1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,840 Speaker 2: Terminal and the Bloomberg Business App. Peter cheerf Academy Securities 10 00:00:37,880 --> 00:00:40,839 Speaker 2: in the recession camp, Aliskalou of Bank of America on 11 00:00:40,880 --> 00:00:43,880 Speaker 2: a cautious global fund manager survey, and Kidjigs of salt 12 00:00:43,960 --> 00:00:46,920 Speaker 2: Gen looking for the big Euro rally to continue. We 13 00:00:47,000 --> 00:00:49,080 Speaker 2: begin this sour with stock steady as the Fed kicks 14 00:00:49,080 --> 00:00:52,240 Speaker 2: off a two day meeting. Peter cheerf Academy Securities, writing, 15 00:00:52,280 --> 00:00:54,360 Speaker 2: I don't see the Fed acting in a big enough 16 00:00:54,400 --> 00:00:56,680 Speaker 2: way to what set the risk that I see the 17 00:00:56,800 --> 00:01:00,200 Speaker 2: convergence of so many policies seems to risk a recession 18 00:01:00,360 --> 00:01:03,880 Speaker 2: before any probability of seeing the benefits. Pete joins us 19 00:01:03,920 --> 00:01:06,319 Speaker 2: now for more. Pak mourned makes me sound so various. 20 00:01:06,319 --> 00:01:08,679 Speaker 2: You've got to say you're sounding incredibly bearish. Are you 21 00:01:08,720 --> 00:01:09,240 Speaker 2: saying you're not? 22 00:01:09,680 --> 00:01:10,479 Speaker 3: No, I actually am. 23 00:01:10,520 --> 00:01:13,039 Speaker 4: I think one thing is even the prior discussion. I 24 00:01:13,040 --> 00:01:14,840 Speaker 4: think a big part of the change is we are 25 00:01:14,880 --> 00:01:18,440 Speaker 4: trading capital flows for trade benefits. 26 00:01:18,120 --> 00:01:19,319 Speaker 3: Right, so we're going after trade. 27 00:01:19,360 --> 00:01:21,399 Speaker 4: I think we're seeing capital outflows and it spent a 28 00:01:21,400 --> 00:01:23,440 Speaker 4: perfect mix for taking. 29 00:01:23,160 --> 00:01:24,400 Speaker 3: Capital outside of the US. 30 00:01:24,480 --> 00:01:26,199 Speaker 4: All of a sudden, you have yields up in Japan, 31 00:01:26,240 --> 00:01:28,480 Speaker 4: you have yields up in Germany, so you can actually 32 00:01:28,480 --> 00:01:30,240 Speaker 4: get some return on that side. And when you look 33 00:01:30,240 --> 00:01:33,400 Speaker 4: at equity valuations, all these other markets had lower evaluations. 34 00:01:33,560 --> 00:01:34,920 Speaker 3: So I think one of the big problems. 35 00:01:34,640 --> 00:01:37,120 Speaker 4: With our strategy so far has rather than having people 36 00:01:37,120 --> 00:01:39,640 Speaker 4: come to the table begging for mercy, it's actually pulled 37 00:01:39,640 --> 00:01:42,200 Speaker 4: money out of the system. It's made people rethink things, 38 00:01:42,400 --> 00:01:44,280 Speaker 4: and they're not rethinking things in a way that really 39 00:01:44,280 --> 00:01:46,240 Speaker 4: involves the US. I think people are trying to rethink 40 00:01:46,440 --> 00:01:48,480 Speaker 4: things away from the US, and that's the negative. 41 00:01:48,680 --> 00:01:51,880 Speaker 2: That was not the objective. These are unintended consequences, and 42 00:01:51,880 --> 00:01:54,040 Speaker 2: for the market, the consensus view was that some of 43 00:01:54,040 --> 00:01:56,400 Speaker 2: these policies would lead to dollar strength, they've led to 44 00:01:56,440 --> 00:01:58,800 Speaker 2: dollar weakness. That speaks to the capital flows story. Do 45 00:01:58,800 --> 00:02:00,640 Speaker 2: you see this turning around soon? 46 00:02:00,880 --> 00:02:02,680 Speaker 4: You know, yesterday was the first day we really went 47 00:02:02,680 --> 00:02:04,760 Speaker 4: the full day without any big tariff headlines. People have 48 00:02:04,800 --> 00:02:07,880 Speaker 4: seemed that maybe there is a trumpet. Maybe you realize, hey, 49 00:02:07,880 --> 00:02:10,920 Speaker 4: bashing on tariffs every single day, bashing our allies is 50 00:02:10,960 --> 00:02:12,840 Speaker 4: not a good strategy, and you keep looking at it. 51 00:02:12,880 --> 00:02:16,120 Speaker 4: We've been searching for where's all this excess capacity. So one, 52 00:02:16,240 --> 00:02:18,120 Speaker 4: there isn't a ton of access capacity. So if we 53 00:02:18,200 --> 00:02:21,359 Speaker 4: just make things more expensive coming in here, it will 54 00:02:21,400 --> 00:02:23,160 Speaker 4: flow through a little bit. And then you have China. 55 00:02:23,320 --> 00:02:25,800 Speaker 4: China's the one with access capacity. Their pricing is so 56 00:02:25,880 --> 00:02:28,400 Speaker 4: cheap that twenty percent tariffs that we've added don't really 57 00:02:28,440 --> 00:02:31,040 Speaker 4: make them uncompetitive. So I think we have to rethink 58 00:02:31,080 --> 00:02:33,600 Speaker 4: this and do some sort of holistic strategy that has 59 00:02:33,639 --> 00:02:35,400 Speaker 4: a one to sort of three year plan. 60 00:02:35,680 --> 00:02:37,160 Speaker 3: How do we build steel plants in the US. 61 00:02:37,200 --> 00:02:38,639 Speaker 4: There's so many things that need to be done to 62 00:02:38,680 --> 00:02:41,200 Speaker 4: make this effective, and we just dumped everything in day 63 00:02:41,200 --> 00:02:42,320 Speaker 4: one and it's been a mess. 64 00:02:42,360 --> 00:02:44,760 Speaker 5: There's shifts in capital flows that are easier to see 65 00:02:44,760 --> 00:02:45,239 Speaker 5: than others. 66 00:02:45,320 --> 00:02:46,120 Speaker 3: One of them is just. 67 00:02:46,080 --> 00:02:48,240 Speaker 5: Looking at the euro versus the dollar. One of them 68 00:02:48,280 --> 00:02:52,000 Speaker 5: is looking at stocklocase and shifting to the euroregion rather 69 00:02:52,040 --> 00:02:55,560 Speaker 5: than the US. You've raised a point about boycotts or 70 00:02:55,760 --> 00:03:00,960 Speaker 5: basically withdrawing from American brands overseas. Any signs of that 71 00:03:01,000 --> 00:03:04,400 Speaker 5: other than say Tesla, which is somewhat idiosyncratic, It's. 72 00:03:04,240 --> 00:03:06,120 Speaker 4: Hard to tell, but I think you are seeing a 73 00:03:06,160 --> 00:03:08,200 Speaker 4: little bit of evidence that people are okay at the 74 00:03:08,240 --> 00:03:11,120 Speaker 4: margin shifting away from American brands. And I think American 75 00:03:11,160 --> 00:03:14,600 Speaker 4: brands represented so many positive things, and I really think 76 00:03:14,639 --> 00:03:16,919 Speaker 4: the administration is at risk that there were so many 77 00:03:16,960 --> 00:03:20,360 Speaker 4: intangible benefits from what the US does, from the presence 78 00:03:20,400 --> 00:03:23,520 Speaker 4: that we had kind of this benevolent superpower, and as 79 00:03:23,560 --> 00:03:25,280 Speaker 4: that goes away, I think we lose some of the 80 00:03:25,320 --> 00:03:28,160 Speaker 4: reputation and that hurts. And unfortunately too, I think the 81 00:03:28,200 --> 00:03:30,560 Speaker 4: way we've thrown out all these tariffs, even if you 82 00:03:30,560 --> 00:03:32,520 Speaker 4: didn't like China, you kind of have to come knocking 83 00:03:32,560 --> 00:03:34,480 Speaker 4: a China's door and say, hey, maybe we should be 84 00:03:34,520 --> 00:03:35,120 Speaker 4: doing business. 85 00:03:35,440 --> 00:03:37,160 Speaker 5: Is there a risk that people are getting over their 86 00:03:37,160 --> 00:03:39,360 Speaker 5: skis with all this pessimism that if you take a 87 00:03:39,360 --> 00:03:41,920 Speaker 5: look at the actual policies. We haven't seen the more 88 00:03:41,960 --> 00:03:44,520 Speaker 5: positive sides of things. Not all of the people are 89 00:03:44,560 --> 00:03:47,040 Speaker 5: in their seats yet. In terms of executing these we 90 00:03:47,120 --> 00:03:49,600 Speaker 5: haven't been through April. Second, and if you actually look 91 00:03:49,640 --> 00:03:52,119 Speaker 5: at growth, it isn't that bad. Even the airlines, which 92 00:03:52,120 --> 00:03:55,320 Speaker 5: everyone uses the example of a slowdown, are still booking 93 00:03:55,360 --> 00:03:56,680 Speaker 5: at pretty healthy rates. 94 00:03:56,960 --> 00:03:57,720 Speaker 1: What's that risk? 95 00:03:57,960 --> 00:03:59,680 Speaker 3: So I think the risk is where we're headed. 96 00:04:00,000 --> 00:04:02,000 Speaker 4: I think the things that Doge has been doing so one, 97 00:04:02,040 --> 00:04:04,840 Speaker 4: we're cutting some spending that does flow through the economy. 98 00:04:05,080 --> 00:04:06,920 Speaker 4: I think you're seeing that it's very difficult to get 99 00:04:07,000 --> 00:04:10,800 Speaker 4: jobs for those people who are getting left behind. But 100 00:04:10,840 --> 00:04:13,360 Speaker 4: then more importantly to me is there's so much uncertainty. 101 00:04:13,400 --> 00:04:15,880 Speaker 4: It's putting plans on hold. So you normally like to 102 00:04:15,880 --> 00:04:18,960 Speaker 4: do things that pull demand and you know, hiring forward. 103 00:04:19,120 --> 00:04:20,920 Speaker 4: If anything, I were pushing it further away. 104 00:04:21,000 --> 00:04:23,080 Speaker 3: Right. There's no one that we talk to really. 105 00:04:22,880 --> 00:04:25,040 Speaker 4: That's saying, well, I have to bring my construction back 106 00:04:25,080 --> 00:04:27,760 Speaker 4: to the US from say Canada or Mexico because I 107 00:04:27,800 --> 00:04:29,039 Speaker 4: don't know how long these terrafs last. 108 00:04:29,040 --> 00:04:30,039 Speaker 3: They might only last a month. 109 00:04:30,040 --> 00:04:31,680 Speaker 4: That would be silly for me, and it's going to 110 00:04:31,720 --> 00:04:33,480 Speaker 4: take months and months if not years to do this, 111 00:04:33,760 --> 00:04:36,760 Speaker 4: so I think there's a lot of hiring on you know, freeze. 112 00:04:36,760 --> 00:04:38,920 Speaker 4: So unless the Fed does something tomorrow, which they might, 113 00:04:38,960 --> 00:04:40,800 Speaker 4: but I don't think they will. When we see a 114 00:04:40,800 --> 00:04:43,080 Speaker 4: real change in messaging, I think we resume the sell 115 00:04:43,120 --> 00:04:44,560 Speaker 4: off and I think we're going to head to bear 116 00:04:44,600 --> 00:04:46,320 Speaker 4: market territory down at least twenty percent. 117 00:04:46,440 --> 00:04:48,800 Speaker 1: Are you saying that the tariff uncertainty can tip the 118 00:04:48,880 --> 00:04:50,760 Speaker 1: US into recession just that alone? 119 00:04:50,880 --> 00:04:54,080 Speaker 4: I think that combination of the spending cuts that we're doing, 120 00:04:54,320 --> 00:04:56,800 Speaker 4: the firing in that sector, it was already I think 121 00:04:56,880 --> 00:04:58,920 Speaker 4: I look at the quits rate, right, the job market 122 00:04:59,000 --> 00:05:01,400 Speaker 4: wasn't that great. I think the official data tends to 123 00:05:01,400 --> 00:05:04,600 Speaker 4: get overstated in January February because they're still miscalculating a 124 00:05:04,600 --> 00:05:06,839 Speaker 4: bunch of the seasonals. So if we tip over into 125 00:05:07,279 --> 00:05:11,000 Speaker 4: weak employment, people on hold no one quite understanding the 126 00:05:11,000 --> 00:05:12,000 Speaker 4: cost of goods, which I. 127 00:05:11,920 --> 00:05:13,279 Speaker 3: Think will go up to some degree. 128 00:05:13,480 --> 00:05:15,720 Speaker 4: Yeah, I think we tip into recession far faster than 129 00:05:16,320 --> 00:05:19,440 Speaker 4: people think, And maybe we're already at that sort of stage. 130 00:05:19,520 --> 00:05:21,800 Speaker 1: We're an inflection point. This morning. You have a bunch 131 00:05:21,839 --> 00:05:24,360 Speaker 1: of generals you consult with at the firm, What do 132 00:05:24,440 --> 00:05:27,360 Speaker 1: they make going into this phone call between Trump and Putin. 133 00:05:27,400 --> 00:05:29,200 Speaker 3: You know, so one to take a step back. 134 00:05:29,240 --> 00:05:31,000 Speaker 4: I think one thing they were all very positive on 135 00:05:31,200 --> 00:05:33,640 Speaker 4: was the actions in the Middle East to clear up shipping. 136 00:05:33,680 --> 00:05:36,120 Speaker 3: I think that's the right sort of thing. It puts pressure. 137 00:05:36,240 --> 00:05:39,080 Speaker 4: I think we've argued under the Biden administration that we 138 00:05:39,160 --> 00:05:42,279 Speaker 4: lost to terrence as a tool, and to get to terrence, 139 00:05:42,320 --> 00:05:44,440 Speaker 4: you actually have to be aggressive periodically. You have to 140 00:05:44,440 --> 00:05:46,160 Speaker 4: put some fear. So that I think we are very 141 00:05:46,160 --> 00:05:47,840 Speaker 4: positive on. I think we're all trying to figure out 142 00:05:47,880 --> 00:05:50,839 Speaker 4: what exactly the endgame is with Russia and Ukraine. I 143 00:05:50,839 --> 00:05:52,720 Speaker 4: think that's an opportunity maybe for the President to come 144 00:05:52,720 --> 00:05:55,680 Speaker 4: out looking good. I think if Putin offers a really 145 00:05:55,720 --> 00:05:58,000 Speaker 4: bad deal and the President accepts it, and I think 146 00:05:58,040 --> 00:06:00,640 Speaker 4: that will cause US further divide, see more of this. 147 00:06:00,960 --> 00:06:02,600 Speaker 4: Any sort of piece deal, though, we really think was 148 00:06:02,640 --> 00:06:05,240 Speaker 4: always going to benefit Germany and Poland. Poland is going 149 00:06:05,279 --> 00:06:07,160 Speaker 4: to continue to be the big winner in this whole 150 00:06:07,640 --> 00:06:10,719 Speaker 4: realignment of Europe. So continue to be positive for stocks 151 00:06:10,760 --> 00:06:12,600 Speaker 4: whether or not there is a deal. Right now, we're 152 00:06:12,640 --> 00:06:14,960 Speaker 4: head of that direction. And I think a bad deal though, 153 00:06:15,000 --> 00:06:17,800 Speaker 4: would really push people away from the US again. 154 00:06:17,920 --> 00:06:20,200 Speaker 2: Unfortunately, how would up pet You see a situation where 155 00:06:20,320 --> 00:06:22,320 Speaker 2: US snquities could be in a band market down twenty 156 00:06:22,360 --> 00:06:25,920 Speaker 2: percent and German equities could stay this high of twenty percent. 157 00:06:26,480 --> 00:06:28,840 Speaker 4: Yeah, I think one you look at valuations, they're so 158 00:06:28,960 --> 00:06:31,480 Speaker 4: somewhat cheap. People are pulling their money back to their 159 00:06:31,480 --> 00:06:33,920 Speaker 4: own home base. They are doing spending, They're doing things 160 00:06:33,960 --> 00:06:36,680 Speaker 4: that are going to be clearly constructive for their businesses. 161 00:06:36,880 --> 00:06:39,039 Speaker 4: I think they do have some access capacity, right VW 162 00:06:39,160 --> 00:06:40,840 Speaker 4: is trying to figure out no one wants to buy 163 00:06:40,839 --> 00:06:43,599 Speaker 4: a VWEV supposedly, what do we do with that? Okay, 164 00:06:43,640 --> 00:06:46,120 Speaker 4: can we make military equipment? And I think that's going 165 00:06:46,160 --> 00:06:48,800 Speaker 4: to be interesting And normally that sort of spending would 166 00:06:49,360 --> 00:06:51,799 Speaker 4: fall heavily into the US. Right, Germany would be spending 167 00:06:51,800 --> 00:06:54,559 Speaker 4: a lot of their money on US equipment, US things. 168 00:06:54,920 --> 00:06:57,280 Speaker 4: They feel very like them to do that given the 169 00:06:57,320 --> 00:06:59,880 Speaker 4: current term. That could change, But as long as that's going, 170 00:07:00,279 --> 00:07:02,680 Speaker 4: we're getting the separation, you get those valuations picking up. 171 00:07:02,720 --> 00:07:02,960 Speaker 3: There. 172 00:07:03,160 --> 00:07:05,520 Speaker 2: Does the great thing not concern you? Over in Europe? 173 00:07:05,600 --> 00:07:05,960 Speaker 3: Right now? 174 00:07:06,360 --> 00:07:10,920 Speaker 2: Overwhelmingly there is a huge consensus celebrating germany rearmic. Does 175 00:07:10,920 --> 00:07:11,720 Speaker 2: that not concern you? 176 00:07:13,880 --> 00:07:14,400 Speaker 3: In which way? 177 00:07:14,520 --> 00:07:15,960 Speaker 4: I don't think it's a bad thing for people to 178 00:07:15,960 --> 00:07:18,560 Speaker 4: have their own ability to defend themselves. What I do think, though, 179 00:07:18,560 --> 00:07:20,160 Speaker 4: is Trump's been pushing for this, you know, two and 180 00:07:20,160 --> 00:07:22,880 Speaker 4: a half three percent whatever spending required he wants. 181 00:07:23,760 --> 00:07:25,000 Speaker 3: But I think that was all done in the. 182 00:07:24,920 --> 00:07:26,560 Speaker 4: Way that well, we're still going to be the big 183 00:07:26,600 --> 00:07:28,280 Speaker 4: person in NATO, will still tell NATO. 184 00:07:28,080 --> 00:07:28,480 Speaker 3: What to do. 185 00:07:28,800 --> 00:07:31,360 Speaker 4: And I think this spending is now okay, we're actually 186 00:07:31,360 --> 00:07:33,400 Speaker 4: going to spend this, but maybe we don't need the 187 00:07:33,440 --> 00:07:33,920 Speaker 4: same US. 188 00:07:33,920 --> 00:07:36,240 Speaker 2: I just want to approach this logically because at the 189 00:07:36,280 --> 00:07:39,400 Speaker 2: one point earlier this year, we were confident that for 190 00:07:39,480 --> 00:07:41,720 Speaker 2: European equities it was a good story. If the United 191 00:07:41,800 --> 00:07:44,320 Speaker 2: States push for a quick peace agreement. Part of that 192 00:07:44,400 --> 00:07:48,640 Speaker 2: story's happened. But Germany rearming Europe spending on defense doesn't 193 00:07:48,640 --> 00:07:51,680 Speaker 2: screen they're pushing for a quick piece deal by the House. 194 00:07:51,840 --> 00:07:54,640 Speaker 2: They're pushing for something very different to what President Trump 195 00:07:54,680 --> 00:07:55,160 Speaker 2: is pushing for. 196 00:07:55,400 --> 00:07:57,400 Speaker 4: Well, I think this all comes down to what sort 197 00:07:57,440 --> 00:08:00,640 Speaker 4: of deal is put in place, right. I think the 198 00:08:00,680 --> 00:08:03,760 Speaker 4: fear is that if and I'm probably on the European side, 199 00:08:03,760 --> 00:08:05,200 Speaker 4: I think most of our generals would be that if 200 00:08:05,200 --> 00:08:06,960 Speaker 4: you do not put some sort of protection in place. 201 00:08:07,280 --> 00:08:10,000 Speaker 4: This is just a temporary rearming for Putin to go 202 00:08:10,080 --> 00:08:12,040 Speaker 4: back in and take a bigger bite. And I think 203 00:08:12,120 --> 00:08:15,400 Speaker 4: that's the big disconnect right now is I think when 204 00:08:15,440 --> 00:08:17,600 Speaker 4: we were looking at this and we figured we'd get 205 00:08:17,600 --> 00:08:19,280 Speaker 4: some sort of peace, we did not think would be easy. 206 00:08:19,440 --> 00:08:21,000 Speaker 4: We do believe that Ukraine's going to have to give 207 00:08:21,080 --> 00:08:23,560 Speaker 4: up some land. We do think that they will get 208 00:08:23,560 --> 00:08:25,680 Speaker 4: a lot of money from this. The whole key is like, 209 00:08:26,000 --> 00:08:28,320 Speaker 4: whether it's security agreement, how do you stop Russia from 210 00:08:28,360 --> 00:08:30,240 Speaker 4: just rearming and coming back in. 211 00:08:30,720 --> 00:08:32,560 Speaker 3: And that's I think what Europe's preparing. 212 00:08:32,280 --> 00:08:35,480 Speaker 1: For the German rearment. Basically Europe trying to set de 213 00:08:35,600 --> 00:08:36,600 Speaker 1: terms with Russia. 214 00:08:36,720 --> 00:08:38,280 Speaker 3: Yes, I think that's even if they're. 215 00:08:38,120 --> 00:08:40,359 Speaker 1: Willing to have gas deals once again. 216 00:08:40,480 --> 00:08:42,640 Speaker 3: You know they will try and do both. I think 217 00:08:42,760 --> 00:08:43,760 Speaker 3: alsode again. 218 00:08:43,840 --> 00:08:45,520 Speaker 4: It's like this is going to be this mad panic 219 00:08:45,520 --> 00:08:46,840 Speaker 4: where everyone's trying to rearm them. 220 00:08:47,200 --> 00:08:49,520 Speaker 2: He doesn't add up. Something about it doesn't add up. 221 00:08:49,559 --> 00:08:51,080 Speaker 4: Well, none of this is added up when we look 222 00:08:51,080 --> 00:08:53,800 Speaker 4: at what the US was doing with Iran, right we 223 00:08:53,800 --> 00:08:57,240 Speaker 4: were allowing Ranian oil to go through Russia continues to 224 00:08:57,280 --> 00:09:01,240 Speaker 4: sell your oil into natural gas into Europe. Right, everyone 225 00:09:01,280 --> 00:09:03,320 Speaker 4: is so scared about energy, and that's a crazy thing. Right, 226 00:09:03,360 --> 00:09:06,040 Speaker 4: If you went back five years ago, everyone's about green energy, 227 00:09:06,080 --> 00:09:09,679 Speaker 4: green energy, green energy, and even the US every energy 228 00:09:09,679 --> 00:09:10,360 Speaker 4: self sufficient. 229 00:09:10,520 --> 00:09:11,640 Speaker 3: We realize all it takes. 230 00:09:11,480 --> 00:09:13,280 Speaker 4: Is one oil price shock to realize we are not 231 00:09:13,400 --> 00:09:16,880 Speaker 4: that energy and self sufficient. Inflation is scary. So I 232 00:09:16,920 --> 00:09:18,600 Speaker 4: do think I love the energy market. 233 00:09:18,720 --> 00:09:19,839 Speaker 3: Again. My strategy for the. 234 00:09:19,840 --> 00:09:22,040 Speaker 4: US where I do like the US is I'm continuing 235 00:09:22,040 --> 00:09:25,679 Speaker 4: to invest in anything that national production and for national 236 00:09:25,760 --> 00:09:28,439 Speaker 4: security's sake, so anything that has a security element. I 237 00:09:28,480 --> 00:09:29,720 Speaker 4: do think we are going to see more and more 238 00:09:29,720 --> 00:09:30,280 Speaker 4: production that. 239 00:09:30,520 --> 00:09:31,160 Speaker 3: I think things like. 240 00:09:31,200 --> 00:09:34,800 Speaker 4: Chips are very important, medical equipment, those things are actually 241 00:09:34,840 --> 00:09:37,080 Speaker 4: going to be really part of what gets driven by this. 242 00:09:37,240 --> 00:09:39,959 Speaker 3: You'll see some growth. That's where I'm headed. 243 00:09:40,040 --> 00:09:42,719 Speaker 4: I'd like to see more done though by actual legislation. 244 00:09:43,040 --> 00:09:44,120 Speaker 3: The executive order. 245 00:09:43,920 --> 00:09:45,720 Speaker 4: Thing, I think is not going to work particularly well. 246 00:09:45,840 --> 00:09:47,840 Speaker 4: If it takes four or five years to build a plant. 247 00:09:48,000 --> 00:09:50,439 Speaker 4: No one's sitting there saying, based on some executive orders 248 00:09:50,480 --> 00:09:52,720 Speaker 4: that may be turned over in four years or may 249 00:09:52,760 --> 00:09:55,240 Speaker 4: be turned over in two months, I'm not investing. 250 00:09:55,800 --> 00:09:58,640 Speaker 2: It's going to say a parish very barrassed US sequities 251 00:09:58,679 --> 00:10:10,319 Speaker 2: paid a chant that of account of Securi. Let's talk 252 00:10:10,360 --> 00:10:13,160 Speaker 2: about the April second date. Conversation we've had around this 253 00:10:13,160 --> 00:10:15,280 Speaker 2: tangle a few times now, is how misleading that date 254 00:10:15,360 --> 00:10:17,880 Speaker 2: might be. What actually happens on April scond, How long 255 00:10:17,920 --> 00:10:19,960 Speaker 2: before these tariffs would actually. 256 00:10:19,640 --> 00:10:23,480 Speaker 6: Hit in some ways, nobody knows. But what I'm expecting 257 00:10:23,480 --> 00:10:26,080 Speaker 6: at Raymond James is that we will get some announcements 258 00:10:26,120 --> 00:10:29,680 Speaker 6: that are immediate, but will also get some announcements that 259 00:10:29,760 --> 00:10:32,920 Speaker 6: set in place a series of new kind of investigations. 260 00:10:33,120 --> 00:10:35,320 Speaker 6: And what you hear with Jamison Greer trying to take 261 00:10:35,320 --> 00:10:37,720 Speaker 6: control of this is there's a real concern within the 262 00:10:37,720 --> 00:10:41,240 Speaker 6: Trump administration on some staff that if you were to 263 00:10:41,280 --> 00:10:43,640 Speaker 6: try to do all of this on April second and 264 00:10:43,720 --> 00:10:47,200 Speaker 6: use emergency powers, there's huge legal risk and it's going 265 00:10:47,240 --> 00:10:48,040 Speaker 6: to get struck down. 266 00:10:48,320 --> 00:10:49,360 Speaker 3: And so what can you do on. 267 00:10:49,320 --> 00:10:51,840 Speaker 6: April second that goes into effect immediately, that can be 268 00:10:52,200 --> 00:10:54,560 Speaker 6: held in the courts, And what can you do that 269 00:10:54,679 --> 00:10:57,640 Speaker 6: sets in motion maybe a worldwide Section three or one 270 00:10:57,640 --> 00:11:01,719 Speaker 6: investigation that can be defe in the courts, but ultimately 271 00:11:01,760 --> 00:11:04,880 Speaker 6: still have a very high teriff rate that goes on 272 00:11:05,240 --> 00:11:08,640 Speaker 6: basically every single piece of equipment and goods that come 273 00:11:08,640 --> 00:11:11,199 Speaker 6: into the United States. That's still a very high probability. 274 00:11:11,280 --> 00:11:14,280 Speaker 1: John so Howard Lutnet, the Commerce Sectory actually outlined that 275 00:11:14,360 --> 00:11:16,360 Speaker 1: to us as well. You could see some on April second, 276 00:11:16,400 --> 00:11:18,400 Speaker 1: and then some might be weeks or months down the line. 277 00:11:18,480 --> 00:11:21,080 Speaker 1: So if they go on April second, they're likely using IEPA. 278 00:11:21,200 --> 00:11:24,000 Speaker 1: What could we see them use IEPA for and say, actually, 279 00:11:24,000 --> 00:11:26,320 Speaker 1: this will hold up in court because there's national security concerns. 280 00:11:26,400 --> 00:11:28,679 Speaker 6: Yeah, so Amory, I would say there are some IEPA stuff, 281 00:11:28,679 --> 00:11:32,600 Speaker 6: and I think that the Mexico China on IEPA probably 282 00:11:32,600 --> 00:11:36,000 Speaker 6: holds up. If there are other national security items, they 283 00:11:36,040 --> 00:11:40,400 Speaker 6: could say semiconductors, you know, clear things within our supply chains. 284 00:11:40,520 --> 00:11:42,480 Speaker 6: But I would look back to the first Trump administration. 285 00:11:42,720 --> 00:11:45,360 Speaker 6: They had a Section two thirty two investigation on autos. 286 00:11:45,400 --> 00:11:48,480 Speaker 6: They could kick that in pretty immediately. They've already done 287 00:11:48,520 --> 00:11:52,600 Speaker 6: some investigations on semiconductors. Generally under the Biden administration. Use 288 00:11:52,679 --> 00:11:57,360 Speaker 6: that there was a investigation into France on digital service taxes. 289 00:11:57,559 --> 00:12:00,640 Speaker 6: They almost put in place a set of tariffs on 290 00:12:00,760 --> 00:12:04,360 Speaker 6: France back in twenty twenty. When Trump was in office, 291 00:12:04,440 --> 00:12:06,840 Speaker 6: they could reactivate that. And there was also an investigation 292 00:12:06,880 --> 00:12:10,880 Speaker 6: into currency manipulation in Vietnam, which could go into effect immediately. 293 00:12:10,960 --> 00:12:13,880 Speaker 6: So take things off the shelf you've already done that 294 00:12:13,960 --> 00:12:17,560 Speaker 6: are legally defensible and put that into effect on April second. 295 00:12:17,720 --> 00:12:19,360 Speaker 6: Seems like a pretty reasonable expectation. 296 00:12:19,559 --> 00:12:23,200 Speaker 1: Ambassador of Jamison Greer is very methodical. He flies under 297 00:12:23,200 --> 00:12:26,280 Speaker 1: the radar. He's a lawyer. Mark Shore had this to say, 298 00:12:26,320 --> 00:12:27,800 Speaker 1: if you had people in the first one, you had 299 00:12:27,800 --> 00:12:30,160 Speaker 1: people in the first Trump white House who fundamentally disagree 300 00:12:30,160 --> 00:12:32,960 Speaker 1: with trade policy. This time around, they don't disagree with 301 00:12:33,040 --> 00:12:35,160 Speaker 1: him on trade, they disagree with the implementation. 302 00:12:35,600 --> 00:12:36,679 Speaker 3: Do you view it like that? 303 00:12:36,880 --> 00:12:40,640 Speaker 1: Who's potentially holding Trump back from potentially his most aggressive 304 00:12:41,080 --> 00:12:42,720 Speaker 1: policy proposals on tariff? 305 00:12:42,800 --> 00:12:44,520 Speaker 6: So I think they have a team of rivals again, 306 00:12:44,640 --> 00:12:47,960 Speaker 6: I think it is Team Economy versus Team Tariff. Team 307 00:12:48,000 --> 00:12:51,800 Speaker 6: Economy is Scott Besson. I think the kind of overall 308 00:12:51,920 --> 00:12:55,280 Speaker 6: kind of team Tariff is Jamison Greer is Howard Lutnik 309 00:12:55,720 --> 00:12:57,959 Speaker 6: is kind of Peter Navarro pushing. 310 00:12:57,600 --> 00:12:59,360 Speaker 3: For it as as much as possible. 311 00:12:59,480 --> 00:13:02,080 Speaker 6: And on team of Tariff right now is Donald Trump 312 00:13:02,400 --> 00:13:04,360 Speaker 6: and so and he and he alone gets to the 313 00:13:04,400 --> 00:13:05,640 Speaker 6: side exactly. 314 00:13:05,160 --> 00:13:07,600 Speaker 5: What happens there are two dueling articles I thought were 315 00:13:07,600 --> 00:13:09,960 Speaker 5: really interesting. New York Times had an article yesterday about 316 00:13:09,960 --> 00:13:12,199 Speaker 5: how Donald Trump is serious this time around plans to 317 00:13:12,200 --> 00:13:13,880 Speaker 5: put these tariffs on and how to call with some 318 00:13:13,920 --> 00:13:16,120 Speaker 5: of the auto manufacturers saying, guess what, guys, this is 319 00:13:16,120 --> 00:13:17,600 Speaker 5: for real. You need to get used to it. Twenty 320 00:13:17,600 --> 00:13:21,160 Speaker 5: five percent tariffs. There was an article by Bloomberg talking 321 00:13:21,160 --> 00:13:23,840 Speaker 5: about all the people around him saying, hold on a second, 322 00:13:23,880 --> 00:13:26,320 Speaker 5: we need to understand what the corporate concerns are, and 323 00:13:26,400 --> 00:13:29,720 Speaker 5: I actually try to mitigate this with pro growth policies, etc. 324 00:13:30,440 --> 00:13:33,120 Speaker 5: Do you have a sense of how much this White House, 325 00:13:33,160 --> 00:13:35,560 Speaker 5: and I mean everybody in the White House actually does 326 00:13:35,600 --> 00:13:38,040 Speaker 5: care about markets and what companies are saying. 327 00:13:38,120 --> 00:13:40,480 Speaker 6: Yeah, I think they care about markets, they care about 328 00:13:40,520 --> 00:13:42,720 Speaker 6: the economy. I think what I hear from them is 329 00:13:42,720 --> 00:13:45,480 Speaker 6: that this is a process that they have to do 330 00:13:45,559 --> 00:13:48,800 Speaker 6: the deregulation, get the tax cuts, do the tariffs, break 331 00:13:48,840 --> 00:13:52,400 Speaker 6: down non tariff barriers around the globe, and then you 332 00:13:52,480 --> 00:13:55,640 Speaker 6: get the positive market reaction. What I'm hearing this time 333 00:13:55,679 --> 00:13:58,280 Speaker 6: in Trump two point zero is wait for it, we 334 00:13:58,440 --> 00:14:00,800 Speaker 6: have to put this all in place. If I get 335 00:14:00,840 --> 00:14:03,920 Speaker 6: some pushback, is the process right now is too Chaotus. 336 00:14:03,960 --> 00:14:05,319 Speaker 5: Well, that's what I was going to ask. Is there 337 00:14:05,320 --> 00:14:08,040 Speaker 5: a process or is it a concept? Is it concepts 338 00:14:08,040 --> 00:14:09,600 Speaker 5: of a plan or is it actually a plan. 339 00:14:10,000 --> 00:14:11,840 Speaker 6: I think it's more concepts of a plan, and I 340 00:14:11,840 --> 00:14:14,480 Speaker 6: think that there is a lot of disagreement. Folks on 341 00:14:14,559 --> 00:14:17,400 Speaker 6: Team ECON are not okay in which the way in 342 00:14:17,440 --> 00:14:20,640 Speaker 6: which this is being put out. But Team Tariff felt 343 00:14:20,880 --> 00:14:23,000 Speaker 6: that they went too slow in Trump one point zero. 344 00:14:23,120 --> 00:14:25,160 Speaker 6: If you go back to Trump one point zero, it 345 00:14:25,240 --> 00:14:28,320 Speaker 6: was March twenty twenty before they signed the Phase one 346 00:14:28,760 --> 00:14:31,680 Speaker 6: trade deal. We've already in the first couple of months 347 00:14:31,880 --> 00:14:35,120 Speaker 6: done more on tariffs than Trump did in four years 348 00:14:35,120 --> 00:14:37,680 Speaker 6: the first time around. They say their biggest mistake in 349 00:14:37,720 --> 00:14:40,360 Speaker 6: one point zero was taking too long, so they almost 350 00:14:40,360 --> 00:14:40,720 Speaker 6: don't care. 351 00:14:40,800 --> 00:14:42,400 Speaker 2: I just want to fit in this final question some 352 00:14:42,480 --> 00:14:44,640 Speaker 2: breaking news. About five minutes ago, we know this call 353 00:14:44,680 --> 00:14:46,920 Speaker 2: was going to take place lightster on this morning at 354 00:14:47,040 --> 00:14:50,480 Speaker 2: nine Eastern time, President Putin demanding a suspension of a 355 00:14:50,560 --> 00:14:53,840 Speaker 2: weapon deliveries to Ukraine during a ceasefire that could come 356 00:14:53,880 --> 00:14:56,280 Speaker 2: up on the coal we expected to lates on this morning. 357 00:14:56,280 --> 00:14:58,160 Speaker 2: Between the two leaders, what do you think the outcome 358 00:14:58,320 --> 00:14:59,320 Speaker 2: of all of that's going to be. 359 00:15:00,000 --> 00:15:03,560 Speaker 6: I think that's a realistic goal of this. However, I 360 00:15:03,640 --> 00:15:06,840 Speaker 6: do know that Donald Trump likes to have any phone 361 00:15:06,840 --> 00:15:09,960 Speaker 6: call come with a bold announcement, so I would expect 362 00:15:10,040 --> 00:15:13,360 Speaker 6: him to talk up the opportunity of a cease fire. 363 00:15:13,800 --> 00:15:15,320 Speaker 3: But Putin is doing a good job of. 364 00:15:15,280 --> 00:15:18,440 Speaker 6: Trying to reset the goalpost, because Donald Trump always resets 365 00:15:18,480 --> 00:15:21,200 Speaker 6: the goalpost, and a lot of world leaders know if 366 00:15:21,240 --> 00:15:23,960 Speaker 6: you can get him one on one, he usually agrees 367 00:15:23,960 --> 00:15:26,040 Speaker 6: to more than what staff would agree to. 368 00:15:26,280 --> 00:15:28,000 Speaker 2: That's the question with God this morning. I guess we 369 00:15:28,040 --> 00:15:30,000 Speaker 2: got into the phone call. Will we get a one 370 00:15:30,000 --> 00:15:32,680 Speaker 2: on one mating in person? Off the back of this, my. 371 00:15:32,720 --> 00:15:35,880 Speaker 1: Reporting weeks ago was that Trump and the Trump administration 372 00:15:35,960 --> 00:15:38,040 Speaker 1: wanted a meeting with Putin and Saudi Arabia by the 373 00:15:38,120 --> 00:15:40,880 Speaker 1: end of February. Well, guess what where in March It's Ramadan, 374 00:15:40,960 --> 00:15:43,880 Speaker 1: then there's need Potentially I would say you could see one. 375 00:15:43,960 --> 00:15:46,120 Speaker 1: If this phone call goes well in the. 376 00:15:46,080 --> 00:15:48,760 Speaker 2: Next month, it's going to see you away. I appreciate it, 377 00:15:48,760 --> 00:16:01,080 Speaker 2: Thank you ed most. If Raymond James, let's send to 378 00:16:01,080 --> 00:16:03,720 Speaker 2: another Mac seven nine, let's talk about in video. Shares 379 00:16:03,760 --> 00:16:05,720 Speaker 2: slightly lower in the pre market ahead of CEO of 380 00:16:05,800 --> 00:16:08,840 Speaker 2: Jensen Wyang's keynote speech at the company's develop A conference. 381 00:16:08,880 --> 00:16:11,360 Speaker 2: We're down by zero point five percent per Pharowgho of 382 00:16:11,400 --> 00:16:13,960 Speaker 2: New Street has a by writing on the stock with 383 00:16:14,040 --> 00:16:16,800 Speaker 2: a two hundred dollars price target Perre joined just now 384 00:16:16,800 --> 00:16:18,640 Speaker 2: for more Perre. Welcome to the show. We'll get to 385 00:16:18,680 --> 00:16:20,880 Speaker 2: Tesla in just a moment. Let's start with Nvidia. What 386 00:16:20,920 --> 00:16:22,560 Speaker 2: do you expect from Jensen Wang later. 387 00:16:22,440 --> 00:16:27,160 Speaker 7: On, well, from Yensen specifically this morning, I think the 388 00:16:27,240 --> 00:16:30,800 Speaker 7: focus is going to be as always on the product proadmap. 389 00:16:31,400 --> 00:16:34,480 Speaker 7: You know, while other chips coming through there has been 390 00:16:34,560 --> 00:16:37,720 Speaker 7: like a fairly high amount of fleaks, so we have 391 00:16:37,840 --> 00:16:40,840 Speaker 7: good visibility. There is a black Well three hundred that 392 00:16:41,000 --> 00:16:43,640 Speaker 7: is going to start shipping towards the end of this year, 393 00:16:43,800 --> 00:16:46,360 Speaker 7: where like the black Well two hundred is shipping now, 394 00:16:46,400 --> 00:16:52,360 Speaker 7: so you have this shrinking you know, time between between 395 00:16:52,360 --> 00:16:56,040 Speaker 7: product and the next generation Rubin products. And as always, 396 00:16:56,040 --> 00:16:59,520 Speaker 7: what Jensen is going to do is going to showcase 397 00:17:00,120 --> 00:17:03,840 Speaker 7: on this giant screen in front of like fifteen thousand people, 398 00:17:03,920 --> 00:17:07,919 Speaker 7: like twenty five thousand people even probably this year. The 399 00:17:08,040 --> 00:17:11,560 Speaker 7: scale of the data centers these chips are going to 400 00:17:12,200 --> 00:17:14,760 Speaker 7: are going into power. You remember last year if he 401 00:17:14,800 --> 00:17:17,480 Speaker 7: presented the Envy seventy two, it was a shock to 402 00:17:17,520 --> 00:17:21,760 Speaker 7: see like a single server with seventy two GPUs with 403 00:17:21,880 --> 00:17:26,000 Speaker 7: seventy two like thirty five thousand dollars GPUs, And we 404 00:17:26,520 --> 00:17:28,439 Speaker 7: expect this year that he's going to announce like the 405 00:17:28,480 --> 00:17:32,160 Speaker 7: next stage of the super super Allaredhiluster for very high 406 00:17:32,240 --> 00:17:35,679 Speaker 7: performance in terance, the NBA two hundred and eighty eight, 407 00:17:35,800 --> 00:17:38,159 Speaker 7: So with two hundred and eighty eight GPUs that are 408 00:17:38,200 --> 00:17:40,440 Speaker 7: going to cost even more than sety five sidand dollars. 409 00:17:40,560 --> 00:17:43,520 Speaker 7: That's probably going to come with the B three hundred 410 00:17:43,560 --> 00:17:46,040 Speaker 7: dollar the Rabbi architecture, Pierre, is that enough? 411 00:17:46,320 --> 00:17:47,840 Speaker 5: And I say this at a time where people are 412 00:17:47,880 --> 00:17:52,159 Speaker 5: worried about the potential blockade on Nvidia selling chips to 413 00:17:52,280 --> 00:17:57,040 Speaker 5: China and questions about technological advancements made elsewhere, and frankly 414 00:17:57,119 --> 00:18:00,320 Speaker 5: a real existential questioning of just how much the big 415 00:18:00,359 --> 00:18:03,760 Speaker 5: tech players can keep spending on chips without showing some 416 00:18:03,800 --> 00:18:06,160 Speaker 5: real advancements that can move the needle. 417 00:18:07,960 --> 00:18:11,800 Speaker 7: Yes, you're totally right, this is what Jansen is going 418 00:18:11,880 --> 00:18:15,159 Speaker 7: to talk about. But yesterday, during the first day of 419 00:18:15,160 --> 00:18:17,159 Speaker 7: the conference, that's not what people are talking about in 420 00:18:18,400 --> 00:18:21,800 Speaker 7: you know, at the cafe and in meeting rooms and 421 00:18:22,160 --> 00:18:26,520 Speaker 7: in the corridors. People are talking a lot about China, 422 00:18:26,560 --> 00:18:31,960 Speaker 7: of course, and like on two fronts, like this idea 423 00:18:32,000 --> 00:18:35,280 Speaker 7: of a blockhead, of course, that has been lingering now 424 00:18:35,320 --> 00:18:37,640 Speaker 7: for our years. But there's also the question of how 425 00:18:37,760 --> 00:18:41,359 Speaker 7: China is contributing to AI developments. And one of the 426 00:18:41,400 --> 00:18:46,119 Speaker 7: buzz words this year in the show is distillation. You know, 427 00:18:46,480 --> 00:18:51,040 Speaker 7: how does this industry do well if Chinese players like 428 00:18:51,080 --> 00:18:55,000 Speaker 7: dipsy An com In and like produce a model that 429 00:18:55,160 --> 00:18:58,760 Speaker 7: is ten or twenty times more efficient for a similar 430 00:18:58,760 --> 00:19:01,439 Speaker 7: performance to what has been there in the US with 431 00:19:01,640 --> 00:19:06,639 Speaker 7: like multi billion dollar data centers. So that the focus 432 00:19:06,680 --> 00:19:09,280 Speaker 7: is not so much on Envygate itself. Like I think 433 00:19:09,359 --> 00:19:12,080 Speaker 7: investors understand that Nvidia has a very storm market position 434 00:19:12,560 --> 00:19:15,119 Speaker 7: and we'll probably defend it even if some of the 435 00:19:15,119 --> 00:19:18,159 Speaker 7: clients are developing their own ASICs. But the question is 436 00:19:18,200 --> 00:19:20,840 Speaker 7: more like people investing these now hundreds of billions of 437 00:19:20,840 --> 00:19:24,399 Speaker 7: dollars in data centers, are they going to make a 438 00:19:24,400 --> 00:19:27,119 Speaker 7: living if the Chinese can copy what they do or 439 00:19:27,480 --> 00:19:31,879 Speaker 7: easily with small ads. So that's that's really like the 440 00:19:31,960 --> 00:19:32,840 Speaker 7: number one focus. 441 00:19:32,840 --> 00:19:33,600 Speaker 3: So I would say. 442 00:19:35,160 --> 00:19:39,680 Speaker 7: Of investors as much as industry practitioners on the on the. 443 00:19:39,680 --> 00:19:42,480 Speaker 5: Fair today, there's a question about whether this effects in video, 444 00:19:42,560 --> 00:19:45,239 Speaker 5: but there's probably a bigger question about how this has 445 00:19:45,359 --> 00:19:48,080 Speaker 5: ramifications for the likes of Apple and Tesla. We we're 446 00:19:48,160 --> 00:19:51,800 Speaker 5: just talking about if China truly is getting to a 447 00:19:51,880 --> 00:19:55,640 Speaker 5: technologically advanced point, or they can produce products that are 448 00:19:55,760 --> 00:19:59,680 Speaker 5: competitive and even supersede the technological abilities of the United 449 00:19:59,720 --> 00:20:00,760 Speaker 5: States products. 450 00:20:01,000 --> 00:20:02,760 Speaker 3: Does that engage. 451 00:20:02,320 --> 00:20:04,919 Speaker 5: With a new paradigm which not only threatens the sales 452 00:20:04,920 --> 00:20:08,359 Speaker 5: of some of the Apple phones or Tesla cars in China, 453 00:20:08,680 --> 00:20:13,400 Speaker 5: but more broadly internationally, How does that affect the competitive landscape. 454 00:20:14,560 --> 00:20:18,520 Speaker 7: Yeah, it's not something new, to be completely honest. You know, 455 00:20:18,280 --> 00:20:21,160 Speaker 7: we could have had this conversation forty years ago about 456 00:20:21,240 --> 00:20:25,520 Speaker 7: trained technology, We could have had this conversation twenty years 457 00:20:25,520 --> 00:20:29,440 Speaker 7: ago about car technology. And today we have this conversation 458 00:20:29,600 --> 00:20:38,000 Speaker 7: about electric car technology for Tesla sheep manufacturing and cheap design, 459 00:20:38,040 --> 00:20:44,600 Speaker 7: and also algothmic design and AI AI development. So China 460 00:20:44,640 --> 00:20:48,119 Speaker 7: has always been like a very very very fierce competitor. 461 00:20:48,720 --> 00:20:51,639 Speaker 7: I think the key change today that in the past 462 00:20:51,760 --> 00:20:56,120 Speaker 7: China used to leverage US and Western technology in order 463 00:20:56,240 --> 00:21:00,760 Speaker 7: to be a competitor in the technology sphere, so they 464 00:21:01,160 --> 00:21:05,200 Speaker 7: having access to mostly like the manufacturing technology the IP 465 00:21:05,560 --> 00:21:08,840 Speaker 7: developed in the West, and now the West is kind 466 00:21:08,880 --> 00:21:12,320 Speaker 7: of like throttling access to that technology. So it's very 467 00:21:12,400 --> 00:21:17,240 Speaker 7: visible on manufacturing the Chinese can't access like the most 468 00:21:17,320 --> 00:21:21,000 Speaker 7: leading edge manufacturing tools and they're lagging behind still very much. 469 00:21:21,040 --> 00:21:24,879 Speaker 7: So today we see that now with chips where the 470 00:21:24,960 --> 00:21:29,200 Speaker 7: Chinese can't access like the most advanced chips Nvidia is producing. 471 00:21:29,800 --> 00:21:33,000 Speaker 7: And now the debate it is how can we protect 472 00:21:33,000 --> 00:21:37,000 Speaker 7: our IP from the Chinese leveraging it's to compete against us. 473 00:21:37,320 --> 00:21:39,639 Speaker 7: And you know that in the in the terms and 474 00:21:39,680 --> 00:21:42,280 Speaker 7: conditions of the use of use of charge DIPTY, you 475 00:21:42,280 --> 00:21:44,919 Speaker 7: can't use churgipety to develop a competitor to charge repty. 476 00:21:45,280 --> 00:21:46,560 Speaker 3: And so now the question mark. 477 00:21:46,520 --> 00:21:49,040 Speaker 7: Is, okay, can we enforce that kind of protection to 478 00:21:49,080 --> 00:21:53,199 Speaker 7: protect Western grown AI. So the way forward is that 479 00:21:53,240 --> 00:21:56,080 Speaker 7: it's very very difficult to know how things are going 480 00:21:56,119 --> 00:22:00,320 Speaker 7: to evolve. It's a balancing act between keeping the market 481 00:22:00,880 --> 00:22:05,639 Speaker 7: open because of course US and Western technology companies like 482 00:22:05,720 --> 00:22:10,359 Speaker 7: to sell in China, and also limiting sales to China 483 00:22:10,480 --> 00:22:15,120 Speaker 7: in order to prevent China from making progress, and it's 484 00:22:15,160 --> 00:22:17,760 Speaker 7: you know, I just talked about the past forty years. 485 00:22:17,800 --> 00:22:19,960 Speaker 7: It's going to keep playing over the next forty years 486 00:22:19,960 --> 00:22:23,560 Speaker 7: because for China to catch up on advanced chip manufacturing, 487 00:22:23,560 --> 00:22:26,440 Speaker 7: for instance, we're talking about projects that are probably going 488 00:22:26,480 --> 00:22:28,679 Speaker 7: to take decades. It is going to take decades for 489 00:22:28,800 --> 00:22:31,840 Speaker 7: China to be able to develop their own tools and. 490 00:22:33,920 --> 00:22:34,520 Speaker 3: Things like that. 491 00:22:34,560 --> 00:22:37,080 Speaker 7: So we'll be here in a year from that still 492 00:22:37,080 --> 00:22:39,480 Speaker 7: talking talking about it. It's not going to be another 493 00:22:39,600 --> 00:22:45,359 Speaker 7: night change. That competition is mounting. And of course what 494 00:22:45,440 --> 00:22:50,359 Speaker 7: we see is, you know, the risk of polarization of 495 00:22:50,359 --> 00:22:52,240 Speaker 7: the world. Like that's what we call in our research 496 00:22:52,720 --> 00:22:57,240 Speaker 7: the silicon world, this idea that if the West becomes 497 00:22:57,280 --> 00:23:01,120 Speaker 7: more and more protective with their technology and China is 498 00:23:01,160 --> 00:23:05,199 Speaker 7: becoming more and more like driven towards developing independent and 499 00:23:05,200 --> 00:23:08,960 Speaker 7: competing technology at all levels of the supply chain, then 500 00:23:09,200 --> 00:23:13,399 Speaker 7: what you'll see potentially is like this market polarizing and 501 00:23:13,520 --> 00:23:17,879 Speaker 7: the China being dominants on the area of inter in 502 00:23:17,960 --> 00:23:21,720 Speaker 7: the West keeping China out of their area of dominance. 503 00:23:21,760 --> 00:23:25,760 Speaker 7: That's that's really you know, one of the direction of 504 00:23:25,760 --> 00:23:27,800 Speaker 7: evolution of the situation that you want to watch. 505 00:23:27,800 --> 00:23:30,000 Speaker 2: Shop for Pierre it's one for the catch up with 506 00:23:30,000 --> 00:23:31,600 Speaker 2: the next time you're on, and it spends more time 507 00:23:31,600 --> 00:23:34,840 Speaker 2: on Tesla. Pierre Fardagud of New Street Research talking about 508 00:23:34,960 --> 00:23:38,800 Speaker 2: Nvidia Tesla for Pierre Farago still has a buy, writing 509 00:23:39,080 --> 00:23:51,439 Speaker 2: on the nine four sixty five price target. It's definitely. 510 00:23:51,520 --> 00:23:54,240 Speaker 2: Roth of Wolf Research joins us now. She says Washington 511 00:23:54,560 --> 00:23:57,400 Speaker 2: is shaking up our economic forecast, writing, we revised down 512 00:23:57,400 --> 00:23:59,800 Speaker 2: our US growth forecast from two point two percent to 513 00:24:00,000 --> 00:24:02,840 Speaker 2: one point six on the back of three surprises out 514 00:24:02,840 --> 00:24:06,520 Speaker 2: of the White House. Those cuts early tariff implementation and 515 00:24:06,680 --> 00:24:10,200 Speaker 2: economic uncertainty. Stephanie joins us now for more. Stephanie Goimnic, 516 00:24:10,320 --> 00:24:12,960 Speaker 2: Good morning. That is quite a cut to GDP growth 517 00:24:13,000 --> 00:24:15,600 Speaker 2: from two point two to one point six. Is the 518 00:24:15,600 --> 00:24:18,760 Speaker 2: federalser of easing in that world or standard pat in 519 00:24:18,760 --> 00:24:20,040 Speaker 2: that world they are that they're. 520 00:24:19,880 --> 00:24:22,080 Speaker 8: Not using for good reasons or using this growth is 521 00:24:22,160 --> 00:24:24,639 Speaker 8: weakening and then they have to restart. But that's not 522 00:24:24,720 --> 00:24:27,240 Speaker 8: something that they're going to to their forecasts right now. 523 00:24:27,280 --> 00:24:29,800 Speaker 8: There are base cases that they're gonna call for two 524 00:24:29,840 --> 00:24:32,840 Speaker 8: cuts in their dot plot, and we'll try to get 525 00:24:32,880 --> 00:24:34,720 Speaker 8: out of that meeting as quickly as possible as you. 526 00:24:34,640 --> 00:24:37,199 Speaker 5: Said, how much are they can really signal that they 527 00:24:37,240 --> 00:24:39,680 Speaker 5: can provide some sort of ballast to the time when 528 00:24:39,680 --> 00:24:43,600 Speaker 5: people think some sort of economic downturn that induces job 529 00:24:43,680 --> 00:24:49,160 Speaker 5: loss has a sort of prolonged scarring effect on the economy. 530 00:24:49,440 --> 00:24:51,160 Speaker 8: I think they'll say what they typically say is they're 531 00:24:51,160 --> 00:24:52,960 Speaker 8: going to respond to respond to the data, and of 532 00:24:53,040 --> 00:24:55,040 Speaker 8: the data weekend, then of course they're going to respond, 533 00:24:55,080 --> 00:24:57,439 Speaker 8: but they can't really promise that much more in advance, 534 00:24:57,520 --> 00:24:59,800 Speaker 8: especially because this is an environment where they're likely to 535 00:24:59,800 --> 00:25:03,359 Speaker 8: take the growth numbers tomorrow, but they're likely to take up. 536 00:25:03,240 --> 00:25:04,199 Speaker 3: Their inflation numbers. 537 00:25:04,480 --> 00:25:07,080 Speaker 8: So this is a really difficult environment for them because 538 00:25:07,080 --> 00:25:09,520 Speaker 8: they're going to have to wait until unemployment rates starts 539 00:25:09,520 --> 00:25:11,720 Speaker 8: to rise more materially for them to actually be able 540 00:25:11,760 --> 00:25:13,359 Speaker 8: to cut, as opposed to the idea of them being 541 00:25:13,400 --> 00:25:14,840 Speaker 8: able to cut because inflation is low. 542 00:25:14,920 --> 00:25:17,359 Speaker 5: You know, I'm always struck by sort of the mass 543 00:25:17,400 --> 00:25:19,760 Speaker 5: moves on Wall Street. Everyone seems to be downgrading their 544 00:25:19,760 --> 00:25:24,000 Speaker 5: growth expectation to the US for the US GDP over 545 00:25:24,040 --> 00:25:26,199 Speaker 5: the past couple of weeks, and part of it is 546 00:25:26,200 --> 00:25:28,560 Speaker 5: this belief that this uncertainty isn't going to go away, 547 00:25:28,600 --> 00:25:31,240 Speaker 5: and that tariffs are here to stay. Is there anything 548 00:25:31,280 --> 00:25:33,400 Speaker 5: that could make you revise it back? Is there any 549 00:25:33,480 --> 00:25:35,720 Speaker 5: kind of caveat to that that you're waiting for. 550 00:25:36,560 --> 00:25:38,760 Speaker 8: Yeah, So the April second deadline is a big one. 551 00:25:38,800 --> 00:25:41,400 Speaker 8: So this is where we're expected to get the sectoral 552 00:25:41,440 --> 00:25:44,680 Speaker 8: tariff information as well as reciprocal tariffs. Our base case 553 00:25:44,760 --> 00:25:47,520 Speaker 8: is that he'll do something country bay country and he 554 00:25:47,520 --> 00:25:50,920 Speaker 8: won't incorporate a significant VAT. But if he does just that, 555 00:25:51,119 --> 00:25:52,639 Speaker 8: then at least that's a positive sign. And if he 556 00:25:52,680 --> 00:25:55,200 Speaker 8: doesn't do some significant thing on the sectoral side, then 557 00:25:55,240 --> 00:25:57,120 Speaker 8: that provides a little bit less of the GDP head 558 00:25:57,119 --> 00:26:00,440 Speaker 8: when then we're forecasting. But base cases, he's not gonna 559 00:26:00,440 --> 00:26:02,480 Speaker 8: go light on on on that day. He's been talking 560 00:26:02,480 --> 00:26:04,480 Speaker 8: about tariffs in a big way. If he wants to 561 00:26:04,480 --> 00:26:06,480 Speaker 8: do this sectoral things, he believes that that's gonna help 562 00:26:06,560 --> 00:26:10,240 Speaker 8: us manufacturing and wants some right size trade from a 563 00:26:10,280 --> 00:26:12,720 Speaker 8: country by country perspective, and has been talking about that 564 00:26:13,440 --> 00:26:15,560 Speaker 8: if they incorporate that, that could be a one point 565 00:26:15,560 --> 00:26:18,720 Speaker 8: four percent GDP headwind in addition to w to to 566 00:26:18,880 --> 00:26:20,920 Speaker 8: all the the sort of the the negative numbers that 567 00:26:20,920 --> 00:26:21,600 Speaker 8: we've talked about. 568 00:26:21,760 --> 00:26:24,760 Speaker 1: You think that April second is a key risk event 569 00:26:24,920 --> 00:26:26,879 Speaker 1: that investors aren't a paying enough attention to. We have 570 00:26:27,040 --> 00:26:31,159 Speaker 1: reporting that Jamison Greer, Uh, President Trump's new USTR chief 571 00:26:31,280 --> 00:26:34,040 Speaker 1: is trying to really drive the narrative when it comes 572 00:26:34,080 --> 00:26:36,400 Speaker 1: to April second. This is someone who is a thoughtful 573 00:26:36,480 --> 00:26:39,240 Speaker 1: trade lawyer. It's pretty calm, cool, collective compared to some 574 00:26:39,280 --> 00:26:42,240 Speaker 1: other individuals. Let's say, in the Trump orbit, does that 575 00:26:42,320 --> 00:26:44,320 Speaker 1: make you more encourage about what we can see? 576 00:26:44,840 --> 00:26:46,080 Speaker 8: I mean, I think it all comes down to what 577 00:26:46,080 --> 00:26:48,040 Speaker 8: Trump wants to do. Trump believes that the tariffs are 578 00:26:48,080 --> 00:26:50,760 Speaker 8: gonna be beneficial. He's gonna do what he wants to do. 579 00:26:50,880 --> 00:26:54,600 Speaker 8: And if that means doing sectoral tariffs, which find there's 580 00:26:54,680 --> 00:26:57,080 Speaker 8: arguments to do it and country by country, that's fair. 581 00:26:57,480 --> 00:26:59,960 Speaker 8: But what we've gotten so far has been a substant 582 00:27:00,520 --> 00:27:03,800 Speaker 8: headmund on GDP and that's fine. If this is the 583 00:27:03,840 --> 00:27:06,679 Speaker 8: direction of travel, it's just a negative GDP shock and 584 00:27:06,720 --> 00:27:09,159 Speaker 8: one point six growth is you know, if we end 585 00:27:09,240 --> 00:27:10,680 Speaker 8: up with that, that would be a decent scenario. 586 00:27:10,720 --> 00:27:11,560 Speaker 3: Realistically, at the. 587 00:27:11,560 --> 00:27:13,080 Speaker 1: End of the day, Trump will make the decision. It's 588 00:27:13,080 --> 00:27:16,320 Speaker 1: an individual that's been speaking about tariff since the nineteen eighties, 589 00:27:16,400 --> 00:27:19,800 Speaker 1: let alone before he entered politics. If that's the case 590 00:27:19,840 --> 00:27:22,119 Speaker 1: and it's such a hit to GDP, what does the 591 00:27:22,160 --> 00:27:24,520 Speaker 1: Fed look like do it one time inflationary shock of 592 00:27:24,520 --> 00:27:27,160 Speaker 1: tariffs are actually growth slowing. 593 00:27:27,480 --> 00:27:29,920 Speaker 8: So back in twenty eighteen, if you look back to 594 00:27:29,960 --> 00:27:32,879 Speaker 8: their tuebook, they said there were two scenarios that they 595 00:27:32,880 --> 00:27:34,679 Speaker 8: could go about. This one would be exactly what they 596 00:27:34,680 --> 00:27:36,920 Speaker 8: did was looking through the tariffs. They ultimately cut because 597 00:27:36,920 --> 00:27:39,399 Speaker 8: it hurt growth. Scenario two is where they have to 598 00:27:39,480 --> 00:27:42,160 Speaker 8: hike and cause a recession, and the deciding factor between 599 00:27:42,160 --> 00:27:44,320 Speaker 8: the two is inflation expectations. So this is gonna be 600 00:27:44,359 --> 00:27:46,040 Speaker 8: the main thing that they're gonna be looking at is 601 00:27:46,080 --> 00:27:48,840 Speaker 8: INFLA if inflation's expectations stay anchored, and as of now 602 00:27:49,320 --> 00:27:51,000 Speaker 8: it's a little bit mixed. Some of the surveys are 603 00:27:51,000 --> 00:27:52,600 Speaker 8: showing them to king up, some of them are a 604 00:27:52,600 --> 00:27:55,080 Speaker 8: little bit more noisy than others. So this is gonna 605 00:27:55,080 --> 00:27:57,399 Speaker 8: be the main thing. If inflation expectations and people feel 606 00:27:57,600 --> 00:27:59,760 Speaker 8: okay about the inflation backdrop, and the Fed can look 607 00:27:59,800 --> 00:28:01,800 Speaker 8: through it and ultimately cut as a result. If not, 608 00:28:01,840 --> 00:28:03,680 Speaker 8: they're gonna have their plain threshold is going to be 609 00:28:03,720 --> 00:28:05,800 Speaker 8: a lot higher in order to do so. The main 610 00:28:05,880 --> 00:28:08,640 Speaker 8: driver of inflation expectations, at least over the long term 611 00:28:08,800 --> 00:28:11,280 Speaker 8: is past inflation. So this is different than where we 612 00:28:11,280 --> 00:28:13,920 Speaker 8: were in twenty eighteen because twenty eighteen people don't really 613 00:28:13,920 --> 00:28:18,080 Speaker 8: remember inflation, most semesters didn't really experience it. This time 614 00:28:18,200 --> 00:28:21,000 Speaker 8: is very different. Our inflation expectations over the past ten 615 00:28:21,080 --> 00:28:24,640 Speaker 8: years are very have been shaped over the COVID pandemic, 616 00:28:24,680 --> 00:28:28,000 Speaker 8: where it's been a different backdrop, so expectations might react 617 00:28:28,040 --> 00:28:30,720 Speaker 8: differently this time. Plus the terraphy likely be a lot bigger. 618 00:28:30,880 --> 00:28:33,359 Speaker 5: You were talking about the statement of economic projections and 619 00:28:33,359 --> 00:28:36,199 Speaker 5: whether they'll signal a greater willingness to look at the 620 00:28:36,200 --> 00:28:39,520 Speaker 5: weakness and growth versus something that we have seen with 621 00:28:39,600 --> 00:28:43,280 Speaker 5: inflation expectations. How much do you see as sort of 622 00:28:43,280 --> 00:28:46,720 Speaker 5: an increase in worries about inflation at the same time 623 00:28:47,120 --> 00:28:48,200 Speaker 5: of potential weakness. 624 00:28:48,560 --> 00:28:50,160 Speaker 8: Yeah, So what's gonna be There's a couple things that 625 00:28:50,200 --> 00:28:52,240 Speaker 8: are gonna be interesting. One, what do they do with 626 00:28:52,240 --> 00:28:54,760 Speaker 8: their GDP forecast for twenty twenty five, What do they 627 00:28:54,760 --> 00:28:57,720 Speaker 8: do with inflation? What do they do with the Fed funds? 628 00:28:57,760 --> 00:28:59,560 Speaker 8: Right at the end of the year, so base cases, 629 00:28:59,560 --> 00:29:01,600 Speaker 8: they take down on their GDP something like one to 630 00:29:01,600 --> 00:29:05,000 Speaker 8: eight take up inflation to something like two seven, and 631 00:29:05,040 --> 00:29:07,480 Speaker 8: then what we're going to look for is within the 632 00:29:07,880 --> 00:29:10,360 Speaker 8: SEP you're going to see the risks around growth, growth 633 00:29:10,360 --> 00:29:12,520 Speaker 8: and inflation, and they're both going to be to higher 634 00:29:12,520 --> 00:29:15,440 Speaker 8: inflation and lower growth. So that's a back job where 635 00:29:15,840 --> 00:29:18,240 Speaker 8: you know, it's a very tough situation for them. And 636 00:29:18,640 --> 00:29:20,120 Speaker 8: right now I think they're probably going to keep the 637 00:29:20,160 --> 00:29:23,600 Speaker 8: two cuts and kind of see how this plays out. Ultimately, 638 00:29:23,600 --> 00:29:26,120 Speaker 8: they'll probably be forced to cut a little bit more 639 00:29:26,280 --> 00:29:27,600 Speaker 8: than you know within the in the. 640 00:29:27,560 --> 00:29:29,560 Speaker 5: Dots, you know, I keep getting struck by what Tom 641 00:29:29,600 --> 00:29:32,240 Speaker 5: Becker of Black Rock said, which I thought was really interesting, 642 00:29:32,280 --> 00:29:34,720 Speaker 5: this idea that everyone's exceptional in this new era where 643 00:29:34,720 --> 00:29:37,680 Speaker 5: fiscal spending is taking off in places like Europe and 644 00:29:37,760 --> 00:29:40,360 Speaker 5: places like China at the same time that, yeah, on 645 00:29:40,400 --> 00:29:42,480 Speaker 5: the margins fiscal straight in the US, but not really 646 00:29:42,520 --> 00:29:44,960 Speaker 5: later on where you're gonna get further fiscal expansion as well. 647 00:29:45,360 --> 00:29:48,560 Speaker 5: How much are you looking at a structural shift upward 648 00:29:48,640 --> 00:29:52,360 Speaker 5: in inflation globally that's going to also rebound on the 649 00:29:52,440 --> 00:29:54,920 Speaker 5: United States in a new way with a lot of 650 00:29:54,960 --> 00:29:57,959 Speaker 5: debt slashing around and a lot of debt financed funding. 651 00:29:58,520 --> 00:30:01,200 Speaker 8: You know what they all plays out the way it works, 652 00:30:01,480 --> 00:30:03,480 Speaker 8: we're sort of forecasting for this year, you're gonna end 653 00:30:03,560 --> 00:30:04,880 Speaker 8: up with a FED funds right that was lower than 654 00:30:04,920 --> 00:30:08,160 Speaker 8: would otherwise be the case. That is, we have a 655 00:30:08,160 --> 00:30:11,520 Speaker 8: material slow down in the economy because you know, it's 656 00:30:11,520 --> 00:30:13,800 Speaker 8: more about growth and inflation, and then you ultimately have 657 00:30:13,960 --> 00:30:16,440 Speaker 8: lower rates as a results. So I don't necessarily believe 658 00:30:16,440 --> 00:30:20,880 Speaker 8: in this big structural shift up in inflation temporarily, of course, 659 00:30:20,960 --> 00:30:24,720 Speaker 8: because of tariffs and some of the fiscal Perhaps you're 660 00:30:24,760 --> 00:30:26,840 Speaker 8: one slightly above two percent, but I don't think we're 661 00:30:26,840 --> 00:30:28,719 Speaker 8: talking about anything two and a half to three percent. 662 00:30:29,160 --> 00:30:31,600 Speaker 2: It's definitely free share, it's definitely Roth there of WOLD 663 00:30:31,640 --> 00:30:36,080 Speaker 2: three search. This is the Bloomberg Sevenance podcast, bringing you 664 00:30:36,320 --> 00:30:39,800 Speaker 2: the best in markets, economics, angiopolitics. You can watch the 665 00:30:39,800 --> 00:30:42,840 Speaker 2: show live on Bloomberg TV weekday mornings from six am 666 00:30:42,960 --> 00:30:46,120 Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, 667 00:30:46,400 --> 00:30:49,240 Speaker 2: Spotify or anywhere else you listen, and as always on 668 00:30:49,280 --> 00:30:51,720 Speaker 2: the Bloomberg Terminal and the Bloomberg Business app.