to to the US that's over 50%. Um and actually what you've seen over the over the year is earnings expectations for the full year constantly nudging up.
Um, so the S&P 500 is now expecting 22% earnings growth for the full year. But what's interesting is when you strip out TMT and commodities, that figure falls to 7%. So you can see how narrow the earnings growth in the US market is at present really driven by that AI complex.
>> Um, let's go into some specific areas, Marcus. Um, defense and there has been a really interesting retrenchment in this sector and actually it's happened this year at the same time. Funny enough, we've seen the USIsraeli Iran war. So I notice actually the likes of Babcock and BA have picked up in the last couple of days, but by and large this sector's 20 to 30% depending on where you go shopping off its highs. What does that represent?
>> Yeah, it's a very sharp reversal from what we saw last year. As as you rightly say, last year the market was very excited by the 5% NATO commitment to to GDP spending on defense. This year I think you've seen growing investor questions around the execution risk of of of that of that growing defense spending but also particularly in Germany you have seen the inevitable budget de delays. Um so you've seen an element of procurement bureaucracy that has delayed the timeline of some of these these these defense contracts.
Where we stand today is the German defense companies that were trading on mid to high30s P multiples are now down in the low 20s. the growth outlook still looks very rosy although it might be delayed by a quarter or two. So I think the market probably became a bit overheated and now I think we're probably at a more interesting level.
>> Yeah, dare I say it was quite a scattergun approach, wasn't it, by investors as ever is the case? They were buying a theme rather than actually looking at the subtleties there as well.
Are those German defense companies where you think the most value is given the where they're trading now?
>> Look, I think you need to look company by company. Um where we have a preference is is actually for the longer cycle names. Um there's a German defense company called Rank for example that is the the global market market leader in transmissions for tanks. And the beauty of that business model is it's very aftermarket centric. Um so once you sell the transmission you then have a 10 to 20 year aftermarket opportunity to harvest a very profitable growth profile. So you're not just selling oneoff weapons and and ammunition where you have a very strong replenishment story, but then that is done. You have that 20-y year visibility once once that tank transmission is sold.
>> It's almost like an ecosystem that you're tied into. Uh let me just push onto another area of conviction that you've gotten that is semis and you say ASML is your top position. I was just charting that versus Nvidia. It's outperformed Nvidia on a year-to-ate performance and also on a one-year basis. Is there now too much baked into the ASML trade or do you think there's more to come? No, look, I think there's more to come. Um, the semis complex has been incredibly strong as a result of of this AI spending. Um, and ASML are probably one of the best positions position companies globally. Um, having that monopoly position in the lithography space. The challenge for both ASML and Nvidia is is the name of the game in the last few months has all been around memory. Um, so you see the SKH Highix and Samsung up over 100% year to date.
ASML doesn't have that beta, but it's a much longer duration company with a with an outstanding mode. Um, so we still have huge conviction here.
>> I was looking at the Google announcement overnight, and it feels as though they're now plugging in a cost base in some of their pitch to customers that if you're a big heavy user of AI, then you need to plug into the supercomputer that Google has. So, the whole build and they will come idea seems to be playing out for the likes of Google. What does it tell us about the cycle we're in and whether we can still bank on more expansion that is going to fuel the semis from here?
>> I think that's absolutely right. Look, usage and data usage is increasing all the time, but companies need to be able to monetize that and and that's what we're beginning to to see the start of that journey now. And and this is really how the debate has shifted in the last in the last few months rather than from rather than whether AI does create economic value to to to how much they will be able to monetize that. So just on that point, I mean Google was saying that if you're a heavy user, you're a big company, you could save more than a billion a year by switching to Google's models. I mean that's uh Google monetizing because it's getting the customer the customer saving money, a significant amount of money by switching to Google if the pitch is right. So do you also then want to own Google stock?
Is there a real change around some of the sentiment do you think around the hyperscalers where investors were worried that they were just spending too much on capex? Look, Google have Google have done an outstanding job in the in the last few years, but it is a highly intensive and capital intensive intensive game. Um, so it's probably too early to draw strong conclusions in terms of how that competitive intensity plays out because you have product cycles that are evolving very fast. Um, and peers constantly constantly catching. So I I think we'll pause before drawing too too strong a conclusion here. Marcus, um I just look at what's happening um on the Korean market, Cosby, and I wonder if there are any lessons to be drawn from that in terms of the risks of such a narrow powered rally with within tech. And I mean, it's not even a sort of um uh I suppose an evolutionary disruption that we're seeing for Samsung. It's an old-fashioned labor dispute. Um and that has, you know, the effects of that. It's not the cost be down from from some impressive highs that it was notching.
If someone were to look at that and say okay I want to position in a way that insulates me if there is a wobble within the tech space whether that's in Europe or the US how do they go about doing that because at the moment it doesn't feel like there's any obvious place to be to hedge >> yeah look the the memory market is incredibly concentrated and particularly you see the the output of that in in Korea um the way we play that is is by having these this exposure to companies like ASML which don't necessarily have that huge beta and concentration risk that Samsung Samsung and Highix have and you have a much longer visibility of growth. Um ASML's order lead time is is about 12 to 12 to 18 months. Um and customers don't game that as they are able to gain gain the memory cycle. They have long-term contracts with with ASML.
>> Marcus, I noticed at the bottom of the note that you've provided us with it says UK politics and the risk of higher inflation borrowing costs as well. I I keep having the same conversation with everyone I can ask because my logic and I don't know if it's logical at all. I don't know if it survives the two miles to Westminster from here. Uh but is that nobody can be as stupid uh to tempt fate with the bond markets as the Tory government was four years ago, which I think will reign whoever becomes the lead or whoever is the leader of the Labor Party or the government. Am I just way too naive?
>> I hope you're not.
And actually you see as for Andy Bernham for example, he is now publicly committed to sticking to the fiscal rules. And I think as you get closer to power, some of the the more populist messages have to have to be toned down.
Um and for better or worse, UK governments certainly are at the mercy of of of bond markets and need to respect those fiscal rules.
>> Um got to leave it there, but I just want to say 328. Got to be pleased with that.
>> Thank you.
>> Yeah, belated congratulations. Haven't done two in two weeks like like you have those lately.
>> I know but you did very well as well. I know anyone who doesn't know what we're talking about then you haven't watched me on this program for the last few years. Marcus, thank you sir. Marcus Morris Ion who is portfolio manager Alliance Bernstein.
>> Let's take a look at some of those chip makers we're just talking about ASML and the reality is we're rallying across the board this morning. We've got a bounce of more than 2% in some of these big names and right towards the top of the stock 600. A company we're talking about yesterday, Autobach, has responded to a report from Grizzly Research on Tuesday in which the short seller alleged that the CEO Hans York's quote excessively lavish lifestyle has seen him take more money out of the company than it has earned for at least 15 years with a multi-billion euro bill due to creditors in a few years time. Otterbox says it categorically rejects what it calls misleading allegations and that it is reviewing legal steps including notifying Germany's supervisory authority. This after the stock posted its worst day on record off the back of the allegations. Coming up on the show, President Trump suggests he was just an hour away from attacking Iran, reiterating his threats if a deal is not reached. Dam will have the latest from Abu Dhabi.
You know how it is to negotiate with a country where you're beating them badly, they come to the table, they're begging to make a deal cuz they're begging to make a deal. I hope we don't have to do the war, but we may have to give them another big hit. We may have to give them another big hit. I'm not sure yet.
Uh you'll know very soon.
>> How close were you to striking around?
>> Uh I was I was I was an hour away.
>> We were all set to go. You're talking about yesterday. Yes.
>> We were going to be striking very It would have been happening right now.
>> Yeah. I was all done. The boats, the ships are all loaded. They're loaded to the brim. And we're all set to start.
>> A US President Donald Trump there doubling down on his threats against Iran while suggesting Thrron is eager for a deal. Meanwhile, two Chinese tankers carrying roughly 4 million barrels of oil exited the straight of Hormuz today according to Reuters citing shipping data. Well, Dan, are the optics around those ships are getting through the straight of Hummus after President Trump just met President Xi?
Fascinating, but just walk us through the latest.
Karen, obviously a really important development there as we continue to assess the impact on the price of oil and of course up near $110 a barrel today, up more than 60% since the war began as President Trump's Friday or Saturday deadline for Iran continues to loom and both sides escalate their rhetoric now as well. The focus now is whether or not both sides will go back to war or if there is some kind of real diplomatic process that could actually yield results here. President Trump saying this week and I quote here, "We may have to give Iran another big hit.
I'm not sure yet. You will know soon."
Those words from the US president. And then of course Iran's foreign minister Abbasari also responding to that threat saying Thrron has gained military knowledge from previous hostilities and that quote a return to war will feature many more surprises. So we've seen this movie before the rhetoric ramping up on both sides. And what's interesting is that Axios also reports today the latest Iranian counter proposal did not necessarily show significant progress.
And reports say President Trump convened his full national security team on Monday evening for a briefing on a military strike. And Axios also said that many US officials now admit that they're a little confused about which direction the president is actually happening. So in terms of what could potentially happen next, of course, the US has been threatening the resumption of military hostilities. The Iranians also saying they have the capability to retaliate. And all eyes now on what kind of diplomatic offramp we might see emerge from this point on, if at all.
And then there's also this separate oil story that's getting a lot of attention this morning. The Wall Street Journal reporting that the Commodity Futures Trading Commission in the United States is now investigating suspicious trading in oil futures that occurred just moments before President Trump's March 23rd Truth Social Post in which he postponed strikes on Iranian energy infrastructure. Now, this is important.
More than 800 million US dollars of oil futures changed hands in minutes during off trading hours according to the Wall Street Journal. Prices then fell as much as 13% after President Trump's Truth Social Post. So the CFTC is interested in at least three firms according to the report and is now trying to determine whether anyone with advanced knowledge of the White House's plans traded on that information. This is a conflict where the price of oil has really become a weapon. And the suggestion that someone may have been trading on advanced knowledge of White House decisions, particularly when it comes to the fate of this war is a story that markets will obviously be watching very very closely.
>> Yeah, look, um I think anecdotally, Dan, many of us would be surprised if there hadn't been something interesting going on. So yes, absolutely right. The CFTC is looking at it. Look, um in terms of how this war ends, it will end one day.
It could end this week. It could be months or whatever ahead. Let's hope it's the former and not the latter. But I think our viewers need to know something. This isn't going to be cleancut. This isn't going to be the end of the verbal political conflict between Iran and the United States. I mean, there's no way that in a very simplistic deal that every single issue is going to be resolved, is there?
>> No, I think that's a fair point, Steve.
And the uh question that's always asked during moments like this, particularly if we do see this war coming to an end, will be, is the region safer as a result of this US military engagement? And the answer to that question, at least right now, is probably no. And that's because this is a conflict that has ultimately emboldened this regime. It has enabled the Iranians to leverage a major geostrategic asset that they now exert some influence over which is the straight of Hormuz. And of course the uh leadership inside Iran the uh supreme leader Mojaba Carmin is still alive and still capable of waging warfare in the region. So, uh, this is obviously, uh, a very complex backdrop for the Gulf States who now have to navigate what will be a brand new Iran on their doorstep. And Iran, as I mentioned, that is capable of using its mil its military assets, including its missiles and drones, uh, as well as what could be a nuclear program as well, unless the United States is able to take that off the table against them into the future.
It has the ability to undermine economic resilience in this part of the world.
The confidence that global investors have in this part of the world. Uh it has the ability to influence the appetite and decision making to do deals in this part of the world. So the the question of whether or not the war has actually improved the status quo or the economic or fiscal backdrop for the Gulf States, I think is uh still yet to be answered. But if you were to maybe have a goal of answering it, then you could basically say that it hasn't. And then of course, it's the question of what type of Iran the United States is going to be dealing with in the future. The president has spoken a lot about leadership change and regime change inside Iran. The the reply to that that we've been saying over the last couple of months now is regime change to what?
Uh, of course the uh the capabilities of this new regime are going to be very closely watched not just in the United States but across the region and you really do get the sense that uh the United States having now thrown the confetti up in the air in the region uh and allowing it to settle somewhere else hasn't necessarily changed the status quo for the better. If anything, it's only made it more uncertain.
>> Okay, Dan, thank you.
The Russian President Vladimir Putin and China's Xiinping have met in Beijing just days after US President Donald Trump's state visit to the country. The leaders touted a series of cooperation documents, including in energy, AI, and technology innovation. President Xi also spoke about the situation in the Middle East, saying that it was imperative to stop the fighting that would help reduce disruption to energy supplies and trade.
Peter Navaro, the senior trade adviser to the US president, gave his thoughts on Trump's trip to China.
>> Point of that trip, Joe, to be crystal clear, was to maintain um people say use the word stability. I would say maintain strategic position. And I would I would say that our strategic position now with China is favorable. We've cut the deficit with them by over hundred billion dollars.
Ah, this next story. Okay, bear with me.
European Union governments are reportedly discussing whether the former ECB president Mario Draghi or the former German Chancellor Angela Merkel could represent the block in potential negotiations with the Russian President Vladimir Putin. That according to the Financial Times, which says EU foreign ministers will discuss the merits of possible candidates at a meeting in Cyprus next week.
We we do theater on this show to try and get people you animated, try and get you thinking. Sometimes we we put it on. Got to be honest. Sometimes it's real. In this case, it's real. I am cannot believe that the EU would consider Angela Merkel as the conduit between the EU and Russia. Mario Draggy, let's part that aside. I think he's a very robust character. He's proven his worth.
European and German foreign policy, European and defense policy when Frra Merkel was the most important politician in Europe from 2005 to 2021 was a blooming disaster. Let's be brutally honest about it. I've said it a hundred times on this channel. When Trump sat down on July the 11th, 2018, it's imprinted on my mind when Karen Iron was another anchor, I can't remember his name, was sitting here watching Stolenberg getting lambasted by Trump because of the ridiculous European policy of taking more and more gas from the Russians, more and more oil from the Russians at the same time of taking US defense. Trump was so right. Trump has never been brighter. And and the fact that the appeasement that Europe and Europe's largest most important economy, i.e. Germany had under FRA Merkel and somebody in the European Union thinks it's a good idea that Merkel comes back as our conduit as our Putin whisperer.
Are they insane?
>> Sorry, had to get off my chest.
>> So, there are other proposed uh people to lead negotiations.
>> Thank God for that.
>> So, there is a dangling question whether a current leader would be more apt to because of the the weight of being part of a state. Would that be more useful in terms of negotiations? also proposed has been Alexander Stub, the Finnish president that he's being put forward.
Stub has been put forward.
>> Well, Stub's so hawking. Do you know the Fins? The Finns have now this massive long border with the Russians and they're saying, "Do you remember Russia what you did last time when you took us on? Do you remember the winter war 1938?
Do you remember what happened Russia?"
Stubs a very different proposition.
>> So So the Russians not that happy with Finland either for for not being uh >> for standing up to them.
>> Exactly. For not stay on the sidelines as much. So that is seen as perhaps not not the right option either. And of course the predecessor for stub Sally Nesta is also another name that's been put forward. But you know in terms of negotiations here would drugy be the right person. He's been trying to make Europe stronger that proposal that he put forward where I heard 40% adoption of the drugy report. We think a little bit less around the set less than 40% but he's been trying to make Europe stronger. Is he the right person to negotiating with Putin as well when Putin doesn't want Europe to be stronger or more competitive? I think people bite your arm off 40%. I'm sorry Karen. I I >> I don't want to steer us off course in terms of this.
>> Yeah. Drag is is an very effective central banker and and when well let's let's go back to Dragh's experience of being prime minister at the start of this conflict the the conflict that started in February 2022. Which European nation weaned themsself off Russian product quickest? It was the Italians.
So you know he's been robust. Wonder what Tony Blair's up to these days at risk of throwing another name that is going to be shot down by Steve in uh in moments. But can I just say something in defense perhaps of Chancellor Mhl. Just just >> tell me about the German defense when they were then when they were drilling with broom handles cuz they didn't have any guns. Tell me about it.
>> No, no. I I wonder whether she was looking to history and thinking the European coal and steel community and the interdependence on each other for energy laid the foundations for peace in Europe for decades after the second world 1933 1935 1938 what bit what bit of history was she looking what was she looking at Chamberlain was she looking at appeasement what what bit of history was she looking at >> it's easy with the hindsight after the Ukraine the thoughts scale invasion of Ukraine >> no no I'm sorry I was in ke in 2014 when the Russians and their little green men were invading Crimea. Why did Putin think that Europe would do nothing? Why did Putin think that Ukraine couldn't defend itself second time round? It's because first time round when you had Fra Merkel as the German chancellor, the reaction from Europe was tepid a and quite frankly underwhelming.
>> I mean, by all means defend by all means defend German foreign policy from 2005 to 2021. I love that conversation.
theory that maybe the motivation was looking at the interdependence on energy historically had laid the foundations for peace. I know tie them in, bring them in, make them part of the economic union as well, but surely we got this big fat warning sign in 2014. Did we not get that?
>> Yes. And and yes, now >> did we not get the warning signs before that with Russian uh moves on other countries as well?
>> Yeah. I mean, and and and all of those >> Let's appease the guy. Let's let's let's encourage him and let's not defend ourselves in the meantime. Let's not have uh any weapons that can be serviced. Let's not have any weapons.
Let's not have tanks that actually are 21st century fit for purpose. Yeah, let's do that. That let's defend that policy. But but if if your point is, you know, and it's a very robustly made point maybe you think I could have made it more to put it mildly. Um but maybe that's the very reason they're thinking of Merkel then that Putin will see someone who is not going to kind of um you know clash up against him. Someone who who is um less sort of uh an aggressive figure aggressive figure Theodore Roosevelt.
Yeah. He was a great great guy in many many ways. You know maybe a bit too imperial for a lot of people's taste.
But you know what Theodore Roosevelt said that actually Germany did half of >> Go on.
>> Walk quietly. Yeah. Which Germany did but with a big stick.
>> Yeah. And Germany didn't have a big stick. It had a little bloom broom handle for for doing the drills with.
>> Do you know? Can I suggest that when they do the confirmation hearings, you're on the panel because it would make for great telly. I mean, >> so Ghard Schroeder apparently was the man Putin wanted.
>> Schroeder. He's on the board of gas prom, wasn't he?
>> Exactly. Coming up in the show, we'll reveal which tech companies have made our annual CNBC disruptor 50 list. Stay with us. We'll be right back.
Welcome to Squawkbox Europe. I'm Karen Ch with Steve Cedric and Ben Brulos.
These are your headlines. Guilt yields fall after UK inflation eases more than expected in April to 2.8%. While European equity markets are a touch weaker as a fixed income sell-off puts pressure on stocks. Mixed messages on the Middle East to President Trump threatens Iran with another big hit, but Brent pulls back after tankers managed to exit the street. And Vice President Vance says the two sides are in a pretty good place. China's President Xi calls for an end to the war in the Middle East as Vladimir Putin hails unprecedented Russia China ties on his Beijing visit.
And Google debuts its latest AI models as it races to keep pace with competitors. But all eyes on Nvidia today. The US chip giant expected to report a near 80% surge in revenue when it post numbers after the bell.
We've had a soggy old start to the European trading session and what we're seeing now is markets moving a little bit higher. The Zetradax as you can see trying to move positive. The French market as well trying to hold on to a fraction of the green and Italian stocks too managing the most territory about a tenth plus. But the Footsie 100 has flipped about a third of a percent weaker. You can see the red that had marched up very quickly at the start of the session now just minimized slightly but still a red tone for some of these markets. the sectors where we're seeing the better performance this morning.
There's been a big element of uh technology that is creeping into the mix as we countd down to Nvidia. Huge announcement too from Google overnight around tackling the lead now from anthropic but also conquering search again. So we're seeing the semiconductors here in Europe trade stronger but it is the basic resources sector that is still the top perched sector this morning. Oil and gas is stronger. Industrial up 210 of a percent. The underperformers where we're seeing some selling is still hold in the morning trade. It's media stocks down heavily about 2%, food and beverage, household goods, retail. A real uh tilt there into the red for some of those consumption plays. What we're seeing in terms of US futures now as we gear up the start of the trading session. We have been seeing the US markets coming off a little bit on the S&P 500 710 down yesterday. There was a third negative session and right at the bottom was Alphabet for both the S&P and also for the Nasdaq this morning. We're chasing some upside and whether that is pre-positioning ahead of Nvidia and on the back of the AI trade thanks to Google, it does seem likely at this early hour. Steve >> HSBC CEO Gesri has urged staff to embrace change at the same time as saying AI will destroy and create new jobs. The lender says it's focused on retraining its workforce to quote be more productive versions of themselves.
The comments come just days after I think it was just yesterday, wasn't it?
Standard Chartered announced it would slash thousands of jobs in a direct response to the impact of AI. Well, the global labor market has moved past the initial phase of AI experimentation firmly entering the age of augmentation according to Ranchstad. Sand Fand Nordender is the CEO of Ranchstad. Hey, how are you?
>> Good morning. It's nice not to see you with us wearing our big puffy jackets >> finally. It's nice >> in her mon. Um lovely to see you look yourself.
>> Well, I don't just look like a big kind of big fluffy thing. Yeah. Look, um Sand, you've been looking at this for a long time and we've been asking you about it for a long time.
>> I guess taking a step back before we get to where we are now. Is it playing out as you thought it would?
>> I would say things are going faster maybe than we thought it would go. I mean the announcement just from Standard Charters yesterday I think is a big one.
Uh obviously that's very focused on the administrative side of the house. I mean but there are lots of opportunities for knowledge workers and let's not forget about the skilled trade. So there's two sides of the coin here. Um uh but things are moving very rapidly.
>> Um lots of ways we can take this. I I I've read a story um there's a lot going on about the student loan in UK at the moment for universities. Kids are going to university, kids, young young adults going to university spending three years there starting off of 50 60 70,000 student loan ending up with 130,000 student loan as well and those who are looking at professional services now and those kind of debts is now I would be in absolute terror of recommending any of my children to do that at the moment. Do you not think it's it's become a very very difficult world for young smart people who would normally go into those areas? It it it is I I would say the days of okay go to college and do something in an office they are over. So you got to be smarter than that. I think technology any kind of technology is still a good career trajectory. The skill trades are are coming up rapidly.
I would say you can make a good career and good money in skill trade. Uh that's definitely a career track.
>> I don't know a software engineer who isn't terrified at the moment. I I spoke to a brilliant brilliant chap recently who is one of the smartest programmers I know, you know, Cambridge first class blah blah blah blah blah. He he says if this AI trade works out the way that the the Sam Ormans of this world are telling us it will do, he'll be out of a job.
>> The demand for software engineers actually up over the past couple of months. Why? Because there's still a lot of software to be engineered, if you will. there's so much opportunity and with productivity going up business cases that weren't in reach are now getting in reach. Uh so it is a it's a bit of a conundrum there but I think there's still opportunity for the world in general at large to do a much better job with technology uh connected products uh you know all kinds of admin stuff that we want to get rid of. So there's there's lots of work to be done still. There was a story in the FT yesterday saying the big four accounting firms posted more job ads for AI specialists than auditors last year.
What does it take to be an AI specialist? I gather it's more than plugging into a search engine of a day using AI.
>> No, I think an AI specialist I mean of course knows about AI but more specifically knows about AI and how to apply AI to their field whether you're a lawyer, a finance, a software engineer.
So it's much more specific than uh doing some stuff on chat GPT if you uh if you will. Uh but it's I find it quite telling. I saw the article too more a more AI specialist than auditors. I guess that also says something about the change in the in in the practice of an auditor because a I mean audit is a job where you can use AI to the max. I would I would say >> absolutely and perhaps speed up what is a fairly boring work otherwise. But I want to come to what your report too where you talk about bypassing the seniority ladder so professionals to proactively stack AI certifications bypass those traditional structures to secure promotions three and a half times faster. I think a lot of people in the audience will be fascinated by that. How do you do that? How do you stack those AI certifications? Well, what we see in our research is that uh in short, you could say AI is a fast pass to promotion and pay. For new entrance into the labor market with AI skills, you can get 25 to 40% more pay. If you have AI skills with a bit of experience, provided that you combine it with social uh skills, if you will, the softer skills, the judgment, uh the collaboration, uh the empathy, uh you can uh uh fasttrack your your career. There is however a bit of a conundrum there because experience is also coming at a premium because AI produces results and you need to have an experienced eye to judge those results.
>> So, so when it comes to certification, I mean typically we would be thinking about university style degrees, but that's not necessarily the case with AI, is it? No, it's university, but it's also uh the the skills and and uh certificates provided by the AI labs, if you will, the the chat GPT, the Gemini, they have lots of training out there that you can that you can do.
>> And Sand, I I just as we sit here today, um Meta is about to begin cutting 8,000 jobs that it announced we're going to go in order to spend more on the AI infrastructure. It's um closing 6,000 vacant posts. Earlier this week, Standard Chartered said that it was going to uh cut 8,000 back office uh business support jobs. Uh the report is uh is titled the age of augmentation. It feels like from a jobs point of view, it it's an age of contraction. If you're out there looking for a job, >> it's not an age of contraction. I would say it's an age of adaptation. Meaning the job market is changing. Jobs disappearing is of all ages. 75% of the jobs that we at Ronstat cater for today did not exist 65 years ago when we started Ransot. So the job market is changing and those stories that you just mentioned are actually quite diff. Meta is focusing there is pivoting their business on AI so they need less people in other areas. Standard Chartered is saying I can leverage AI to do a better job and less admin uh for my for my for my clients. Uh so there's plenty of opportunity uh to use AI but there's also new opportunities popping up and I I I I keep saying it the skilled trades is a is a big opportunity but knowledge work workers in law in finance applying AI being augmented by AI to do a better job for their clients I think is really uh is is really an opportunity as well.
I take your point about adaptation, but is there a danger that we end up with a world where um the most fulfilling, stimulating, satisfying work is no longer available.
>> Sitting next to me.
>> Absolutely. I mean, it was the example I was about to site.
>> Kind of what you were thinking.
>> I was going to say actually tiresome.
>> I was going to say sitting next to Karen, but yeah. Go on. Sitting next to you is the fulfilling ironic to me, but you meant it to Karen.
>> Talking about European negotiators to to Russia. Well, exactly. Exactly. I need that job.
>> Exactly. Robust. Um, but I I think when I speak to people who work in coding, for example, they say to me they went into it because they enjoy creating something and and um there's a satisfaction to that, an intellectual stimulation. They're now just becoming auditors who check who mark the work of the AI programs that are doing effectively the fun stuff. and and so we're left with almost like a rump of jobs that no longer give people that that um intellectual boost.
>> I would actually say say the opposite because the fun and fulfilling bit is creating something.
>> Yeah.
>> Is making your customer happy. Is creating that program that does something for a user. That's that's the fun bit. That's the fulfilling bit. the bits that go before that whatever that is doing all the data stuff or coding endless lines of code that's not per se the fun stuff the fun stuff is the creativity the production which is accelerated by AI and then the result I think that's where the fun is >> I want to just take it to uh the broader market because the evidence from anthropic when they're gathering the adoption of AI and where it was playing out in the real economy was mostly at large companies and we saw evidence of that in other jurisdictions too. Large companies are all over this trend.
Smaller companies have been slower to move. How is that impacting the job market?
>> Well, that is not per se impacting the job market. The phenomenon is of all times. Large companies have lots of money focused people on new technologies and they they start they start uh moving. uh the fact that smaller companies are somewhat slower gives an opportunity to people like us uh to help them find skills and talent to uh to move their AI agenda.
>> So you were seeing that too though.
Yeah.
>> Okay. Uh Sandra thank you very much.
Really interesting conversation. You've plenty to think about. Sander von Nordender, the CEO of Aranchtat.
And on that theme of disruptors, Anthropic has claimed the number one spot on the annual CNBC disruptor 50 list. AI continues to dominate among the companies that have made the list with 43 of the 50 firms saying the technology is essential to their disruptive business models. Julia Boston filed this report.
Number five, RAM. Valued at $32 billion, the fintech giant now has more than 50,000 companies using its platform for everything from corporate cards and expense management to vendor payments.
Number four, Andro. The $61 billion defense tech giant uses AI to build next generation autonomous weapon systems. In March, the company won its biggest contract yet, a 10-year deal worth up to $20 billion with the US Army. Number three, Datab Bricks. The analytics giant now serves 20,000 customers, including 70% of the Fortune 500. Valued at $134 billion, Data Bricks has strategic partnerships with OpenAI, Anthropic, and others. Number two, Open AI. Since kickstarting the AI boom with chat GPT back in 2022, the platform has grown to more than 900 million weekly users. Open AAI recently closed a record $122 billion funding round, valuing the company at $852 billion.
Number one, anthropic. Despite being labeled a supply chain risk in its legal battle with the US government, the AI startup has seen historic growth with revenue and usage increasing by 80 times in the first quarter of 2026.
Anthropic's rise has been fueled by the explosion of its Claude code tool which is revolutionizing software development.
The company is currently in talks to raise even more capital at a whopping $900 billion valuation. We're thrilled to be in a position where we have so much demand for the cloud models and I think we are uh you know always diligently working around the clock to make sure that we're able to meet customer demand you know as it comes along.
Coming up on the show it's Nvidia Day with investor attention on the AI darlings earnings set to cross the wires after the market closed state side. I look ahead to the numbers.
I got to be brutally honest. This next story is maybe chortal because SpaceX has chosen Goldman Sachs to lead its highly anticipated IPO according to multiple reports. Now, Goldman's will take the lead uh position on the deal.
Morgan Stanley, Bank of America, City, JP Morgan, Chase also assisting. I'm not being funny. This is so bit up this IPO.
I could have done the the IPO for them and got every single stock away. It just I think it's incredible that every major US investment bank's on the deal when this must be the easiest money they've ever earned. Uh the reusable rocket company is valued at $1.25 trillion. could reportedly make its prospectors public as soon as today.
>> Well, there was the Twitter take private, don't forget. So perhaps there's a payday on the other side now around SpaceX.
>> I mean, >> it took ages to get that.
>> I'm getting my one of my stock brokers, a stock broker I should say, in the UK keeps keep sending me messages saying, um, yeah, you want to have a look at this, you want a look at this. And like it's the easiest thing in the world to flog.
>> Yeah. But I mean, you don't need I mean, I presume the terms are very, very lenient because they all want to be on They all want their name on it. Anyway, um our US colleagues will have an exclusive interview with well it says here Jez Bezos I think his name's Jeff live from Blue Origin Rocket Factory that's his nickname in Florida today.
That interview coming up at 1300 London time is is Jeff isn't it? Most people I think it's Jeff. I don't know whether those might be a bit close and dearest and dearest. Yeah. Alibaba says its latest AI chip is three times more powerful than its predecessor as rival Nvidia struggles to get its advanced chips into China. Chinese AI developers have been restricted from buying cuttingedge processes from US companies due to American export restrictions while Beijing has also tightened security or scrutiny on domestic companies use of foreign AI chips.
Alibaba says it has already delivered 560,000 of its newest chips to more than 400 customers across 20 industries. And video will publish its first quarter results after the bell today with the chip giant expected to see a 79% surge in revenue according to Else estimates.
That would be its fastest growth in more than a year. Investors will be on the lookout for amid rising competition from other chip players and tech giants developing their own AI chips. So let's get to Arjun for more. Arjun the bar is incredibly high for Nvidia. It needs to claw its way up over this very high hurdle and prove that there's enormous expansion still ahead in the sector. Can it do it?
>> Absolutely Karen. I think that the two stories you mention are linked because this is uh one of the concerns for investors right now invidia is that China question um and what Alibaba showing that the local players are continuing to bring out product that is filling the void left by the fact Nvidia is not in the market. So if there is eventually some sort of um truce between the US and China, Nvidia is allowed to sell the chips. The question is how much demand is there going to be for those chips given the infrastructure is now being built a lot of domestic products. So China will continue to be cons a concern. You mentioned the high bar extremely high. It the the market is expecting another beat and raise kind of quarter. But if the market's expecting that then there needs to be something special here. So that's where guidance I think for the current quarter is going to be key. The consensus is around 86 to87 billion in revenue. Surely Nvidia will need to uh beat that. But there are also I think another number of questions that that the market is going to have is one is Nvidia broadening out its customer base. So much of its revenue is concentrated on on the big hyperscalers the likes of Amazon and Microsoft and Google etc. Um is that beginning to change and is the business broadening as well? By that I mean the focus so much has been on its GPUs, its graphics processing units and and those server systems it sells into the data centers but Nvidia's made a recent big push talking up its CPUs which are going to become an ever increasingly important component where um these always on kind of agents are running and so are we going to get some clarity on the kind of demand that Nvidia is is seeing right now for those Vera CPUs. So that's going to be I think some of the big questions swirling around this earnings report.
>> Does Alibaba matter? Because what we know from the background of Nvidia's previous numbers 80 to 85% of its revenue in recent quarters coming from four to six customers. So does it matter if Alibaba comes up with some sort of rival because it doesn't feel like American companies the hypers scale is going to be using that technology? So, not so much in the US, but if the the the there was a lot of lost revenue from Nvidia not being in China, and I think Alibaba's very clearly in that China market, it's unlikely to be able to sell much of this product outside of China, perhaps to a few places, but but not a lot. And so, the question is, if for example, uh, you know, the Trump administration and President Xi over in in China say, "Hey, Nvidia is more than welcome back in. We'll allow our local companies to buy it." what is that market size going to be? Nvidia once I think enjoyed more than sort of 85% market share over in China that's basically been obliterated and so even if it is allowed back in the market given how quickly the local players have moved in to fill the void what is the scale of that market so I think that's where it matters is China forever lost to Nvidia and I think that's a a big question right now and it's unclear at this point whether Nvidia is going to be able to get back into that market at least in the near term >> yeah and I suppose the the situation with China will be very much front and center investors minds given that Jensen Huang uh spent a good few days on that trip and yet what what was there to show for that time and energy spent there that he could have been focusing on on other matters. Um do you think we'll get any update on that or is that a matter of uncertainty that will remain uncertain?
>> Yeah, I think what we'll likely hear is you know it's in the hands of the administration. I think you know Nvidia very much is waiting. Jensen Hang was obviously on that trip and it underscores the importance of of uh China to uh Nvidia and also I guess Nvidia to President Trump to some extent even though it was a lastminute invite.
Um but yeah, we're unlikely to hear anymore. I think it's still a case that this is a market that Nvidia wants to be in um because of the huge number of customer potential there and and the fact that their technology is without a doubt still more advanced than what is being produced in China. But the problem is a lot of these Chinese companies have moved in to fill the void. Uh and so yeah, it goes back to the question of how big really that market is for Nvidia anymore.
>> Uh AJ, we want to talk about Google as well. But in the meantime, we're just flagging to the audience our US colleagues will be speaking to the CEO Jensen Huang in a few hours. You can catch that interview from midnight tonight. But the big news flow and to me the question is whether the AI crown is up for grabs. is if Nvidia doesn't perform today and you see any loss of momentum, what does it mean for Alphabet that has garnered enormous momentum and been within a whisker of taking over the top spot in terms of market cap? Now, Google unveiled a new AI powered feature in its search and announced a faster, cheaper version of its Gemini model at the annual AIO developer conference. The tech giant is aiming to take on rivals anthropic and open AI as it continues to focus on enterprise customers. Alphabet, the parent company of Google, also lowered the cost of its AI ultra subscription plan. Uh so that plan has gone down to $200 a month from 250. So you talk about monetizing, that's how it's monetizing. But it's also talking yesterday about how companies have been blowing through their AI budget. We kept talking at length of how many companies are adopting AI, how they're integrating into workflows. Pitch was suggesting that companies are blowing through their annual token budgets and it's only May that they now need to effectively lean into more of the Google technology. If that is the case, what does it also mean for Nvidia? If Google is seeing the customer turn up and they're paying for it, they're monetizing it. Where does it leave future orders for Nvidia? Then >> if the read through on on Google and others is that AI and we heard it from Anthropic as well that actually, you know, their revenue grew this much, it could have grown more if they weren't so supply constraint. And I think that's one of the keys here. If usage of AI is continuing as these companies say and is being adopted in in the enterprise, that only means there needs to be more compute. And so that in theory should be a positive for companies like Nvidia and those building out the infrastructure. I think where it gets difficult is if any of these companies pull back on capex, if any of these companies report actually that demand isn't as high, that's I think where certainly there'll be a bit of uncertainty around some of these companies.
>> Okay. Thank you very much. We'll see you later. Uh stick around because coming up on the show, President Trump suggests he was just an hour away from attacking Iran, reiterating his threats if a deal is not reached. Dan will bring us the latest Welcome to Squirtbox Europe. I'm Karen Cho with Steve Sage and Ben Bulos. These are your headlines. Google debuts its latest AI models as it races to keep pace with competitors. But all eyes on Nvidia today. The US chip giant expected to report a near 80% surge in revenue when opposed numbers after the bell.
>> Uh yields in the guilt market falling after UK inflation eases more than expected in April to 2.8% whilst European equity markets are a touch weaker as a fixed income selloff puts pressure on stocks.
Mixed messages on the Middle East.
President Trump threatens Iran with another big hit, but Brent pulls back after tankers managed to exit the straight. And Vice President JD Vance says the two sides are in a pretty good place.
Nvidia has had a fairly decent performance so far this year. A lot of the action really coming through from late March where the gains really started to ramp up and we're up about 16 odd percent so far year to date. The question is whether that momentum continues today as Nvidia will publish its first quarter results after the bell with the chip giant expected to see a 79% surge in revenue according to LEG estimates. So in terms of where the market sits, it's got a beat basically on that 80 odd percent number. Uh that would be the fastest growth in more than a year. Investors focus will be on the outlook amid rising competition from other chip players and tech giants developing their own AI chips. Our US colleagues will be speaking to the CEO Jensen Huang in just a few hours time.
You can catch that interview from midnight tonight. Uh for me the question is whether any breadth in the customer base from the four to six users would be welcome any doubling down by those four to six customers whether that would be key but no doubt uh very important as we talk about the macro and the AI sentiment. Ben >> let's check in on how the markets are doing uh today this Wednesday and the stock 600 is off reflecting the regional benchmarks all giving up ground uh this morning. the Footsie 100 down almost half a percent leading the losses uh reflecting I suppose the fall in the oil price and uh the oil and gas majors tend to track that and that obviously has an outsized impact on the London index versus its peers on the continent but the others also in the red this Wednesday morning in terms of sector by sector breakdown a quick glance and uh just a handful of sectors uh advancing this morning basically resources on the front foot almost a 6 of a percent oil and pass advancing tech and telecoms.
Also on the board of gainers to the downside and here is what we're seeing in terms of a downward pull. It's media stocks falling. They've had a decent run over the last couple of days but giving up significant chunk of that ground off by more than two and a quarter%.
Household goods retreating. Food and beverage down as well as is the basket of retailers. Steve paper looks like this around the world. I can't quite see why you would sell off or or buy guilts and sell yields on the back of the UK inflation data which is so backwardlooking when we know the hits still to come across the board. In fact, the UK government knows the hit still to come, don't they? When they were talking about price caps in a, as one analyst put it, in a neo Soviet style uh on UK grocerers. Anyway, um looking at it rather than making them do it at the moment, 10 year guilts trading 5.075. A quick look at the longest end of the curve for a lot of you out there at least. Anyway, um 30-year JGB 4.075 and the 30-year United States T-bond 5.1711.
And the US futures ahead of the session, ahead of the key Nvidia data look like this, unchanged on the Dow. US President Donald Trump said Washington may have to give Iran another quote big hit with the US leader reiterating his suggestion that the country's leaders are begging to make a deal. You know how it is to negotiate with a country where you're beating them badly. They come to the table. They're begging to make a deal cuz they're begging to make a deal. I hope we don't have to do the war, but we may have to give them another big hit.
We may have to give him another big hit.
I'm not sure yet. Uh you'll know very soon. How close were you to striking around?
>> Uh I was I was >> I was an hour away.
>> We were all set to go. You're talking about yesterday. Yes.
>> We were going to be striking very It would have been happening right now.
>> Yeah. I was all done. The boats, the ships are all loaded. They're loaded to the brim and we're all set to start.
>> Two Chinese tankers carrying roughly 4 million barrels of oil exited the straight of Hummus today. According to Reuters citing shipping data, this says the US and Iran remain at loggerheads over the critical waterway. Let's get out to Dan for more. Dan, there's a lot of dialogue taking place there about the Iranians wanting to get a deal done, but is there any evidence to suggest that is the case?
>> There isn't. And it seems as if as we kick off what will be a fresh trading day in the United States, the situation still very much at a stalemate here in the Middle East. President Trump, you heard there, now giving Iran until Friday or Saturday to show meaningful progress in negotiations. You just heard the president with a pretty clear message saying, "We may have to give Iran another big hit. I'm not sure yet, but you'll know soon." Well, Iran's revolutionary guards have now responded.
Iranian state media carrying a statement from the IRGC saying and I quote here, "The regional war that was promised will this time be extended beyond the region and our crushing blows will bring you to ruin in places you cannot imagine." Now, that from the IRGC this morning, that is not the language of a side preparing to make concessions. But important to stress, we also know that the Iranian leadership is fragmented. Not all sides are speaking with the same intent.
Either way, it comes as Axios reports today that the latest Iranian counter proposal did not show significant progress. In fact, a senior US official told Axios that if Iran won't shift, negotiations will have to continue through quote bombs. So, the IRGC's threat to extend this war beyond the region certainly one of the most expansive that we've heard Iran make since February 28th. And then we're following reaction in the region as well. The UAE diplomatic adviser Anoir Gagash also issuing a fresh condemnation of Iran in the last couple of hours on X on the Baraka attack which is the UAE nuclear power facility. The UAE says that attack was carried out by Iranbacked Iraqi militias. Gaggash called it a quote directed criminal act and a direct violation of international law. And he also drew a direct line from Hormuz to Baraka as well, saying both represent what he called a mentality of chaos and blackmail that disregards the security of peoples, international law, and the stability of the global economy.
His conclusion ultimately is that from Hormuz to Baraka, the threat transcends the Arabian Gulf to affect the entire international system. And that is already what we are seeing playing out in the markets right now. It's back over to you, >> Dan. I think it's very interesting and we've spent a lot of time, you and I, um, with with members of the com team looking at the implications of UAE going its alone on its energy policy, but the UAE and Saudi are reported or reputed to have um, got involved in some military attacks on Iran as well. Is it a danger in this conflict or is that too far-fetched that actually some of the GCC nations are so fed up with Iran that they will go their own way in this conflict rather than actually tagging along perhaps with the US and Iranian timeline for ending it? Let's say the US and Iran were to say, "Okay, we're going to have some form of a deal." Is there a possibility at all that the GCC nations would actually not adhere to that?
>> It's a really good question, Steve. Uh, of course, purely hypothetical at this point, but it's unlikely that the Gulf States would act alone to push back on Iranian aggression or retaliate Iranian threats without the support of the United States. Of course, these countries rely heavily on US weaponry, US military intelligence as well. Uh in the UAE's case, perhaps given the fact that it's closer in the orbit of the Abraham Accords as well, we've seen some closer alignment between the UAE and Israel when it comes to using military capabilities like the Iron Dome, for example. But uh it's unlikely uh at least in my own personal perspective that we would see the Gulf States going it alone here to enact strikes on Iran.
I think as an extension to that, the question you could ask is if the situation did deteriorate further and we saw the United States and Israel deciding to engage in kinetic activity again, that is going back to war with Iran in the next uh couple of days or weeks if there is no diplomatic offramp, then would the UAE or Saudi Arabia become actively involved? I think the answer to that question uh is still unknown at this point. Ultimately, it would depend on the level of threat that's still being uh exerted towards these countries. What the reporting does show is that the uh defensive posture that the UEE and Saudi Arabia had in the early days of the conflict has changed and they have demonstrated a capability to respond and the official statements that we have heard from the leadership on both sides suggest that uh they are ready and willing to defend their citizens and to defend their populations, their critical civilian infrastructure and their energy assets if they continue to come under threat.
Thank you very much for that. Um, now coming up on the show, we'll discuss the impact of the war in the Middle East on the global economy with the World Bank Group's managing director, Pascal Dono.
That conversation coming up next Russian president and Vladimir Putin.
Russian President Vladimir Putin and China's Xiinping have met in Beijing just days after US President Donald Trump's state visit to the country. The leaders touted a series of cooperation documents including in energy, AI, and technology innovation. I didn't see anything about Power of Siberia too though. Maybe I've missed it. Maybe it's in the detail, but that's what really that Putin really wants. He wants this massive new pipeline, but I didn't see it. President Xi also though spoke about the situation in the Middle East, saying it that it was imperative to stop the fighting which would help reduce disruption to energy supplies and trade.
Well, meanwhile, Peter Navaro, the senior trade adviser to the United States president, gave his thoughts on Trump's trip to China.
>> Point of that trip, Joe, to be crystal clear, was to maintain um people say use the word stability. I would say maintain strategic position and I would I would say that our strategic position now with China is favorable. We've cut the deficit with them by over hundred billion dollars.
>> The European Union has finalized a provisional agreement on legislation to suspend import duties on US goods. It's part of a deal struck last summer which will grant the block preferential access to US farm and sea produce. While the US agreed to impose reduced 15% tariffs on most EU goods, Trump has warned that if the deal is not in place by the 4th of July, tariffs on European autos would be raised to 25%.
The World Bank Group has launched its financial services hub in London, part of its efforts to mobilize more private sector investment in emerging markets.
Well, Pascal Donahoo joins us, managing director and chief knowledge officer at the World Bank Group. Pascal, great to see you. And normally, I would ask you about the previous story. That was you in a different chapter as head of Euro Group, but congratulations on new >> here in a new role. I'm delighted to be back with you.
>> Tell us what you're up to because you opened the London Stock Exchange this morning. You're trying to energize money from the private sector into emerging markets. And as part of this role, just explain what you're doing. So uh we in the countries and clients that we work with uh we need to work with them to create an additional uh jobs for 800 million more people who will be looking for jobs in the time ahead. Uh the uh public capital the money of the taxpayer alone won't be able to do that. We need to raise additional private capital. The World Bank Group has a very good track record with regard to that. Over eight decades now, we've been successful in generating uh with private capital investment around 1.5 bill trillion worth of investment in the world. But we need to do more and the city of London has such deep financial markets, such expertise in this area that we're building out our presence here to achieve more in the time ahead.
>> This is one of the big initiatives for the World Bank Group, but the gap in the jobs market was something I spoke to your president about when I was in Washington. the amount of people coming through and emerging and developing economies that are trying to look for jobs and there won't necessarily be a job down the track thanks to population growth as well as AI. So this this initiative how interested are companies to put money into emerging markets when there's so much conflict and geopolitics taking place?
>> Uh they are extremely interested but we have to work with them to increase that attractiveness and we're anchoring us all in jobs in our mission of jobs in creating jobs for those 800 million young women and men. What we've done is we've identified five different sectors across the global economy from tourism to health care to high-v value manufacturing and then we are looking at what we can do in three different policy areas to make a difference to increasing jobs in those sectors infrastructure regulation and policy and then private capital mobilization. And here today we're looking to accelerate our efforts in private capital mobilization with our partners in the city of London. Ask, what was it about London that uh made it the most attractive place to do this as opposed to all the other places you could have gone?
>> Ask the former senior EU official why London's still the best.
>> So, we have we have we we have a presence in many different financial hubs all over the world. uh whether it's uh what we do within uh New York of course whether it's what we do in eur Europe across the European Union but one of the reasons we want to build out what we have here within the United Kingdom is the uh value we place on the relationship uh that we have with the government of the United Kingdom and the work that they are doing and despite all they continue to be very strong supporters of the work that the World Bank is doing and many parts of the World Bank have a relationship with companies here in London that's stretching back many many decades. So for example, if you look at our bond issuances that many parts of the World Bank do, the majority of them are done here. If you look at our reinsurance activities to help derisk investment in emerging economies, so much of it is done out of the city of London as well.
So for all those reasons, it makes sense to develop what we have here as indeed we are doing in other parts of the world.
>> What's your take then on this? I suppose the mood music politically is that the Treasury here in the UK would like to see um people investing more in domestic companies to try and they think that will unlock the growth that has proved so elusive for the UK economy. and and here you are sort of uh espousing the virtues and the opportunities of uh emerging markets which kind of goes in the opposite direction I suppose to the mansion house accord that we had where um real pressure is being applied on big investors to put their money >> in UK equities what's your take on that is that the right thing >> so uh those very UK companies that you're talking about are the same UK companies that we would do business with and support in emerging economies So the UK companies that understandably the chancellor wants to increase investment in in order for them to be successful, many of them want to be successful in key export markets and in export markets of the future. And the broader argument that we are making is that by investing both in those companies in the city of London and in emerging economies that will grow, it can create the environment in which we have stability within the global economy and growth. And for an economy as open as the United Kingdom, I think there's a good case to be made there. And in the city of London in particular, uh, which does so much business with those economies and with the World Bank, there's an even stronger argument to make which we're helping with in the, uh, in the announcement today.
>> Pascal, I hear everything you're saying and and I think that's great and and you're absolutely right. You London for all the problems of the last 10 years remains the epicenter of a lot of finance done around the world. But but I'm looking at the various hats you've worn, you know, from from from Dublin to Brussels to here now or to DC now, and I'm thinking Ben's right. Europe needs to concentrate on keeping as much capital within Europe as possible. And that has perhaps been one of the biggest criticisms of European leadership over the last go back as long as you like this century just say where actually that vast amount of amazing European capital that you know more about than anyone because you are head of the Euro group as well has not stayed at home as well. So whilst it is absolutely lordable and right that as in the World Bank Group should look for financing out of Europe for the rest of the world, the truth remains financing and to Ben's point needs to remain in Europe in order for us to proliferate and do as well as we can do.
>> But Europe also makes the case for openness. The United Kingdom also makes the case.
>> Don't we just have to be a little bit less naive?
>> Well, actually I'm making an argument that's based in realism. And the argument that I'm making, which is a profoundly realistic one, is that if we care about, and we do, the stability of the global economy and its ability to grow in the future, creating jobs is at the heart of that for countries that want to export and the United Kingdom and the European Union are leading examples of that. Um, it can be to their benefit if they are investing in in those markets within which they want to grow. And overall, I'd make the very final point that the amount of private capital that we are talking about mobilizing is a relatively small share of the total amount of domestic capital that economies like the UK have. So we absolutely understand why governments want to invest at home. But the argument that we are making that we have made progress on is that private capital mobilization is good from where the capital is coming from and good for the capital is going to.
>> I agree with you and that >> well that's great. We're making progress then one person >> and that and that's great but but what I'm trying to get at and I know you're the most skilled politician so you're all over the place. You're running rings around me Pascal. You really are anything. You're running rings around me. But what I really want to say and you know as well is that there is such a massive failure at the heart of Europe for a proud European.
>> There is a massive failure at the start at the center of Europe that is not getting that capital. You call it a savings investment union. Paul I like to call it capital markets because I'm a realist.
>> We have failed to galvanize capital markets in Europe for Europe. And as such that money is finding homes in American technology companies, in American growth when it should be staying here in Europe if we had done our job properly.
>> And it is a a case for uh European governments uh to consider about how they can build up their own private capital markets. And God knows I spent many years trying to do it and I understand the value of it.
>> But the broad case I'm making is for the value of private capital markets and for the value of private capital. Uh I understand why governments in Dublin, in London, all across Europe are looking at how they can prioritize the stability of their own economy. But the overall argument that we're making here is part of the way in which that stability can develop is if that stability is also happening with other parts of the world stabilized and growing too. and relatively low shares of the total amount of capital that we are talking about can be invested in such a way that's good for companies in Britain, in the European Union and in Ireland and can be really beneficial for parts of our world that need further assistant assistance and support in their own development.
>> Pascal, can I ask you about the second part of your title because I've been thoroughly confused about four months now. I've sat in the lobby of your building for a couple of days and I can see the the size of the institution.
That's just one building. It stretches well beyond that one main headquarters.
Chief knowledge officer. What does that mean? What what do you do when it comes to that title?
>> So that refers to how we can make the knowledge of the World Bank work harder on behalf of those that we serve. uh the knowledge refers to the expertise that we have built up over eight decades and whether there's our plans to bring electricity to 300 million uh households and businesses across Africa, our plans to make primary health care available to one and a half billion people across the world. We want to use our expertise to develop more common solutions to these common challenges and I'm really lucky to be working with the World Bank Group to play a role in those efforts. Um, Pascal, I I know this is sort of jumping to a totally different topic, but just before we finish, while we've got you here, managing director of the World Bank Group, um, just your take on the situation the world faces at the moment with no signs of peace um, coming in, the situation with Iran, the energy price shock, all the headwinds facing the global economy, international trade, tariffs still, you know, looming. Um, goodness knows where where those are going to fall.
How does the world deal with this challenge and emerge stronger and prosperous from it?
>> By not losing sight of the missions that I just referred to a moment ago. How we can create a better tomorrow with regard to water, with regard to electricity, with regard to jobs, with regard to health, but recognizing that the challenges that we have of today are very intense. And we're working flat out now with our clients to support them in dealing with that. We have the ability to make around 20 to 22 billion dollars of emergency funding available. And the longer the economic effects of the conflict go on for we have the ability to increase that over time to up to around $80 billion with lots of changes in our balance sheets and reprofiling of projects. So uh that's what we are doing. Uh the effects are grave. They are serious. But we are determined to play our part in the World Bank Group in helping those countries deal with the consequences of the conflict.
>> Um, you're based in DC now, aren't you?
>> I am indeed.
>> How does it feel when the president of the United States thinks that pretty much there are many aspects of the World Bank Group and indeed dare I say it, the Washington institutions uh more generally that are not fit for purpose.
>> So, we take very seriously the views of all of our shareholders.
>> But specifically, I'm asking you about Trump.
>> I was going to go on and talk about President Trump. I thought you were going to give me a very kind of generic answer.
>> I know a generic answer doesn't work with you, but I was going to make the general point uh that we take seriously the views of every single shareholder and President Trump has made the point uh regarding many global institutions.
uh and we're very fortunate that we continue to receive a very high level of support uh from uh his administration from their treasury in our work and we have a very very good and very constructive uh working relationship uh with his administration and part of it is the focus that we have on jobs. uh part of it is the focus that we have on real tangible things we want to achieve in parts of the world that need the highest level of support electricity and education and we are ensuring that with all of the changes that are going on whether it's in America whether it's elsewhere across the world uh that our mission is relevant that it's effective and that we can make the case for it um and uh myself and President AJ Banganger work very hard to do that >> part of the challenge you face today is because of Trump's policies The global imbalances are getting larger because of the US determined to be a superpower counteracting some of the challenge we see from China around AI in particular that is one of the new frontiers when you focus on electricity and the jobs of tomorrow and infrastructure one of the biggest plays is AI and there's a real fear that a lot of parts of the world will just be technology takers how do you think about that challenge and what the World Bank Group can do >> so in the coming months we will be launching a new strategy with regard to that uh you've really highlighted a real key challenge regarding emerging and developing economies that they are not part of the profound changes that are taking place with regard to AI in the way that other economies are. We'll be launching a new plan with regard to digital access because the reality is that if we want to make progress on health care, on education and skills, digital use will be at the heart of that. So for example, if you want to see a doctor, if for example, if you're a farmer in Africa wanting advice about a crop, wanting access to a market, we believe in the future, in particular, small AI will be at the heart of how that will be done. And we're working now with private sector partners all over the world to make that a reality.
>> How conscious are you about parts of the world not being dependent on China? for instance, the old bridges and roads and and a check that China used to write and would leave countries in debt for generations versus also the US perspective being tied into a very expensive ecosystem thanks to Silicon Valley. How conscious are you of those two pressures?
>> So, I'm just back from uh Ghana and Liberia, uh two countries in in Africa which are really dealing with many of the different issues that we have just spent the last few minutes discussing.
And what I can see is those countries are looking into a changing world and what they want to do is identify reliable institutional partners that can support them in their economic growth and development and in their jobs. And really that's where we come in. You know we are very fortunate to be supported in our work by China, by America, by governments all over the world. They support us by their taxpayers money and we show them the effect that we are having. And then when it comes to the countries that you've uh just referred to across the world that are conscious of global changes that are happening, they want reliable partners from an institutional perspective, which is what we are and what we aim to be in the time ahead.
>> Really glad you could join us today.
>> I'm really glad and thank you very much for having me on.
>> Thank you very much indeed. It's been lovely chatting to Pascal Donahoo, managing director and chief knowledge officer of the World Bank Group. Just to say coming up on the show, we're going to reveal which tech companies have made our annual CNBC Disruptor 50. Stay tuned with us. We'll be right back.
Hello, welcome to Sportbox Europe. I'm Ben Bulos with Steve Cedric and Karen Cho and these are your headlines. All eyes on Nvidia today. The US chip giant trading in the green before the open, expected to report a near 80% surge in revenue when it posts numbers after the bell.
Guilt yields fall after UK inflation eases more than expected in April to 2.8% while European equity markets are well mixed as a fixed income selloff puts pressure on some stocks.
And mixed messages on the Middle East.
President Trump threatens Iran with another big hit, but Brent pulls back after tankers managed to exit the straight. And Vice President JD Vance says the two sides are in a pretty good place.
Let's get up to speed with these markets. about 90 minutes into the trading session so far and we are seeing the Footsie 100 down by about a quarter of a percent. The DAX also flipping slightly weaker. So a fairly choppy trading session is what we're watching.
The markets that are showing a little bit more appetite across for French and Italian stocks this morning. The sector improvers where we're seeing the green marching onto the chart. Still the top of the boards has been basic resources or morning that remains the case.
Technology has found a bid too. It is Nvidia day today and we've had a ton of announcements overnight from Google trying to maintain its lead a search. So that is moving the needle on the chip stocks today. Oil and gas a little bit firmer despite slightly weaker trade around WTI. The telecom's basket also ahead. The under improvers we're seeing that red form across the board. It's been media this morning still down close to 2% as some of the household plays to are trading weaker from retail to household goods and food and beverage.
But US futures as we gear up to the start of the trading session later on today we are expecting a fairly cautious start. You can see in some areas for the Dow not much movement there. The Nasdaq is showing a bit more appetite. Don't forget yesterday we're on the back foot.
We're down more than 18 of a percent some selling in the likes of Alphabet but on Nvidia day today I think the market is trying to be a little bit careful around its bets as the detail will cross after hours.
Anthropic has claimed the number one spot on the annual CNBC disruptor 50 list. AI continues to dominate among the companies that have made the list with 43 of the 50 firms saying the technology is essential to their disruptive business models. Julia Boston filed this report.
Number five, RAM. Valued at $32 billion.
The fintech giant now has more than 50,000 companies using its platform for everything from corporate cards and expense management to vendor payments.
Number four, Androll. This 61 billion defense tech giant uses AI to build next generation autonomous weapon systems. In March, the company won its biggest contract yet, a 10-year deal worth up to $20 billion with the US Army. Number three, Datab Bricks. The analytics giant now serves 20,000 customers, including 70% of the Fortune 500. Valued at $134 billion, Datab Bricks has strategic partnerships with OpenAI, Anthropic, and others. Number two, Open AI. Since kickstarting the AI boom with Chat GPT back in 2022, the platform has grown to more than 900 million weekly users. Open AAI recently closed a record $122 billion funding round, valuing the company at $852 billion.
Number one, Anthropic. Despite being labeled a supply chain risk in its legal battle with the US government, the AI startup has seen historic growth with revenue and usage increasing by 80 times in the first quarter of 2026.
Anthropic's rise has been fueled by the explosion of its Claude code tool, which is revolutionizing software development.
The company is currently in talks to raise even more capital at a whopping $900 billion valuation. We're thrilled to be in a position where we have so much demand for the cloud models and I think we are uh you know always diligently working around the clock to make sure that we're able to meet customer demand you know as it comes along.
HSBC CEO Georges Alri has urged staff to embrace change at the same time as saying AI will destroy and create new jobs. The lender says it is focused on retraining its workforce to quote be more productive versions of themselves.
The comments come just days after rival Standard Chartered announced it would slash thousands of jobs in a direct response to the AI impact. Well, our next guests, a firm recently unveiled its new Agentic AI board member product, which it says reduces dependence on outside advisers and tightens control over sensitive workflows. Brian Stafford is CEO of Diligent uh and joins us now.
Really nice to see you, Brian. Thank you very much indeed for joining us. Look, there was another comment from another CEO yesterday and I don't know if you saw it or not, but Bill Winters, the boss of Standard Chartered, is going to invest vast amounts more in AI and less in human beings. um 7 half thousand jobs will go because he's investing in AI rather than lower value human capital.
Your product sounds great and we were looking into it beforehand and there's there's so much that this boardroom member this AI member can can give, but it will be taking jobs, won't it? It won't be creating space for that same person to do a job elsewhere.
>> Look, I think the reality is everybody's looking for productivity from AI. I think that's incredibly true. Uh we do governance, risk, and compliance software. We work with 25,000 companies around the world. uh 70% of the Fortune 1000, 70% of the Footsie 100, two-thirds of the DAX 30, and everybody's looking for ways to use AI to help to get more productivity and digitize what they end up doing. Uh we went to our board 3 years ago, post chat GPT, and said we have to double the size of our engineering team just largely because the demand in areas like compliance, audit, and assurance and risk are huge.
No CEO wants to walk in front in a room with his or her colleagues and say, "I have the largest compliance department of all of you." No one wants that and they want to use AI to drive that efficiency. And we've seen that efficiency take off across everything we do, including in the boardroom. So, we launched our first AI capability for boards in Q3 of 2024. We have 3,000 of our clients already using it, and it's taking off like a rocket ship. And just two weeks ago, we launched our own agent for the boardroom. And so, you will have an AI agent that is trained up in every single one of your board papers for the last 5 years, 10 years, knows every nuance, every word. It's trained up in the markets you operate in, the segments that you play in, knows your competitive landset, and it's able to act and interact based upon and let you ask questions of it and let it actually lean in and communicate in the boardroom if you so choose. And our clients have asked us to prompt up that AI agent in different forms. We have an activist investor, we have a Middle East expert, we have the futurist. And so you're able to bring all these additional personas into the boardroom and into the dynamic.
And whether CEOs just use it on their own, whether board chairs just use it on their own, whether management uses it, it's a capability that we know we use in many of our daily lives. And so why not uh unleash it to the boardroom?
>> Great. It it sounds fantastic. I have to say, you know, coming in with these different um personas, phenomenal. But but you kind of answer my question. Um but then, okay, let me discuss again.
Yes, it will make you more productive.
Yes, it will make this board absolutely tuned to the key issues as well and can answer all these questions and what have you and can take all the notes and can remember everything that happened and what have you and all your key areas. It is going to cost a lot of jobs, isn't it? Look, I I think the reality is if you talk to most CEOs, you know, whether it's on your air but in closed rooms and yes, people have AI productivity targets across their organization and they're looking for AI as ways to either allow you to keep the same headcount as you grow or look for areas to be more efficient and areas that we operate in.
As I mentioned, areas like compliance, audit, and assurance are uh no co wants that to grow at the same rate of revenue. And so those are all areas that you're looking to get that efficiency and that efficiency is going to come from improved processes and it's going to impact roles. You captured my attention talking about the agent that can act like the activist investor. We all know how powerful the activist investor has been in recent times uh with its demands on how to allocate capital, how to uh streamline the business, what to devest, uh share buybacks. So if you've got this activist agent, how much attention does the board member pay to the activist agent? Well, it's almost if you think about flipping it on the on its head, I think your question is an awesome one, which is, you know, part of the idea from this came from actually a footsie CEO who actually said um said, "Brian, look, I, you know, I don't necessarily want an activist investor on my board." Um, but the reality is they actually have a really interesting perspective on things. So, how do I actually get that perspective and how do we bring that into the boardroom so we actually know what someone's going to say before we go to um you know out and have a uh our our capital plans or enumeration plans etc. And so someone had asked, well, is this going to impact the business of adviserss and you know whatnot? And I think you'll still bring the Lazards of the world in to go and do activist investor strategy, but you will have the ability to bounce ideas off of an informed AI agent maybe more frequently.
And so one of the things that one of our clients had said was the reason why they love this so much is typically at the end of a board meeting, you'll actually end up tableabling something so that management team can do some work and then come back the next board meeting with a perspective. But if you can bring that perspective into the boardroom, then you'll still have the management team go and do additional work because you'll you'll validate it, but it will help to inform the conversation.
>> It speeds up the decision-m it seems.
And to the point around the activist though, because we see the activity where we hear that an activist is now involved in a company, you see the stock price move because the market breaks over all the initiatives put forward.
Then the company has to decide whether to adopt any of it. But the stock market is still moving in a certain direction, which sort of forces the hand of the board to react to some of the implications. All that could get changed if the boardroom is already looking at some of the these initiatives.
>> Yeah. I mean, the the world of activist investing has changed so much over the course of the last five years as you guys have have covered. And where it used to be a a letter was sent to a board, the board had time to, you know, go back and do some work and respond to it. Now, those letters are made public on on your show. And so, why not give boards the tools so they can actually respond faster and even in more of a preventative way? And again uh I think in this case it won't replace advisers but I think it will supplement and speed up the decision-m >> Brian I wonder when I look at the example of Della in Albania we have the world's first AI minister in the parliament overseeing procurement immune to any any kind of uh attempts at corrupting or or or undue influence. If you have an AI board member and other members of the board over time think actually this has been right every single time its judgment has become better than ours. Do you think there's a time you could potentially see an AI CEO of a major company?
>> You know, it's interesting. I was with a I was with a CEO of a large um uh media entertainment company and we were sharing um the AI agent for the board that they're adopting. And the joke that he had was um was well I'd love to replace half my board members with AI.
And then he quickly said, "What are you going to charge for it? Are you going to charge it um the same I pay for my board members? I pay them 250,000 per year."
Before I could answer, he said very very quickly, "No, charge half that because I want to make them nervous." And I was with a footsie I was a Footsie 100 chair. Um, and I shared the story with him and he said, "Oh, well that's nonsense. If I really wanted to save money, we'd eliminate the CEO because that's actually where most of the pay goes." So, I mean, look, I think AI is coming for for many roles, many roles of knowledge workers. And do I think AI is a massive supplement to what I do as a CEO? I do. And at some at some point, we'll be able to do the job better than I will. Who knows? Um, right now, I think on the board level, the really interesting thing is I think the best boards function by having diverse points of view. And if AI can add a different point of view, it's ultimately up for the CEO to choose what waiting they put on each of those perspectives. And you might put a different waiting on on AI than you might someone who has been there done that in your CEO chair. But at some period of time, if AI becomes better and better, maybe you put a much higher waiting on that.
>> When we look at uh AI options and developments and platforms, they don't exist in isolation. And the one I've got very much in mind is mythos and the capabilities and the security implications that come from such a powerful model. And when you're talking about an AI board member effectively within a company, that's having access to the most sensitive commercially valuable information. There's an added level of importance to making sure that is secured against other AI platforms targeting it and attacking it. What kind of safeguards do you have? And and and do you think companies will be willing, not just a a you know, an assistant who does some research, but a a an agent that has access to the most sensitive data the company holds.
>> Yeah. I think whether it's board materials, whether it's your R&D pipeline if you're a pharmaceutical company, I think there are real concerns around security that have been around for a while. Those those concerns actually become, you know, even more pressing in a world of mythos or other, you know, innovation from models. And I think you know it's you know we look for our partners at Anthropic and other places to help you know make sure that we're using the tools uh that we can to make sure that we stay ahead of the bad guys.
>> Brian just very quickly it is Nvidia day today so let me ask you about the cost compute and the demand for compute from your perspective. How would you summarize it?
>> I you know I I think you're seeing just the demand just go through the roof and you're seeing just increased demand for all these services whether it's you know cloud code running pervasive throughout every organization. And I mean, you know, some of our clients will use cloud code more outside of engineering with in engineering. And so you're just seeing the use cases explode. And so I would expect to see the same, you know, bumper um announcements and earnings coming out from Nvidia.
>> Fascinating. Brian, thank you for taking the questions. Great to see you. Brian Stafford with us, the CEO of Diligent.
Well, SpaceX has chosen Goldman Sachs to lead its highly anticipated IPO.
According to multiple reports, Goldman will take the lead left position on the deal, followed by Morgan Stanley with a Bank of America, Cityroup, and JP Morgan Chase also assisting. The reusable rocket company valued at $1.25 trillion could reportly make its prospects public as soon as today. Our US colleagues will have an exclusive interview with Jeff Bezos live from the Blue Origin Rocket Factory in Florida today. That interview is coming up at 1300 London time.
Still to come on the show, it's Nvidia Day with investor attention on the AI Darling's earnings due to cross the wires after the market close state side.
We'll look ahead to the numbers with Arjun right after the break. Don't go away.
Right. Google unveiled new AI powered features in its search and announced a faster, cheaper version of the Gemini model at the developer IO developer conference. The tech giant is aiming to take on rivals Anthropic and OpenAI as it continues to focus on enterprise customers. Alphabet, the parent company of Google, also lowered the cost of its AI ultra subscription plan.
>> Nvidia will publish its first quarter results after the bell today with the chip giant expected to see a 79% surge in revenue according to Else estimates.
That would be its fastest growth in more than a year. Investor focus will be on the outlook amid rising competition from other chip players and tech giants developing their own AI chips. Arjun joins us with more. Uh Jim, we're just talking to the CEO Diligent and he said demand is incredibly strong. What are you hearing and what are you expecting?
>> Yeah, very similar. I spoke to the head of Claude Code yesterday and he was also talking about the uptake for some of these AI tools within the enterprise.
And um as AI usage increases, that does mean that compute power will need to be increased as well. And as we hear from a lot of these AI firms, one of the constraining factors right now is access to compute i.e. the chips and and the cloud capacity to be able to train and run these AI models. And so with Nvidia coming out with uh its next generation platform uh pretty soon as well, that's really what the focus is going to be on is how much demand is there and how much I guess can Nvidia satisfy that demand because demand is one thing, but there are a ton of bottle chains ac across the entire semiconductor supply chain, whether that's in memory, whether it's in TSMC's ability to actually manufacture um these chips as well. that is really what's constraining a lot of the customers. So the guidance is going to be key here to give us an indication of the demand and how much um also Nvidia can supply to the market. But I think there's also going to be um one eye being kept on the broadening of Nvidia's customer base. So much of it is concentrated around the hyperscalers and if this AI story has legs that demand will need to uh expand beyond just the hyperscalers and I think investors going to be really watching to hear any kind of signs whether there is that demand broadening out beyond those core customers.
>> Nvidia is running hard. It is trying to build out not just the chips business but the software business. Other competitors are running hard to to catch up. Everybody's making their own chips or trying to get into the business of uh chip delivery. So how do we think about that competition touching the sides at some point for Nvidia particularly around inferencing? Yeah, and there's so many parts of the so many different types of chips that go into these data centers and that are required, right?
So, Nvidia's focused so much on the GPU part of the portion. What we've seen is a bunch of competitors and startups come out saying, "Hey, we've got a chips that great for inferencing i.e. the actual running of these AI models." Um, then you've got on the other hand the hyperscalers themselves developing their own specific uh chips that are designed to run very specific applications. And so, the makeup of the data center is increasingly changing. It's still so much centered around Nvidia, but there's all these other competitors coming into the mix. How Nvidia is trying to come back at this is they've got a brand new CPU server unit, and CPU is going to be incredibly important for inferencing.
And so that's their play here on the inferencing part of the Pi. So, you know, Nvidia is still an incredibly strong company, a very important company in the data center. And whilst there is a lot of competition, I think where Nvidia continues to have strength is around the the variety of product it now has in the market, the software as you mentioned around around CUDA, which has locked in a lot of these customers. And secondly, a little bit of an less spoken about part is the networking i.e. all the things that link these large server racks together. Nvidia owns that portion of the hardware as well, which is incredibly important because if you link these servers up together, you need very very fast connections in order for that data to move in between them. And so that is another part of the pie that Nvidia owns as well. And of course, it acquired recently uh some of the technology from a company called Grock.
It's starting to integrate that into some of the platform. Grock technology is again specifically divi designed around inferencing. So it has the the pieces of the puzzle to continue to be incredibly competitive and there's no doubt there is more competition though coming in.
>> Arch China was once such an important market for Nvidia. Um is is there a danger now that um that China actually decides it can do perfectly well without Nvidia's chips. Thank you very much. And and then it loses that market and and struggles to then find anywhere of a scale that can replace it. Uh yes pretty much. Uh the short answer I think you know Nvidia has been out of the China market you know properly for for just I guess about a year and a bit now. In that time there has been incredibly fastpace of innovation going on in terms of the semiconductor front. Just uh you know in the last few hours we've heard about a brand new uh AI inferencing and training chip from Alibaba. And so there is uh a lot of homegrown players bringing competitors to market that right now is filling the void left by Nvidia. Yes. you know, pound-for-pound, these chips don't stack up with what Nvidia's top-end products are are able to produce, but um the companies are are making do and are able to innovate around the hardware that they've got.
And you know, when DeepC came out with its model, one of the innovations was around the efficiency and being able to deal and train with it on on the hardware that was available. And you're seeing that now some of the models that are coming out of companies like Alibaba and others are incredibly competitive globally. And that is as a result of them working on homegrown hardware as well.
>> Are you aware of the uh the song Everything is Awesome?
>> No, >> I don't think any of us are. Can you sing it for us?
>> You all are. You all are. Exactly. Ro the director.
>> It's from the Lego movie 2014. And it's where everyone looks at Lego world and everything is awesome.
>> I speak to VC. No, all our companies are doing well. Actually, we're beating the power law. We're beating the parto principle of 80/20. I speak to the software developers. Oh no, we're not going to suffer from it as well. I speak to you when I'm Well, no, I didn't speak to you about it because you're you're you're more sanguin, but Alibaba's got its model, but no one else is going to suffer. They're all going to proliferate together. Everyone is going to have a fantastic time. Everything is awesome.
History has never been like that. Why would it be that this time?
>> Yeah, it's a great question. There are there are an increasing number of voices now getting concerned about the run-ups in some of these names that around the AI infrastructure play.
>> 20% of them turn out to be the bayamoffs of this century and make it really we're saying that they're all going to make it.
>> Yeah, there's a lot there will be a lot of cracks in the market. That's without a doubt.
>> Big focus on electronic pop today. We're going to have the CEO Jensen Huang in a few hours time. You can catch that interview from midnight tonight. But in the meantime, that is all from us today.
I'm Karen Ch with Steve Cedric Benos Arjent Kapal. Morning Call is up next.
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