Intro
Bloomberg's Merryn Somerset Webb and John Stepek record their weekly markets wrap from Panmure House in Edinburgh, covering Nvidia's results and the market's muted response, the difference between doubting AI and doubting how it is being financed, the rotation out of the Mag 7 and into commodities and miners, and what a working quantum computer would do to Bitcoin.
Hosts: Merryn Somerset Webb, UK money editor at large, Bloomberg; John Stepek, senior reporter at Bloomberg and author of the Money Distilled newsletter
Published: 27 August 2026 on Merryn Talks Money
Listen on Omny | 10 min
Key Takeaways
Nvidia guided far above consensus and the shares barely reacted
"7%. It's not that much for that kind of news." — Merryn Somerset Webb
Somerset Webb reads it as perfection already priced in, so the company has to keep beating just to stand still
The skepticism is about the financing and the price, not the technology
Somerset Webb: LLMs are brilliant, and there is more to come; the objection is circular financing and what is being paid
Being an AI skeptic is not a contrarian position any more
"I don't think being an AI skeptic is a remotely contrarian position" — John Stepek
Nvidia's price rises run straight through to inflation, bond yields and the cost of financing everything
The hyperscalers' visible balance-sheet debt is the top of an iceberg; the mass below is off balance sheet or implied future rents
The rotation the two have called for ages now looks underway, and it leads to commodities and miners
Agricultural prices, copper and a wave of new UK mining ventures, down to tungsten in Devon
The debasement trade is running again, and quantum is the risk nobody prices into Bitcoin
"And the very fact that you could surely makes Bitcoin of less value than previously." — Merryn Somerset Webb
Recording at Adam Smith's Last Home, 250 Years After The Wealth of Nations
The wrap is recorded away from London, at Panmure House in Edinburgh, the last home of Adam Smith, in the 45 minutes before the two go on stage for their Edinburgh Fringe show
Stepek, who normally lives in the southeast of England, says it has been scorching there for about six months and that Edinburgh is the coldest he has been in the whole of 2026 — he calls the city "the Athens of the North, except for the weather"
Somerset Webb, who finds the weather muggy and warm, notes he is in a jumper and a jacket while she is not, and puts his exile from Scotland down to it; Stepek's own verdict on himself is "I'm a wimp."
It is the 250th anniversary of the publication of The Wealth of Nations, which Stepek flags as the reason this year is special
Somerset Webb points out that Smith published in the same year James Watt unveiled his steam engine, and draws the parallel to now: "he wrote this book and published this book at the beginning of the last great industrial revolution. And here we are right here, right now on the cusp of the next great industrial revolution."
She flags Smith's other book, Moral Sentiments, and its argument about the nature of humanity as the thing she plans to talk about at length in the live show rather than on the markets wrap
Nvidia Beats, and the Shares Move 7%
Stepek opens the markets discussion on Nvidia's results, saying the appetite for building out AI infrastructure still looks unstoppable
The guidance for next fiscal year came in well ahead of the street: "which is an awful lot more than analysts had thought. And analysts had said 45%, which is still a lot." — John Stepek
Somerset Webb says she was surprised by how little the share price did; Stepek puts the move at 7%, and adds that he thinks it came after market
"7%. It's not that much for that kind of news." — Merryn Somerset Webb, who frames the guidance as being told the company will sell double, triple or quadruple what it had said it would
She adds the rating to the argument: "the forward P/E for Nvidia, it's like 18, 19 times or something", which for a company growing that fast — or that the market thinks is growing that fast — strikes her as not much either
Her read is that either AI skepticism is getting a hold in the market, or expectations have run so far ahead that nothing counts as good news: "There's so much perfection priced in in people's heads that it's just got to keep beating and beating and beating to even stand still."
Where the AI Skepticism Actually Sits
Stepek says the muted reaction is a bit of both — investors have got used to Nvidia beating, and the skeptical position is now crowded
"I don't think being an AI skeptic is a remotely contrarian position" — John Stepek, who says most people would agree it has become, above all, a label
Somerset Webb draws a hard line between the technology and the trade: the show has run a lot of AI skepticism and makes no apologies for it, but that is not skepticism about whether the technology works
"It's brilliant. LLMs are brilliant. Not as brilliant as some people think, but brilliant." — Merryn Somerset Webb, who adds there is a lot more great stuff to come after LLMs
"We're talking here about the financing, the circular financing problem, to the extent you can call it a problem, and the prices." — Merryn Somerset Webb
China's Cheaper AI Came From Better Software, Not Better Chips
Stepek's other objection is that the situation keeps changing, which he thinks the debate underweights
He relays a piece by their Bloomberg colleague Parmy Olson, published that week, arguing that China does everything so cheaply because it has better software — the result of not being able to get the best chips, so engineers sat down and worked out how to move data around a chip more effectively
Getting rid of what he calls the traffic-jam element on a chip gets more out of it, and gets it more cheaply
Olson's conclusion, as Stepek reads it, is that American companies will have to do the same thing, because Nvidia keeps jacking up the price and competing means using the chips more efficiently
Price Rises, Inflation, and the Debt Under the Hyperscalers' Iceberg
"Nvidia has announced price rises and we're beginning to see that come through in pretty much all technological products, rising prices, which of course will feed through into inflation, feeds through into bond yields, feeds through into the price of financing for everything." — Merryn Somerset Webb
Her one-line summary of the loop: "It's all so circular."
Stepek's addition is the private-market side, which he says is only starting to come out. He describes a diagram he has now seen several versions of: an iceberg whose visible part is the balance-sheet debt of the big hyperscalers, Alphabet among them, with a colossal section underneath that either sits off balance sheet or is implied, because it is rent that will have to be paid at some point
He says that is why he can see people taking the numbers with a pinch of salt
Somerset Webb relays how Nvidia's CEO answered the circular-financing question — you may call it circular financing, he calls it "financing the greatest technology in the history of mankind," none of that matters, focus on the end goal
Stepek's response is that the CEO would say that: "And there's an element of Mandy Rice-Davies there. He would say that, wouldn't he?"
What Every CEO Could Learn From Next's Simon Wolfson
Stepek's counter-model is the guy who runs Next, Simon Wolfson, whose approach he thinks most CEOs should take a leaf out of — the alternative to having to keep over-promising and over-delivering
"every year he comes in and says, oh, we've beaten what we expected our estimates to be, but we won't do it next year because everything's terrible" — John Stepek, who says the following year brings the same line again
Somerset Webb's reading: Wolfson has set up the idea that he can outperform every year in a terrible environment, and it really works
Stepek notes how consistent the pattern is and that the market falls for it every time — which is exactly why he thinks more chief executives could do with it
The Rotation Is Underway, and It Runs Through Commodities
Somerset Webb says the rotation the two have been talking about for ages is probably now underway, with the Mag 7 struggling and Nvidia's rating where it is
Things are spreading out a little, and other markets are doing better
The commodity super cycle looks like it is beginning to get a little traction — she points to agricultural prices as the example, and says she wishes she had bought some of those grain ETFs a while back
She tells listeners to look at the copper price as well
Her second piece of evidence is corporate rather than price-based: the new mining companies starting up in the UK, of which she says there are now quite a few rather than a couple
Digging Up Bodmin Moor
Stepek's contribution to the UK mining revival: "There's a bit of tungsten going on in Devon, et cetera."
Somerset Webb recalls the joke the two used to make about it: "if you really cared about the energy transition and you really cared about rare earths, you would dig up Bodmin Moor and then we'd laugh ourselves silly. Now what are they doing? Digging up Bodmin Moor."
Her verdict on the outcome — "They listen, John. They listen" — gets Stepek's agreement that the industry finally came to its senses
The Debasement Trade and the Q Day Problem for Bitcoin
"the whole debasement trade is kind of taking off again as well. So gold's going up again. Silver's going up again. Bitcoin is going up again." — John Stepek, picking up a thread from the previous week's show
Somerset Webb points listeners to the show's own episode from earlier in the week on Q Day and Bitcoin — the day quantum computing starts to work and encryption stops being a real thing, because a quantum machine can strip it away in a second
The guest's answer, as she relays it, was that he would not buy Bitcoin because the risk is real, but that anyone with access to a quantum computer has much bigger fish to fry than a Bitcoin wallet — they might not bother, but they could
"And the very fact that you could surely makes Bitcoin of less value than previously." — Merryn Somerset Webb
The two acknowledge they are biased against Bitcoin, joke about being no-coiners, and say they should get Charlie Morris on to argue the other side
Watch the Bond Markets
Asked whether there is anything else listeners should know about markets this week, Stepek says he does not think so — until Somerset Webb answers her own question with the bond market
"French bond yields particularly are a bit sticky looking this week. And that's just because they've got a big election next year." — John Stepek
Somerset Webb adds worries about US debt to the list, and says the two will keep an eye on it and take it in more detail next week
Nvidia can beat by a distance and still leave the shares looking flat, and the two hosts read that as a market where perfection is already in the price, where the money is starting to move toward commodities, miners and the debasement assets, and where the bond market is the thing to watch next.
Products, Companies & Tools Mentioned
Nvidia (Guided next fiscal year's sales far above the 45% analysts had penciled in and moved 7%; Somerset Webb's forward P/E of "18, 19 times or something" is the crux of her rotation argument, and its announced price rises are what she says feed inflation and bond yields)
Alphabet (Named as one of the big hyperscalers whose balance-sheet debt is only the visible top of Stepek's iceberg)
Next (Simon Wolfson's guide-down-then-beat routine, which Stepek says is remarkably consistent, always works on the market, and is what more CEOs should copy)
Gold, silver and Bitcoin (The debasement trade Stepek says is taking off again, with all three going up; Bitcoin also carries the quantum risk the hosts spend the segment's last stretch on)
Grain ETFs and copper (Somerset Webb's evidence that the commodity super cycle is getting traction — she wishes she had bought the grain ETFs a while back)
UK mining ventures, including tungsten in Devon and rare earths on Bodmin Moor (Once the punchline of the two hosts' own joke about the energy transition, now actually happening)
Books & Resources Mentioned
The Wealth of Nations – Adam Smith (250 years old this year; the wrap is recorded at Panmure House, Smith's last home, before the hosts' Fringe show)
Moral Sentiments – Adam Smith (Smith's other book, on the nature of humanity, which Somerset Webb says she will bore everybody about on stage rather than on the markets wrap)
Parmy Olson's piece on China's AI costs (A Bloomberg colleague's column that week arguing chip restrictions pushed China into writing better software, and that US firms will have to follow)
Merryn Talks Money's own episode on Q Day and Bitcoin (Published earlier in the same week; the guest said the quantum risk is real but that a quantum owner has bigger fish to fry)
The Money Distilled newsletter – John Stepek (Stepek's own Bloomberg newsletter, named in his introduction)
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