# AI Disruption, Energy Scarcity, and Global Trade Shifts

**Podcast:** Bloomberg Daybreak: US Edition
**Published:** 2026-02-06

## Transcript

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Straight ahead on the program, we'll look at some delayed economic data in the U.S.
and how they may impact Fed policy.
I'm Nathan Hager in Washington.
I'm Caroline Hetke in London, where we're looking at the global energy sector.
I'm Doug Chrisner, looking at SoftBank's approaching earnings as well as the company's bets on artificial intelligence.
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Good day to you.
I'm Nathan Hager.
We begin today's program with some key economic data in the U.S.
It's coming a little late, thanks to the recent government shutdown, but we do expect to get the January Employment Report this Wednesday, so uh no jobs Friday this month.
The consumer price index that had been scheduled for this Wednesday is coming out this Friday, so we get a CPI Friday instead.
Here to get us ready for the figures and how they may affect Fed policy is Stuart Paul, U.S.
economist with Bloomberg Economics, starting to get a little used to this data coming a touch late with these recent government shutdowns.
Are we expecting um any distortions in the data due to the uh the slight lapse in timing on these numbers, Stuart?
The distortions will probably be pretty limited.
Data collection continued pretty much uninterrupted.
So I think that the quality of the data should be about fine.
What we're expecting, though, is uh a pretty poor reading for headline job gains.
We're expecting the January report to show just about 15,000 jobs added during the month of January.
And that's about a quarter of what the consensus estimates uh estimates we're gonna see.
The thing that's most interesting, Nathan, is that beyond the actual monthly job gains number, we're just gonna have a lot of technical adjustments that are included in the January report.
We're gonna have an adjustment of the birth death model.
We're gonna have the official rebenchmarking of the data.
We've already seen a preliminary rebenchmarking showing that about 911,000 jobs are gonna get stripped out of the data.
So the job total job number is gonna be revised down by about 911,000 jobs.
So there's just gonna be a lot of quirks in the report itself beyond even the slow pace of hiring that we're expecting the report to show.
We got some clues into that slow hiring in some of the latest data leading up to this report.
The latest weekly jobless claims came in a little bit higher than expected, and that pretty eye-popping number on layoff notices from Challenger Gray and Christmas as well.
Does that factor into uh some of your analysis on why you're a little bit below consensus on the top line number for payrolls?
It just paints a picture of a cooling labor market, and that's been one of our major themes uh for several months now.
So as you mentioned, Challenger job cuts number shows about an 120% increase year on year in total job cut announcements.
The initial jobless claims data popped last week.
And when we also think back to last week's December Jolt report, it really showed a major cooling in labor demand in the month of December.
So December through January, all the way through January, labor demand had just been cooling pretty dramatically.
So we think that when we finally see this uh non-farm payrolls report in the middle of the next week, it's going to add to our conviction that the labor market is cooling and it's not a material source of inflation pressure right now.
The uh theme we've been hearing is low higher, low fire labor market.
What's driving the dynamics in the labor market right now?
We're starting to see a little bit more evidence of this weakness.
Firms are really reassessing their labor needs right now.
I don't think that firms are fully realizing the efficiency gains to be had from AI.
I don't think that they know what to even expect as they deploy AI.
Uh, but right now they're really hitting the brakes on headcount.
And when we look at uh first especially small business hiring plans right now, they're really just hitting the brakes and looking to see how much they could expand, how much AI will crowd out their need for additional headcount and ultimately what they'll need.
And at this point, this sort of turn of the year uh business plan reassessment point in time, that's really what we're seeing from firms they're just reassessing how much labor they're actually going to need and so how much they're going to need to hire throughout this year.
Is this payrolls report going to raise questions for you about whether the Fed was right to pause on interest rate cuts last month?
Well I think that the Fed is focused right now on the balance in the labor market and whether that balance in the labor market is feeding through into inflation.
They knew going into the January meeting that the labor market was tilted toward an excess supply of workers.
That point was only confirmed in the December Jolts report which showed about you know, 1.2 unemployed workers per job opening.
And so the Fed already understood that there was this excess supply of workers.
I think that the decision to pause is really uh more contingent on what's going on on the goods side of the market, whether we're going to see additional inflation pressure coming from tariff pass through.
And I think that the jury is still a little bit out on that front.
When we dig into corporate data, it looks as though we're passing through peak tariff pass through, but it seems like the Fed is taking this cautious approach on the inflation side, really worried about goods more than labor.
Well, that gets us to the CPI print that we're expecting on Friday.
What are your expectations there when it comes to inflation?
I think that the monthly print is going to be hot.
I think that we're going to see about a 0.3% month on month pace of both headline and core inflation.
When we look at PMI data, firms were marking up their prices.
I think that inventories were uh a big story and running down inventories during the holiday season.
Now firms are feeling a little bit higher input costs, and they're starting to try to pass that through to customers once again.
Ultimately, however, we think that pricing plans are pointing toward cooling inflation pressures.
But this January CPI report we think is gonna end up showing uh, I think uh quite a bit of inflation pressure in January.
Thanks for this, Stuart.
Good having you with us.
That's Stuart Paul, U.S.
economist with Bloomberg Economics.
Let's take a look now at some stocks making news in the week ahead.
I'm Nathan Hager, joined by Bailey Lipschultz, senior equities reporter for Bloomberg News.
Bailey, it looks like Wednesday is gonna be a particularly busy day on the earnings for we got several big names reporting in the middle of the week.
So let's start with uh Cisco.
The tech earnings aren't quite done with this yet, huh?
No, not done with this yet, and we're pivoting to some of those, I don't know, actual companies that make real tangible goods that you can hold, and Cisco's gonna be a big one given the stocks up more than thirty percent over the last year, and a lot of expectations are a big focus on can they maintain the momentum that we've been seeing uh given the jitters, broadly speaking, around software AI and kind of the broader sell-off.
Yeah, we've seen this uh massive sell-off, particularly in software stocks after the uh anthropic AI agent was announced.
So, how could that potentially affect the results we see from Cisco particularly?
Well, I think the big question comes back to what is management guide towards for the remainder of twenty twenty six, and everyone seemingly is marking down their software expectations, but is a company like Cisco that makes the hardware and is able to at least benefit from a huge push of AI investments.
The question will be is there actually capacity, uh is there a capacity constraint, and are we going to hit a point where maybe some of these companies, uh the likes of Meta and Google, who seemingly are not slowing down on their investment, are we gonna see that potentially hit an inflection point or a peak?
And that'll be critical for investors.
But again, this is a stock that has continued to rally uh over the last few days and weeks, as opposed to, as we mentioned, the big sell-off that we've seen for anything that could lose out to AI making their kind of software irrelevant.
Along with big tech, we're waiting for earnings from Big Macs.
What do we expect from McDonald's this week, Bailey?
There's a lot of optimism about how this how McDonald's is positioning, benefiting from tax rebates for the lower end consumer, benefiting potentially from your upper or middle class, down shifting uh some of their spending.
This is a company that, if you look at the chart on a 12-month basis, looks a bit like an EKG, but right now it's going to close uh at another record high.
So this is a lot of excitement around their new offerings.
It does seem like when you talk to analysts or look through some of the notes, this is one of the companies that could benefit as a fast food operator, uh, not only here in the US, but globally speaking.
So again, does it turn into to your point a price to perfection example remains to be seen, but a lot of excitement.
Well, there are a lot of questions though, aren't there, about whether the uh the pivot, the return of the extra value meal is is gonna eat into uh McDonald's margins potentially.
Well, that's the question.
When you when you look at a company uh like McDonald's, or you kind of look broadly speaking at some of these companies who are needing to rethink their playbook, does that impact margins and are investors willing to underwrite maybe more narrow margins for actually a return to growth or seemingly uh bigger kind of beat on the top line?
But the questions do come back to your point.
If you're using better deals or trying to get people in the door and you're competing with other peers who are catering towards people who don't want to spend up to eat out or eat fast food, how does that ultimately impact the bottom line?
But it does seem like again, at least the sell side is very optimistic.
And I do want to call out the fact that if investors are rotating away from fast growing tech stocks, McDonald's is not a bad place to park your money, and we've been seeing that play out over the last few weeks.
And along with uh McDonald's and Cisco Systems, we're going to get earnings as well from T Mobile on Wednesday.
I think we had some recent beats, didn't we, from Verizon and ATT?
Where does that leave the country's most valuable cell phone provider?
It's kind of stuck in a rut.
If you look at the stock price right now on T Mobile really moving sideways.
Yes, it did rally from a low um at the end towards the end of of January of 183.
But when you compare overlay their charts against uh ATT to your point or Verizon, those stocks look like rocket ships.
Verizon uh over the last week went from 30 about $40 a share to $47 a share.
On the flip side ATT is up pretty sharply after rallying after its results.
So it does seem like investors maybe are baking in some optimism.
There was a bit of a lift which we typically do see with mobile or spectrum providers.
We do see with airlines when one company beats people get a bit more optimistic.
But if we're looking at a T-Mobile stock that on the last 12 months is down it doesn't seem like investors are maybe giving them the credit to benefit again from the optimism and from uh what all intents and purposes kind of looks like a little bit like a rocket ship, as much as it could for a communications company, what we saw for Verizon again, rallying 12% last week after their results.
And so, what are the potential uh big growth drivers for T-Mobile in this quarter?
Well, the big focus is going to be on how are they competing uh with ATT with Verizon.
Can they continue to compete on price?
We all see the Verizon ads about how if you can swap and they can beat your price for a mobile provider.
Uh, the big other question is are they going to benefit potentially from what we've seen play out with uh SpaceX's Starlink direct-to-consumer, potentially uh from Starlink.
Uh, the big question also is when you look at these companies and their percep propensity to return capital, whether that's buybacks, whether that's through dividends, management's commentary around that, I think also will be closely watched.
A lot to watch.
Just on Wednesday for earnings.
Thank you for this.
Bailey Lipschultz, senior equities reporter for Bloomberg News.
And coming up on Bloomberg Daybreak weekend, we'll look ahead as global energy leaders convene in London for International Energy Week.
I'm Nathan Hager, and this is Bloomberg.
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This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week.
I'm Nathan Hager in Washington.
Up later in our program, we'll look ahead to earnings from the Japanese holding company, Soft Bank.
But first, in the coming days, global energy leaders convene in London for International Energy Week.
Policymakers, chief executives, academics, and even influencers will gather, united by a shared focus on growth and security during an increasingly disordered energy transition.
For more, let's go to London and bring in Bloomberg Daybreak EuroBanker Caroline Hepger.
Nathan, in recent weeks, the conversation around global energy has been focused on the Middle East.
And hard power will likely be high on the agenda at the upcoming International Energy Week, where participants are expected to discuss issues including energy sovereignty and industrial competitiveness.
But there are many other aspects touching on global energy needs that will also feature, including the need for energy in supporting evolving technology.
China's ramping up its energy installations.
Elon Musk has warned that energy is a limiting factor for AI deployment.
Microsoft's vice president of energy, Bobby Hollis, says that energy will play a central role in the future of Microsoft.
I think we have a lot of history to support how energy is needed and how it can actually be used efficiently to support infrastructure for data centers, including AI.
So the opportunity really is to take advantage of what we saw when cloud developed, and we found lots of opportunities for efficiency.
So there's a wide range of expectations and planning numbers out there, and you do have to plan for a larger number so that you can make sure that the energy is there to serve you.
But we do believe that there's going to be significant efficiency that's going to come from deploying AI and figuring out how we can actually make sure that we're using every single megawatt and megawatt hour in the most efficient way possible.
That was Bobby Hollis from Microsoft speaking there to Bloomberg Television.
So, how will the energy sector fuel the next technological era?
And will geopolitical uncertainty overshadow its progress?
Joining me now, Bloomberg's climate opinion columnist Lara Williams and our energy reporter Eamon Farhat.
Welcome to both of you and thanks for your time.
Eamon, can I start with you?
Just specifically, I suppose, on the conference and its aims.
It is gonna gather a lot of people together at a very pivotal moment.
Yeah, I mean it's an energy conference, but really energy across all types of oil, gas, but also power, electricity.
You know, we're talking about AI and data centers and trying to power them and power economies.
A lot of that is how do we build more generation, whether that's gas plants, solar farms, you know, all of this stuff, and how we bring together different stakeholders, like government officials, companies, and some of the people who are funding this to make that happen.
I think this kind of conference really does that.
Yeah.
Lara, a lot of the discussion surrounding energy is still about fossil fuels, though.
How motivated are policymakers, our businesses to shift the conversation towards renewables?
Yeah, well, you know, when it comes to policymakers, I think it really depends on the policymaker.
You've got someone like Ed Millerband and that's his big mission.
He's fully committed to the energy transition.
He wants to rally support for, you know, his investing the UK's money in renewables.
Um, for a lot of other policymakers, I think net zero has become a politically charged thing.
And I think that makes it slightly harder to communicate.
So, you know, for example, with with offshore wind, we had the results of the latest subsidy auction in the UK in January, and it was a record auction in terms of capacity.
It was really positive, but it was also more expensive than the last auction and more expensive than wholesale power prices.
And that kind of goes against the the uh overall story that has been in recent years that renewable prices are coming right down.
And to be clear, the you know, this capacity that the UK secured will still help bring down power prices in the future by reducing the amount of gas that has to be bought.
But it's a more complicated story to tell voters who are concerned about their energy bills today.
And I think potentially there is, you know, policymakers are nervous about rocking the boat, especially with far right parties like reform on the rise.
Um, you know, that leaves a void then which is filled by people who have an interest in talking about fossil fuels.
Yeah, and and the distinctly sort of pro oil and gas stance of the current White House surely factors into that too.
In terms of the energy transition, though, Eamon, last year I was speaking to Corweaves, UK and Global Heads about their rapid data center expansion plans for the UK, and it really is all about the need for energy.
How are people thinking about that now?
Yeah, when I talk to some of these people trying to build and develop data centres, which is really in line with what the government wants, you know, it's just about how quickly can they get power.
They don't really care much about price, it's about can they connect to the grid?
And um, and as you've seen before, I mean, you know, we're talking about gas still being important.
I mean, right now, you know, gas generation, building a gas power plant could be the fastest way to do that.
And in the US, that's what you know Trump has been talking about.
You know, if we're trying to do it with renewables, it will take a lot longer.
And some of the companies trying to develop these data centers don't want to wait that long, so then it you know, we risk maybe losing out on some of this momentum that data centers have right now.
So it really is all about getting that power as quickly as possible and trying to see how government can facilitate that for companies.
Laura, how much broad support is there still for the energy transition?
Um, among um corporates, I think I think there is broad support really.
Um I think from what from people I've spoken to, there's been a lot of green hushing going on.
So the pot the toxic political atmosphere makes it hard to kind of shout about climate change unless you want to draw the the wrath of of the the US president, but you know, the investments are still being made in renewables.
Um, and that's partly because you know, it is just cheaper, and being energy efficient is really good for business, and reducing operating costs has always been a motivator for corporates.
And you know, really it's a much more powerful one than than doing the right thing.
So while you might not hear businesses going on about climate change and carbon emissions, um the investments are still being made, and I think there is still broad support for the transition.
Amen.
Eamon, how are businesses dealing with the uncertainty um around the kind of energy backdrop?
I mean, obviously, we're not in a period of such volatility of prices as we saw after Russia's invasion of Ukraine, but it's still a highly uncertain environment.
Yeah, I mean, wholesale power prices, which feeds into household bills but also businesses' bills, they are still elevated and people are still worried about what the future could bring.
Because you know, when it comes to all these government plans and all these things we talk about, clean power 2030, breaking down bills, these are all just forecasts, and a lot can change between now and then, whether that's you know how much it costs to build an offshore wind farm, how much the price of gas is.
So gov um companies who are making plans to maybe build a factory and do all this, they have to really be sure that we'll really be uh make put in their model some uncertainty around the energy prices, and right now there isn't much certainty around that.
We can try to model things, but things can keep changing.
Aaman, in terms of policy here in the UK, how much do you think is changing in terms of capacity and sovereignty and all those sorts of discussions for uh you know the the UK's policy makers?
Yeah, I mean, after what happened with the Russian um invasion of Ukraine, there was definitely a reckoning of we have to have some more energy sovereignty and clean power 2030, it does bring down bills, it's it's that's important because renewables are cheap, but also it means that our power will be generated in the UK, and that's a big push for the government.
You know, they've set up GB Energy, a kind of a state-owned utility that will help to develop some of this, and it's a lot about trying to be in control of our own energy because that also means you can control your economy, your growth, and not be reliant on outside partners as much.
That's interesting.
Laura, also a topic on the agenda at this event that's taking place in London is Africa's energy transition.
How much of a focus is there on clean energy for emerging markets?
Yeah, well, you know, the African continent is like one of the settings, for one of the most like positive renewable stories out there right now.
There's an absolutely huge boom in solar installations.
I think they jumped 54%.
Um, and that's you know, both utility stale and ones, you know, on people's roofs.
Um, and so it is, you know, it is a there is a big focus on that.
Um in emerging markets more broadly, I think there, you know, there's a huge opportunity.
People often talk about them, you know, leapfrogging fossil fuels, um, because you know, part of the motivation for these countries is simply expanding access to energy full stop and clean, you know, renewables are cheap, so it's a good way that they can you know expand energy access.
Um, but they receive so little of the kind of global investment.
And so that's the main thing that's holding them back.
So I'm sure there'll be lots of conversations about how to increase the the funds going to these these markets.
Laura, what do you think the biggest um challenges to the energy transition then are going to be in the years to come?
If you say, you know, as you mentioned, for emerging markets is actually just getting uh access to electricity and to power, what are going to be the big challenges do you think that maybe the participants of this event uh are going to be well versed in?
I think I think partly is you know improving grid infrastructure.
Um we're used to a kind of on-demand model, and so now we've got to have uh much more capacity and also work in energy storage um because renewables are intermittent.
Um I think so that I think you know, just improving grid infrastructure all around the world is going to be a big challenge.
Um, and I think you know, the kind of rise of AI will also be a big challenge.
There's there's places where uh you know coal power plants have been kept going just because of the energy demand from new data centers.
And so uh AI has a potential to help us, you know, improve energy efficiency.
Um, but it could also be a drag, and it really just depends on which way that trend goes.
Aam, what are you thinking about then in terms of what people are going to get out of this event, uh, in terms of what corporates are hoping to gain from it?
What do you think might emerge in the days ahead?
Yeah, I mean, I think when you look at the what the topics are, who the speakers are, um, it's very clear that now we're at the stage in the UK and Europe and even elsewhere that it's less about kind of proving the case for the transition, but more understanding how we're going to deliver it and what the impacts will be on consumers and the challenges ahead.
I mean, I think it's understood now that I mean, as Laura said, you know, the economic case in lots of in lots of um cases is there.
I mean, it's the cheapest form of power.
It's more about how do you actually now build these things, make this happen, and how do governments uh play their part in that?
Yeah, and make it a priority.
Thank you so much to both of you for your time.
Really great to speak to you.
That is our energy reporter Eamon Farhat and Bloomberg's climate opinion columnist Laura Williams.
My thanks to both of you.
I'm Caroline Hepke here in London, and you can catch us every weekday morning.
For Bloomberg Daybreak Europe, beginning at 6 a.m.
in London.
That's 1 a.m.
on Wall Street.
Nathan.
Thanks, Caroline.
And coming up on Bloomberg Daybreak Weekend, we'll look ahead to earnings from the Japanese holding company, SoftBank.
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This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week.
I'm Nathan Hager in Washington.
This week we get the latest results from Japanese holding company Softbank.
Let's get to Bloomberg's Doug Chrisner.
For that, he's host of the Daybreak Asia podcast.
Nathan, SoftBank founder Masayoshi's son has bet the farm on artificial intelligence.
The company is one of the largest backers of open AI.
Now some of the funding has come from the sale of SoftBank's earlier investments.
As one example, in the fourth quarter of last year, Softbank sold its stake in NVIDIA for about $5.8 billion.
It also sold part of its stake in T Mobile for nearly 9.2 billion.
For a look at Softbank, I'm joined by Bloomberg's Alice French.
She covers the Japanese equity market and she joins us from our studios in Tokyo.
Thank you for being here.
What are we expecting to learn from SoftBank's results?
So SoftBank is interesting, right?
Because it's kind of more so become almost a proxy for open AI or for sort of AI sentiment in general in Tokyo.
And I think investors are looking much more toward, you know, any comments from Son around future investment plans, current returns on investment, rather than the actual kind of earnings numbers themselves.
Now obviously the open AI investment is sort of the big top-line issue here, and we know that SoftBank is kind of betting almost the whole house on OpenAI, right?
Recently, this additional $30 billion investment.
And whilst that, you know, has allowed the stock to kind of ride on on the coattails of the AI boom over the past year, and it did really well in 2025.
I think caution is really starting to kind of come to the fore now, right?
I mean, we saw this with Microsoft results recently in in the States.
These kind of worries that all these companies are just pumping so much money into AI, and when are we actually going to see the returns and what does it mean for their credit risks and things like that?
And I think if it starts to look kind of irresponsible, this investment, then that's something that's really going to weigh on sentiment, right?
So any kind of language around that, I think is something that investors will really be looking for.
Away from the story on open AI, help me understand what Softbank is doing in the hardware space as it relates to AI.
I think in the last week the company announced a collaboration with Intel on developing cutting-edge memory technology.
Softbank wants to make sure that they are kind of jumping on all of these tech bandwagons, right?
And so the Intel story is, yeah, I mean, we know that memory prices are set to soar.
They're already up a lot because of all of this demand for AI products.
Um, and so SoftBank trying to kind of hitch a ride on that too.
Something else they've also spoken about in recent months is robotics, right?
So this idea of physical AI.
We saw this acquisition of ABB's robotics arm back late last year.
And so they're kind of trying to get their fingers in in all of the AI pies, I think, and it seems like memory is going to be the biggest one in in the coming months.
What do we know about SoftBank's commitments to invest money in the United States?
How is that process going?
This is the big ongoing question, right?
So we know that there is this 550 billion supposed pact between the US and Japan as part of this kind of tariff deal.
Now, all of it's still sort of quite up in the air.
Now we kind of get the sense that we might start to get some of these deals getting announced in the next kind of few weeks or months, but it's all been quite hush hush.
We know that SoftBank is going to be playing a big role in it.
Of course, it's already a big part of the Stargate project with those US firms, and we know that Son has, you know, had meetings in the US and and with Trump.
So they will be playing a big role there.
But again, that's another potential risk, right?
This is all money that they are throwing at an area where competition is rising and there's already so much caution and worries about overvaluation in the stock market.
So I think it really could go either way in terms of softbank's performance.
Do you have a sense of how SoftBank shareholders are feeling about what Masayoshi-Sun is up to these days?
People are really split, right?
I mean, if we just look at what's happened so far this year, Softbank is actually down around 2%, and that's compared to a 7% rise for the topics.
I mean, Japanese stocks overall have been doing pretty well, partly on this kind of Takaichi trade of ahead of the election.
Um, but I think in the last few weeks, I would say, I think things have been shifting from kind of excitement more towards caution, right?
And I think it's partly because Son is going in so hard on open AI at a time when open AI is coming up against, you know, competition with Google's Gemini, um, and just worries really about how much money they are throwing at this.
And you know, they they're not really that diversified, right?
They're going so hard on open AI and AI in general at a time where market sentiment is really kind of looking a bit jittery.
And I think, you know, investors are gonna have to start seeing some real kind of solid, tangible returns and get some more confidence that, you know, this is actually going to be all worth it.
Or I think, you know, the shares are going to suffer, and I think the sentiment is really kind of at a crossroads right now.
When you look at the firm SoftBank is investing in, how are they distributed geographically?
Are most Japan-based?
No, I mean they've been working with a lot of foreign firms, right?
Of course, we know that they're heavily involved with ARM, the chip gear maker that's that's based in the UK.
I mentioned ABB there, of course, open AI in the state.
So they're very kind of outward looking.
And I think that's partly because, you know, Japan's market in general, you know, they have there there's pockets here of sort of companies that can jump on the AI trend.
For example, we saw just recently, uh, the toilet maker Toto, for example, that makes these kind of very niche ceramic products that can be used in chips for AI.
There are companies that sort of have small pockets of AI exposure, but we don't really have those kind of big AI leaders here in the Japanese space, and that's why SoftBank essentially has become the proxy for that in the domestic market.
And that means there's a lot riding on it, right?
And it's a good stock to sort of monitor if you want to see what the sentiment is around AI domestically in Japan.
Alice, if we take a step back for a moment and look more broadly at what's happening in Japan as it relates to AI, is it primarily showing up in the semiconductor space and perhaps to a lesser degree robotics?
I mean the traditional names that investors would be looking for, right, are these chip gear makers.
So the big names we've got here Advan Test, Tokyo Electron, Shift, Screen, etc.
And you know, we're well into earnings season now, and it's been quite a mixed kind of uh quite a mixed showing for the earnings so far.
Avant test did really well.
It's really been rallying so far this year, outperforming the benchmark.
You know, its forecast kind of blew investors away.
On the other end, LaserTech, another chip gear maker kind of disappointed.
So I think it's kind of becoming, it's becoming quite a stock picker's market in that sense, right?
You've got to be backing the right one.
But of course, on the memory theme, right, which again, as we were saying is is a huge theme for AI this year.
We have Kyoxia, which is a memory chip maker.
It was actually the world's best performing stock in 2025, only just IPO'd at the end of 2024, and that's still been continuing its rally so far.
And then what a lot of investors say Japan might kind of have have an edge over other markets is robotics, okay, physical AI.
So we have companies like Yaskawa Electric and Fanac that have been working in this robotics sphere for a long time.
Some of them have been announcing collaborations with big US AI names in recent months, too.
And I think we might see that physical AI, that kind of robotics theme really gaining ground throughout this year, and that's a benefit for Japan.
During the last week in the US, many software stocks were very hard hit on concern over how AI will impact their core businesses.
The catalyst for the pullback was the release of a new AI tool from Anthropic.
Can you give me a sense of how Japanese software companies are holding up in the face of the many new advancements in AI?
I mean, we've seen a similar theme here in the past week, you know, after that anthropic news, some of those software names really dropping.
Oracle Japan is a big one that was hit, and those worries are definitely there, I think as well.
A big theme for Japan, of course, is is gaming and video games, right?
And we did have news in the past week of kind of these new tools, these new AI tools where you can sort of make your own gaming world using AI.
And I think there were some worries that that could start threatening video game developers, right?
And of course we've got Nintendo and Sony here, but we have the slightly smaller names like Capcom and Konami as well, that sort of really felt some headwinds from that news.
So I think investors are still trying to figure out kind of weighing up the pluses and minuses of these new AI tools, right?
And it does seem like software makers, whether they are sort of the the more kind of corporate uh office software, or whether it's gaming software, it's entertainment, you know, there's definitely a risk there.
Um, and I think it's whether these companies can kind of counter that with here's how we're going to use it to kind of boost our productivity and actually boost earnings.
And I don't think investors are quite seeing enough of that potential upside yet.
Alice, we'll leave it there.
Thank you so very much for helping us set up the earnings in the week ahead from SoftBank.
Bloomberg's Alice French, she covers Japanese equities, and she joined us from our studios in Tokyo.
We move next to trade.
In the last week, President Trump said he would roll back tariffs on India.
That was after Prime Minister Narendra Modi agreed to stop buying Russian crude oil.
Now, Trump said he would lower his 25% tariff on Indian goods to 18%.
That sparked a rally in Indian markets.
And that's where we begin our conversation with Ven Anantha Nagaswaran.
Venn is the chief economic advisor to the government of India.
And he spoke with Bloomberg's Haslinda Amen.
Your thoughts on this uh long, much anticipated trade deal.
This was something that was one big stumbling block of sentiment in the capital market, also for the Indian rupee.
And so I'm not surprised that the reaction is very positive in both these markets.
And uh, I mean, at the end of the day, it is the world's uh biggest consumption market, 21 trillion dollars of GDP, and therefore to be able to have access to it is important and um uh for all labor intensive products, and two, I think uh the China plus one strategy that many uh Western companies and multinationals were looking at India as the next um uh location for their global value chains, that uh that thought process was getting a bit disrupted due to these uh tariff-related uncertainties.
Now that would once again sort of uh be back in contention, and therefore it it lends a huge uh dose of um upside uh to our growth estimates in the economic survey.
In terms of um how it's playing out in the market, are you satisfied that this will provide a boost for the Indian rupee, which has been among the worst performers in Asia for a while now?
Yeah, I mean, of course, to put the Indian rupee's performance in context over the last five years or since the dawn of the millennium, Indian rupee hasn't performed any worse than most emerging currencies which have a current account deficit, just to put it in context.
Uh, nonetheless, obviously in the last year or so, due to the drying up of capital flows, especially on the portfolio side, which has not been made up as much on the uh FTI side, although it was doing better than the previous financial year, we have had this impact on the Indian rupee, and that was to be expected.
And this was proving to be a big um uh mind uh mind block in the on the part of investors because they were uh thinking about India being uh restricted from accessing one of the world's biggest consumption markets and what it and therefore what it meant for uh Indian value chain uh attract attractiveness of India for global value chains, etc.
So they were extrapolating from this tariff uncertainty onto much bigger and broader questions.
And to the extent that um this uh uh framework allies those concerns, it is uh it is going to be a very big boost to uh capital flows, which are very critical, even though India's current account deficit is extremely on the lowest side compared to historical trends.
This matters for capital flows uh and therefore it couldn't have come at a better time from that perspective.
That was Van Anantha Nagaswaran, the chief economic advisor to the Indian government, speaking with Bloomberg's Haslinda Amon.
I'm Doug Krisner.
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Nathan.
Thanks, Doug.
And that does it for this edition of Bloomberg Daybreak Weekend.
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