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- [00:00]
Commercial Narrator
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- [00:46]
Joe Matthew
Bloomberg Audio Studios Podcasts Radio news You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. Thank you for being with us on the Friday edition of Balance of Power here on Bloomberg TV and Radio. Kailey Leinz has the day off. We begin with the situation with Iran and a lot of confusion about exactly what is happening right now. Right now, with the President issuing a mixed message in a single post on Truth Social writing the Islamic Republic of Iran has asked us to continue talks. We have agreed to do so. That part, taken in isolation, has given the market a bit of a boost today. And as Charlie was just saying, it's not only stocks up, interest rates are largely flat and oil prices are lower. WTI and Brent down about 1% each year as the President goes on to write. But the United States has stated to them in no uncertain terms the ceasefire is over. Talks continuing, ceasefire over. Similar language to what we heard from the President at the NATO summit this week in Ankara. Listen to me, I think it's over. I don't want to deal with them anymore. They're scum as far as I'm concerned. It's over. We just hit him very hard. He did a little something today, but it was really retribution for last night. I'm not sure I want to make a deal with him. We can play games, but I'm not sure I want to make a deal. I just finished the job. We turn to a voice of experience at this time with a lot of questions as we head into another weekend about what might happen in the next 24 to 48 hours. Although the market seems to be pretty calm at the moment, with the bet that this president is not looking to re Enter all out war. Ambassador James Jeffrey joins us now live. Distinguished fellow at the Washington Institute for Near East Policy. He was former US Ambassador to Iraq and Turkey, former Ambassador to Albania and former Deputy National Security Advisor. He was special envoy for the global coalition to counter the Islamic State ISIS and is with us now on balance of power. Ambassador, it's great to see you and welcome back. How do we describe this moment before we explore how to get out of it? This rolling back and forth of kinetic activity preference for talks. How long can we sustain this split screen?
- [03:21]
Ambassador James Jeffrey
Welcome to my world of many decades of diplomacy in conflict situations. This is not abnormal. It also isn't good. Very quickly the President and Iran back in June agreed to end the latest range of fighting from February on with a cease fire. And the Iranians would get to ship their oil out in sell it for market prices on the world market. And in return the United States would have all other ships out of the straits and we would negotiate a new nuclear deal. It wasn't a bad arrangement for Iran. Instead the Iranians decided that they would start fooling with it. Lawyering as we say the text of a somewhat ambiguous agreement by many agreements are ambiguous to say they'll really control the straits from day one. That led to them firing at ships, breaking the ceasefire and American retaliation. Right now the MoU may technically be in effect and not in effect. The point is we are talking with the Iranians and the United States is not launching any new attacks. Waiting to see what Iran does. For the moment if Iran doesn't fire any new missiles at targets across the straits at our ships the United States probably will not retaliate. But if Iran keeps the straits closed one way or the other we will reinstitute the blockade and we will take further economic and potentially military measures to return Iran to the Memorandum agreement we signed in June. I think that's the way we're going.
- [05:05]
Joe Matthew
Okay, Ambassador, speak to the significance realizing that we haven't hit anything today of in the last 24 hours. The the US choosing to hit two bridges in Eastern provinces along the railway line to the city of Mashad. Iran's Foreign Ministry called this a flagrant violation of Articles 1 and 5 of the MoU. What were we trying to accomplish by taking down those bridges?
- [05:31]
Ambassador James Jeffrey
First of all to get the Iranian hypocritical Foreign minister to rant and rave about what we're doing is violation of this and that when these are the guys who violated the MOU in the first place. We launched 170 strikes over two days. That's back up too close to what we were doing a few months ago. Importantly, as you noted, we hit these railway connections that Iran is using to get its oil out to China by land. If we put a new blockade on, cutting their sea exit and we also blow up the railways, cutting their land exit and also limit their ability to move their forces around Iran, they're facing a very dire situation. I was in Iraq in 2004 when all the rail lines were cut. It wasn't happy.
- [06:18]
Joe Matthew
Wow. Well, that's fascinating. Ambassador, should that be the ongoing strategy if we're in fact going to cripple Iran? As much focus as we have on the Strait, eliminating any other avenue for Iran to get oil to China?
- [06:32]
Ambassador James Jeffrey
Sure. It's not just the oil, as I said, the bridges, the railways. And eventually I would suspect he'll also go after the electrical systems or at least the high tension lines because if you get a new cease fire, they can easily be replaced. That again cripples the Iranian economy. It cripples the Iranian ability to wage war, including to close the straits. And it will provoke one or another very dramatic reaction sooner or later among the population. Iran knows this, so this will be encouraging them to come back to the table. Which is why again, the Foreign minister is bitching so loudly about all the bad things we're doing because they realize they're having an impact.
- [07:12]
Joe Matthew
Well, that's pretty fascinating when you talk about the fact that we are at least talking. These are not formal talks at a table. We're hearing about back channels and indirect talks. As a career diplomat, Ambassador, how does that work before the phone call gets back to the White House with news, it works badly.
- [07:34]
Ambassador James Jeffrey
The best is face to face. We had one round with the Iranians with Vice President J.D. vance, but since then, including the details for this June memorandum of understanding were done through intermediaries. There are all kinds of problems with them. It's just that it's better than not talking. And right now we can't meet face to face. We'll go through the Qataris, we'll go through the Pakistanis, the Turks and others and they'll do a good enough job.
- [07:59]
Joe Matthew
I believe what you make of the swap. I know we only have a minute left. Ambassador, the swap on Air Force One this week there's been some reporting, more specifically from the New York Times to suggest that the new gifted Air Force One from Qatar was not outfitted with aerial defense systems that would prevent a heat seeking missile potentially from downing the jet he took the old Air Force one home after being threatened by Iran. Should that plane, the new Air Force One, be used at all?
- [08:31]
Ambassador James Jeffrey
No. I was in the old Air Force One with President Bush when a certain rogue East Asian state I won't name which took some threatening actions, launching fighters and under those circumstances, it's a life or death situation involving the President. We cannot take any risk with an American president being shot down or destroyed in a combat arena terrorist operation, that thing should be sent to some graveyard.
- [09:01]
Joe Matthew
Wow, I had a feeling you might have a good answer for that, James. Jeffrey, it's great to see you, sir. Thank you for joining us, Mr. Ambassador, and have a great weekend. Former Ambassador to Iraq and Turkey former Special Envoy the global coalition to defeat isis. I'm Joe Matthew in Washington. As we balance a couple of lead stories here today on Bloomberg, we turn from geopolitics to Wall street and the enormous demand for memory that has culminated in a new listing in New York today. And Bloomberg's Ed Ludlow joins us from world headquarters with his eyes on SK Hynix. So far a successful debut of ADRs trading on the NASDAQ up over 16% from the sale price. And Ed is with us right now live having just returned from the NASDAQ market site. So far so good, Ed.
- [09:49]
Ed Ludlow
So far so good. You know the ticker for now, SK H Y V the V goes on the 14th when, when the full trading starts. But the other way of looking at it is sky high. SK H Y sky high. And that kind of represents the state of the memory market right now. DRAM prices are sky high, NAND flash memory sky high. And SK Hynix dominates high bandwidth memory HBM market 57% and in any given financial transaction, Joe, there are numbers, right? But I think for the balance of power listeners and for the American audience, you know, SK really believed that America understands what's going on in AI from the memory perspective. And so from their point of view, it was not just about the money. It was about getting in front of Americans and trying to get them thinking
- [10:42]
Joe Matthew
about sk well, and we're told this was seven times oversubscribed. So I guess the roadshow to whatever extent there was one worked. We talk a lot about Micron. They're in the same business and and help our audience understand what makes them similar and what makes them different. It has been to the moon for Micron shares. They're actually down about $6 a half percent right now and have come down meaningfully from their highs. Do they make the same stuff?
- [11:09]
Ed Ludlow
Yes, they make the same stuff, but there's an interesting distinction. So a big story this week was Micron boosting its investment in America to 250 billion. 250 billion from 200 billion. But to boost capacity of memory chips they operate in the same market. SK Hydex has 57% market share in high bandwidth memory. Those are the memory chips that correspond to a GPU in an AI data center. And Micron and Samsung make up the remainder of that market. But what you need to know about Micron is that right now its American output of memory broadly is a few single digit percent of its total output. All of what it's doing is in Asia. That's really interesting because the main news headline out of my interview with the SK chairman was they're going to come big to America, they're going to invest big. And we can get to that I guess in a second. But I would just set the playing field. Micron is really in the news cycle right now. It's a big American company but their footprint's really outside of America and that's the bit they're trying to address.
- [12:14]
Joe Matthew
Let's hear from the SK chairman who you spoke with right before trading began earlier here on Bloomberg. Listen, I have some confidence and the demand will be grow and our supply capacity never want to catch up. It's going to be until that our
- [12:31]
Ambassador James Jeffrey
society, human society has said there was
- [12:33]
Joe Matthew
some settlement with AGI then while I
- [12:37]
Ambassador James Jeffrey
guess that the world that's a kind
- [12:39]
Joe Matthew
of normalized at the older the cycles but anyhow that until then while we, we need that a lot of memories begging the question when will it catch up Ed or will it? This is a company as you've reported today that has big investment plans for the U.S. yeah.
- [12:59]
Ed Ludlow
I think what's so interesting is everyone has a slightly different view of how long there's going to be a shortage of memory chips. And in this context we're specifically talking about DRAM. A high bandwidth memory chip is layers of DRAM, micro layers 12 in the case of the one I held up to you earlier in the earlier edition. A balance of power and the high bandwidth memory market is about just under, I don't know, 40% let's say of everything that's being done in DRAM right now. But from a dollar perspective because pricing is so high it accounts for it. What the chairman was saying there is very academic. Bear with me Joe. It's hard to pass this stuff. He is saying he thinks that the shortage will end when the humankind reaches artificial general intelligence which is the Holy Grail of AI. For those that aren't aware, you can't put that on your calendar. What's that going to be exactly? I'm not getting my flip calendar going. Okay. I wanted him to say 2030 or 2032 and it didn't go like that. I think that because, let's be honest, English is not Chairman Che's first language. He has a PhD in economics from Chicago, by the way, University of Chicago. Lived a long time in Chicago and in New York City. But if you listen very carefully, he said the supply is never going to catch up with the demand. It's about bridging the gap. And, and that's why we're pulling this all together. Why are they raising money through US ADRs? Why is he talking up his commitment to invest in America? They are massively committed to ramping up their capacity in Korea here in the United States and, and to continually tap capital markets to do it.
- [14:37]
Joe Matthew
So this is no longer a cyclical industry. The big run ups, the boom and bust cycles we've seen in the past.
- [14:42]
Ed Ludlow
Yes.
- [14:42]
Joe Matthew
Will not occur again.
- [14:44]
Ed Ludlow
So in 2012, when SK bought Hynix, a lot of people thought that was crazy. The memory industry was underpinned by a lot of debt and it was boom and bust because basically memory chips went into consumer electronics. You know, it followed the cycle of the global economy. If people, you know, stop buying consumer electronics and they built up a glut of memory chips, you just stop buying the memory chips, you stop buying consumer electronics. Now it's more linear. You know, it's just linear being there's a longer field of view for how long the demand vastly outpaces the supply of memory. But it's being driven by something completely different, which is again, I'm sorry to go back to basics, a high bandwidth memory chip that goes into a data center. It's just layers of dram. So there's a competition between the datacenter market and the consumer electronics market for where that DRAM is getting funneled. And that's a new dynamic that didn't exist in 2012.
- [15:38]
Joe Matthew
Incredible. Can I ask you just because we don't get to spend that much time together on the air at Ludlow, We've got earnings reporting season starting next week. What are you excited about? What are you worried about as we get up to the tech earnings cycle?
- [15:50]
Ed Ludlow
Yeah. Earnings expectations are incredibly high for the Mag 7, the biggest technology companies in America and therefore the world capital expenditures from the big cloud computing companies. That's Amazon, Microsoft, Google will be a big, big focus, but probably at this stage a greater emphasis on evidence, proof that out the other side companies big and small have worked out something useful to do with AI and are generating their own revenues. I think there's going to be a lot more focus on that going forward. Yes, all these chip companies are going to grow massively, top and bottom line. The cloud computing companies will say the demands there, but everyone's looking for that extra third bucket which is like, well, hold on, what about all these companies that you say are your customers? How they doing?
- [16:35]
Ambassador James Jeffrey
Yeah.
- [16:36]
Joe Matthew
Wow. Well, it's going to be fascinating and we'd love your help to get through it. Of course you can find Ed to that end as the host of Bloomberg Tech every day here on Bloomberg and I appreciate it. Ed will be watching, of course. SK Hynix. It's up about 16% at the moment. We'll have the latest with our political panel next. President Trump says he will not sign the bill. Stay with us on balance of power. We'll have much more coming up after this.
- [17:03]
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- [17:59]
Joe Matthew
Investing Brokered Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, LLC. SEC registered advisor. Complete disclosures available@public.com disclosures. You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg 1130 as we inch our way towards 4pm and of course this program followed by Bloomberg Businessweek Daily. We'll keep tabs on the SK trade straight through the afternoon. Thanks for joining us here on the Friday edition of Balance of Power. Kelly's off today. And the president has made it very clear he's not signing the bill. We've not actually heard from him on this, but on Truth Social, this is the bipartisan housing bill that's been knocking around the White House for the better part of a week. Even more than that, he's got 10 days to sign it and the president has decided that he doesn't want you. As we go back to last month remembering, there was a signing ceremony that was to take place on Capitol Hill in Statuary Hall. The chairs were set, the table with the presidential seal, the Sharpies were there, cameras, lights were lit when he announced on Truth Social that he was not going to the signing ceremony because he was not able to get enough support for the Save America act within his own conference. And today, the president continues to seemingly punish his own party, going back to Truth Social to write, quote, I will not sign the housing bill which has been fully approved by Congress and sent to the White House in protest. He says there it is on your screen over the fact that the US Senate is not capable of passing the Save America act, which he says is polling at 97% with the Republican Party and very high with the non politician Democrats, as he refers to the other party. President's been pretty clear about this. And listen, this was an achievement that both Republicans and Democrats were hoping to carry with them on the midterm trail. Many will continue to do so just without the love and support of President Trump, who doesn't seem to think that this bill does much anyway. This is what he said about it at the end of last month, June 29th. Here's what I would like to say. Much more than a bill that big deal, it's a yawn.
- [20:32]
Ambassador James Jeffrey
Some people say it's wonderful.
- [20:35]
Joe Matthew
To me, compared to the Save America act, just about everything is a big yawn. A yawn. He said a big yawn. Tyler Kendall, our Washington correspondent, is at the White House right now where there will not be a signing ceremony. But the law tells us the way this works, Tyler, is it will be on the books after midnight if the president chooses not to veto the bill. And he's not going to do that. Right?
- [21:02]
Tyler Kendall
Right, Joe. It's expected to become a law Saturday at midnight. There's a few different important pieces of context that we can provide here. One regard to what you've just heard from President Trump, industry experts do tell us here at Bloomberg News that the bill is actually expected to have a limited immediate impact because it takes so much time to build up housing supply. And it also doesn't include any new federal funding. So there's no appropriations backing this bill that could make a tangible difference immediately. But it have 47 different provisions. This is considered to be the most Biden bipartisan and widest ranging housing bill in really decades for the U.S. congress. And it includes things like encouraging localities to streamline some of their rules, making other rules around factory built housing, and then also importantly includes that provision related to institutional investors with more than 350 homes from purchasing additional single family properties. That band was really critical to getting this White House's support. So there are provisions in here that we know both sides of the aisle would like to tout moving forward. You mentioned it passed on a bipartisan basis. Just to put some context there, we're talking very bipartisan. In the senate it was 85 to 5 and in the house it was 538 to 32. The thing is, President Trump, as you heard, says that this is essentially a protest vote when it comes to the Save America act, that voter ID requirement law. But Joe, the thing is, Senate Republicans have repeatedly told this White House the math just isn't there to pass it. As it stands, the math also isn't there to change the procedure. You'll often hear President Trump talking about the filibuster, trying to get around that 60 vote threshold. But at this point, there doesn't really seem to be a tangible path, at least before November, for the Senate to get this done.
- [22:50]
Joe Matthew
Yeah, he's calling for two things, Tyler, in this very same post, as he said, if the Democrats, or as he writes Democrats are not working with Republicans, do not allow a positive vote on Save America, then terminate the filibuster, he writes in all caps, and pass this and every other bill that true Republicans have ever dreamt of. So he wants the Save America act to be passed. John Thune has made clear they don't have the votes to do that. So as a result, he says kill the filibuster. John Thune's not prepared to do that either.
- [23:23]
Tyler Kendall
Right. Joe, as you well know, this is something that Senate leadership, including the Senate Majority Leader John Thune, has repeatedly said is not something that is going to be on the table because it's going to need some broader support to get through the finish line. And many Republicans have pointed out the fact that if they do this now, then that could hurt their hand if they lose control of the chamber. Whether that's this November or down the line. It sets that precedent for other governing parties. The Senate is a very procedural driven body and they like to have those rules that have really been in place. And that I think, factors really largely into what has been this pushback to the president when it comes to this bill. Now we've previously spoken about in weeks prior, maybe some provisions of it could be wrapped up into another reconciliation package. But at this point in time, we haven't really seen movement around that because that opens the door to budgetary concerns from even some conservatives on the House side. And the process just gets really complicated. So it will be interesting to watch what else could potentially be stalled or not have the president's sign of approval if the Save America act doesn't actually advance in a more meaningful way without that path clearly laid out at this point.
- [24:32]
Joe Matthew
All right, Tyler, thanks for being out there for us. Tyler Kendall on the North Lawn on this Friday as we assemble our political panel for their take on this, Bloomberg Politics contributors Rick Davis and Jeannie Shann Zaino join now. Rick is our Republican strategist and partner at Stone Court Capitol. Jeannie is our Democratic analyst and democracy visiting fellow at Harvard Kennedy School's Ash Center. How do we chalk this up, Rick? If anything, other than the president simply punishing his own party over a personal preference here, and I have to admit I'm almost surprised in retrospect that he canceled that signing ceremony. Doesn't the president love taking credit for stuff? That's what everyone wanted here.
- [25:10]
Rick Davis
Well, you would think this president loves taking credit for stuff. He usually takes credit for just about everything. Sun comes up in the morning and goes down in the evening, and that's probably all because of him. The reality is that he tried to leverage this very popular bipartisan bill that addresses the affordability concerns of millions of Americans to get a very unpopular bill, the Save America Act. You were just talking to Tyler about, you know, to pass through. And I think he's just grumpy by the fact that he's been demanding this bill, Save America, to get past for quite some time. And he couldn't even get this incredibly popular bill that he held hostage to do the trick for him. So at the end of the day, I think he's just grumpy about this. It is a positive thing. No president would not want to sign a bipartisan bill where 80% of the House and Senate supported it. And it comes at a time when voters really want something done in Washington around the issues of affordability, especially housing. So you know, just chalk this one up as Donald Trump's having a bad day, didn't get what he want. This is his temp, this is his temper tantrum.
- [26:22]
Joe Matthew
Well, and I guess as maybe he was intending, you gave a lot of other people a bad day, Jeannie. It's not just ours. It's Deez who wanted to have that signing ceremony and let everybody know what they got done. Look no further than Elizabeth Warren who helped to draft big components of this housing bill. What do Democrats do with this on the campaign trail? Is this still promotable or we moving on to the next thing? It's promotable and I think what they're going to do on the campaign trail is speak the truth about the president. It's not just that he's having a bad, bad day. It's not just that he's grumpy. He is not signing this bill, the first housing bill in 30 years, because it is not a priority. Issues of affordability and housing are simply not a priority for this president. That's why his approval rating is at about 60% disapproval when it comes to the economy. And the other part of this is why is the president so bent on this Save America act with which experts from both sides say we'll disenfranchise millions of voters going to the polls in a few months? It's part of a long term quest on the part of the president to take on the election administration in this country and to ensure that what happens in November, he controls the rules. He's, you know, started with mid decade redistricting, he's attacked absentee ballots. He fired the election commissioners yesterday. He's bullying states into the voter rolls. This is about him controlling what happens in November because he knows he cannot win in a and square election. That's what's happening, not just because he's having a bad day or grumpy. Well, I'll tell you Rick, some of the analysis that we've heard from Bloomberg Intelligence, for instance, and our colleague Nathan Dean here in Washington is they took a lot of the teeth out of this bill. They took buyer rent out of this bill. A lot of the components that might have actually kept institutional buyers out of the market and some of the other things that Democrats and Republicans were looking for. Does the president, while not popular to make this point, have one when he says it's a big yawn?
- [28:37]
Rick Davis
Yeah, I think if he'd fill in the blanks and said the kinds of things you just repeated, I think he'd have a shot on goal saying you haven't done enough. But basically what he's saying is, I'm okay to sign this bill. You just got to send me what I want in addition to it. And that's a different argument. And he just can't get out of his own political way to do that. I would say if the Democrats spend all their time talking about Donald Trump on this bill, it's going to be a total waste of a perfectly good bill for them. I mean, you're right, it's more optics than it is teeth, but both Republicans and Democrats will make as much political value out of it as they can. But there's absolutely no value to spending a lot of time talking about how Donald Trump didn't sign the bill. Americans don't really care how bill comes into effect now. This is going to be a win regardless of what happens at the White House.
- [29:29]
Joe Matthew
I don't remember this on the Schoolhouse Rock, Jeannie, the whole ten day rule. But you know, we're learning as we go here. Great panel and here's good news. Rick and Jeannie will be back for the late edition of Balance of Power that starts at 5pm Eastern. I'll see you both back here at that time. Bloomberg Politics contributors Jeannie Shan Zaino and Rick Davis. Great panel. Thank you both. Stay with us on Balance of Power. We'll have much more coming up after this.
- [29:55]
Public.com Advertiser
Support for the show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve of the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public
- [30:51]
Joe Matthew
Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, LLC. SEC registered advisor complete disclosures available@public.com disclosures. You're listening to the Bloomberg Balance of Power podcast. Catch us Live weekdays at noon and 5pm Eastern on on Apple CarPlay and Android Auto with the Bloomberg business app Listen on demand wherever you get your podcasts or watch us live on YouTube. More on the Friday trade that suddenly gets a lot more interesting. The S&P 500, NASDAQ 100 both now at session highs and memory stocks just took another leg up. And when I say that I mean Micron also has turned positive which had been lower until a short time ago. This is all because of the CEO at 8. The aforementioned SK Hynix in its first day of trading went further than the chair did. Chair Shay in conversation with Bloomberg's Ed Ludlow. As we were just discussing a short time ago, trying to get our arms around how long the memory shortage might last. How long until this is a cyclical story again, Chairman Shea didn't venture to guess or offer a date, but the CEO of SK just telling Bloomberg News the memory chip shortage may persist beyond 2030. A red headline on the terminal beyond 2030. And of course SK is doing quite nicely at the moment. It's up about 15%. Micron again turning positive, up a half percent, approaching $1,000. We're at 997 right now. SanDisk higher by almost 5%. Samsung is up one and a half percent and even in video catches a bid today it higher before this headline and it's finding a new altitude, up about $7 or 4% to $210 for Nvidia. Let's bring in Nora. Melinda, I want to hold on to this moment for, for some time if we can, because this is a slightly different market than we had when we even started the show. Bloomberg Markets correspondent with us live from New York. It's incredible, Nora, how one headline can change an entire session.
- [33:08]
Commercial Narrator
Absolutely. It's interesting as we're seeing major indexes hitting session highs. But just broadly, this isn't just another ipo. This is also just a sign that investors are pouring money into the companies building AI infrastructure, not just the companies that are making the AI software. And so as you see the double digit gains that we're seeing on SK Hynix and we're seeing the broad based rally across chip makers, tech and the market more holistically. It really just shows you that the market is really looking toward the tech industry to essentially chart the next steps forward. We know that SK Hynix is already investing about $35 billion in the United States. But we heard from the chairman that he says quote, much, much bigger plan. He has a much, much bigger plan to invest more money in the United States. And of course, we know this kind of sits squarely with Washington's goal. We know President Trump has been wanting a lot of these foreign manufacturers to pour more money and do more manufacturing in the United States. So if you take a look at just Micron earlier in the week saying that they were going to up their investment to $250 billion from $200 billion. This of course, is just adding to the optimism that we are seeing with SK Hynix today as we think about what it could look like, the future here in the United States as it relates to artificial intelligence and chip infrastructure more broadly.
- [34:24]
Joe Matthew
Chip trade gets a nice boost here. You know who's lower, of course, those who need to buy these chips, Nora. Dell right now is suddenly lower down about 1%. Apple is lower by almost 1% and frankly most of the mag 7 lower. Now, these are the companies spending the money on this hard to find memory.
- [34:43]
Commercial Narrator
Absolutely. So you are seeing a bit of divergence in the market, as you mentioned, the companies that are having to spend tons of money on these chips. We know we're dealing with this shortage. And of course, this headline is just crossing the wire, really boosting the market when we think about memory chip makers in particular. But when you think about the companies that actually have to buy the chips, it's no surprise that you would start seeing people in the market, investors selling off on Wall street as they're a bit apprehensive as to whether or not these companies are actually able to support the amount of money needed to get these chips brought into their companies to continue work efficiently.
- [35:18]
Joe Matthew
Great, Nora, thank you. Appreciate the insights on a busy Friday. Live from New York, Nora, Melinda here reporting live on Bloomberg. Pretty interesting moment. We'll update the markets for you again at the top of the hour. As I mentioned, 2pm Eastern, when we hear once again from Charlie Pellet. The other big story beyond SK that we've been following this hour and throughout the day is what is happening with Iran, with the president of the United States issuing a mixed message in a single post again today, very similar to what he said out loud at the NATO summit now in writing as he talks about the Islamic Republic of Iran asking, asking, he says, the US to continue talks. We have agreed to do so. There's the good news, at least in the eyes of the market. But he says the US has stated to them in no uncertain terms that the ceasefire is over. Both of these he indicated, he said cease fire over and said he was open, allowing talks at least to continue while in Ankara. And since then, of course, we've seen two straight days of strikes. Things are pretty quiet right now. The President holding his fire for apparently the next leg in this whole fight. And we've been looking forward to talking with Trita. Trita Parsi, Executive Vice President at the Quincy Institute for Responsible Statecraft, an important voice in this conversation beyond some of the experts that we talk to, because for Trita, it's personal in a lot of ways. He was born in Iran, but moved with his family here at the young age of 4, moved to Sweden in order to escape political repression in Iran. His dad was an outspoken academic who was jailed by the Shah and then by the Ayatollah. So consider his point of view ahead of this conversation. Trita, it's great to see you. Welcome back to Bloomberg.
- [37:01]
Trita Parsi
Thank you so much for having me.
- [37:02]
Joe Matthew
I'm wondering your thoughts on the way the President is offering this sort of split screen message which manifests itself on a day to day basis. Sometimes we are talking, sometimes we are shooting. What do we call this?
- [37:15]
Trita Parsi
Well, it's starting to become a Swiss cheese of a ceasefire and at some point it's gonna fall apart if it continues this way. I frankly think that both sides have overreacted. I think it was obviously wrong of the Iranians to shoot at the ships. They're very worried that the US Was trying to set up a southern corridor that would be outside of Iran's control. So if the US Were to restart the war, which of course the Iranians are very suspicious that he might, the Iranians would no longer have the strait as a weapon and as a leverage. And given the fact that it was crucial for, for them, it's understandable that they're going to be protective of it. But shooting at the ships was an overreaction. And then, you know, the manner in which the United States responded here was also, in my view, unnecessary. Some response was warranted, but this went beyond that. And it's not that there is an impossibility to get back to talks. There already seems to be some significant efforts. It's that this memorandum period was supposed to be used to actually help build some confidence between the two sides so they could strike a final deal. But so far it seems that this effort has been a confidence depleting effort rather than a confidence building period. And that's very problematic because ultimately that makes it more difficult to get a lasting deal at the end of this
- [38:36]
Joe Matthew
President called the regime scum this week, among other interesting names. Clearly there's no trust on our side. Of things, and that's probably deserved. Do you believe or expect that Iran will trust Jared Kushner and Steve Witkoff enough to make a deal?
- [38:53]
Trita Parsi
No, I don't think either side is going to trust the other. And as you mentioned, the US has now attacked Iran twice in the midst of negotiations, including killing their supreme leader. So trust is beyond what we can expect. But one can trust the incentive and interest of the other side to be a guide of how they will act. And if there is a deal that actually is good for both sides and it's better than the alternative, then you can trust that they will follow their own self interest in a rational way and stick to it. That's the sweet spot that the two countries have to find.
- [39:28]
Joe Matthew
Remember, help is on its way. President Trump posted that on Truth Social to the people of Iran long before the shooting started. That was before thousands were killed by the regime. And Trita, I wonder if you can tell us anything about the people. We never hear about those who actually live in Iran. We saw the video of people chanting Death to America at the Ayatollah's funeral last weekend. But what is their feeling about the regime and this stalemate that we seem to be in?
- [39:57]
Trita Parsi
I think frankly, this war has galvanized the supporters of the regime within Iran significantly. In some ways, this war actually saved the Islamic Republic because it was undoubtedly facing a significant legitimacy crisis back in December and January. But just as Saddam Hussein's invasion of Iran back in 1980 actually helped save the Islamic Republic, because back then they had not fully consolidated their power, but an external enemy enabled them to do so, I think the US Attack, completely contrary to what Trump thought, ended up doing pretty much the same. Do they have the majority support of the population? I do not believe so. I think their support levels prior to this war was probably no more than 15 to 20%. And after the war it may have gone up. But more importantly, those 15 to 20% or 25% are now much more intense in their level of support for the regime because in their view, believe.
- [40:58]
Joe Matthew
Sorry, go ahead, go ahead, finish your answer.
- [41:00]
Trita Parsi
Yeah, because from their view, it performed. It protected the country against two countries that have nuclear weapons. And nationalism sentiments always tend to take over in moments like this. Whether they last or not is a different story.
- [41:15]
Joe Matthew
I understand. Do you believe that a popular uprising is the only way to topple this regime with or without the help of
- [41:21]
Trita Parsi
the U.S. well, I think external help is actually extremely unhelpful. I don't think help ever was on its way, regardless of What Trump was saying, this is something that only the Iranians can handle at the end of the day. Now, there was a lot of belief in that before. The belief in it completely dwindled in the last couple of years. And there was a sentiment, at least amongst the majority, that nothing could happen unless there was help from the outside. Well, now we saw that. We saw the war, we saw what that did, and it certainly didn't help. It was counterproductive. So I do think that this system is going to change, but it's going to have to be because of change. Agents from inside, Iranians, themselves, themselves doing it. It may take a very long time. It may not move in a straight direction. In fact, I think it's been moving backwards for at least the last 10 or so years, but I don't see any other pathway.
- [42:11]
Joe Matthew
Well, so do Iranians, the people of Iran, believe that the US Abandoned them? Is this some sort of Middle Eastern Bay of Pigs?
- [42:19]
Trita Parsi
Well, for those who actually believed that the US Would come to their aid, and yes, I think there is a sense of betrayal that they have. I don't think that was the majority. I think a majority had a variety of opinions ranging from never believing the US Never believing that the US Actually would act in the interests of the Iranian people, but it would act in its own interest. So having a more cynical view of countries, which I personally think is healthy, because it's more accurate, to be frank, it's not just the U.S. it's all states, but also those who, because of looking at what happened in Libya, in Syria, in Iraq, in Afghanistan, believe that even if the intentions of the US were good, the capacity to actually follow through and make sure that it's a success was simply not there. We're very skeptical of this in the first place because the track record of the US in the region, particularly in terms of democratizing countries, is abysmal. So I think the majority fell in that camp and a very small minority, out of desperation because of the repression of the government, were hoping that a war potentially could bring down the regime. And it did the opposite.
- [43:28]
Joe Matthew
Really something. Trita, I've only got about a minute left. If the ceasefire is over like the President says, we'll take him at his word. Are we starting from scratch?
- [43:39]
Trita Parsi
If the ceasefire is truly over and the MOU is over, because the ceasefire can be over and the MOU is still standing, not only are we starting from scratch scratch, we're starting from a worse situation because the war. So if you take a look at all the inventories right now, or the strategic reserve is much lower than it was in February. So the war would restart at a much worse position economically. The Runway the US would have would be much shorter, and we're also closer to the midterms, so it would be a much worse situation. On top of that, any trust or confidence in going for a ceasefire would be far less than it was before, and it was very difficult in the first place.
- [44:15]
Joe Matthew
Time I want to keep talking with you, Trina. Thank you for coming on the program today. Trita Parsley is Executive VP at the Quincy Institute for Responsible Statecraft, and we appreciate your insight. Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already, Apple, Spotify, or wherever you get your podcasts. And you can find us live every Weekday from Washington, D.C. at York New
- [44:41]
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