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Speaker 2: Begin strong with jeffre You, Senior Strategy Seema Bny. Jeff you,
Speaker 2: thank you so much for joining us. Let me go
Speaker 2: right to the terriffs. Michael Brown in London has a
Speaker 2: wonderful tweet out. So the US went from negligible tariffs
Speaker 2: on China to ten percent, then twenty, then fifty four,
Speaker 2: then one oh four, then one forty five, and now
Speaker 2: we're back to thirty and ninety days. Jeff you, is
Speaker 2: China advantaged by this round trip on tariffs?
Speaker 3: Well, roundtrip and detailing how long? Right, I'll just highlight
Speaker 3: simultaneously when that joints came out, China actually put out
Speaker 3: a twenty thirty five white paper on security and resilience. Okay,
Speaker 3: that round trip is going to last years and years
Speaker 3: and years, or rather it's not a round trip at all,
Speaker 3: so they're looking to perhaps get some dat in the
Speaker 3: short term paper things over stability the target restructuring of
Speaker 3: the economy and the medium to longer term. So in
Speaker 3: terms of long term strategy for Beijing, this doesn't change
Speaker 3: a thing.
Speaker 2: And for the export numbers, I'm going to say forty
Speaker 2: eight hours ago showing buoyant exports out of China to
Speaker 2: other nations. This delay in the trade war, this round
Speaker 2: trip by President Trump, doesn't it give a more time
Speaker 2: to organize and disperse their supply chains to other nations.
Speaker 3: And one hour ago, I believe China's just signed deals
Speaker 3: with Lula detailing billions and billions of investment into Brazil
Speaker 3: and vice versa. And you think about agricultural supply chains potential.
Speaker 3: So South America is a very large market for Chinese
Speaker 3: evs for example. All of that is taking place in
Speaker 3: the background, and let's look at how chum weather. China
Speaker 3: reaches some form of agreement with Europe on evs as well,
Speaker 3: you know that's going to be a big one. So
Speaker 3: Beijing's not done in terms of its broader focus on
Speaker 3: diversification that also need to restructure its own economy as
Speaker 3: well in favor of domestic demand.
Speaker 4: Whereas from the US.
Speaker 3: Side, hopefully that it's a short term blip, and we'll
Speaker 3: need to see whether it can continue US exceptionalism, because
Speaker 3: that's in the mind of all investors right now.
Speaker 5: So, Jeffrey, we're seeing a rally in the Bloomberg Dollar
Speaker 5: Index here. How do you think about the US dollar here?
Speaker 3: Well, a lot will depend on the FED and also
Speaker 3: you know how the economies pursued in terms of growth,
Speaker 3: right I look at dollar Asia because that's where the
Speaker 3: volatility has been right now, and there's this view that, oh, well,
Speaker 3: their Asian currencies need to appreciate up ahead that that
Speaker 3: to Tom's favorite theme, Yes, appreciate, But in real terms,
Speaker 3: how do we square the circle here? Well, that means
Speaker 3: fiscal stimulus across Asia. That can afford it to boost
Speaker 3: our own economies, to boost the domestic site, bring inflation
Speaker 3: up in Asia, and I think that will help paper
Speaker 3: global growth over and for the US. I don't see
Speaker 3: that as a bad thing either. It's the rebalancing process
Speaker 3: and perhaps the exceptionalism can continue with a softer dollar
Speaker 3: to stimulate the US economy.
Speaker 2: And Paul brilliant to bring up the Bloomberg Dollar Index, folks,
Speaker 2: this is a more emerging market. Adding in China index
Speaker 2: off of dxy the symbol and for those of you
Speaker 2: with a terminal in your car nationwide dbdxy. Paul, we've moved.
Speaker 2: It's an elegant chart. Yep. I did it log rhythmic
Speaker 2: because Jeff us with us and we're out two point
Speaker 2: six standard deviations up, so's it's not like a fiery
Speaker 2: rally in the dollar. But it's a legitimate move.
Speaker 5: Jeffrey, when you see the risk assets. Let's just take
Speaker 5: the US equity markets here rallying three four percent here today.
Speaker 2: What does that tell you?
Speaker 3: I think that tells you and that people are viewing
Speaker 3: this stability as being prioritized by this administration, and the
Speaker 3: stability is being prioritized by all administrations and globally ultimately
Speaker 3: this uh, this loosens financial conditions and it's good for
Speaker 3: risk appetite, so you know, no one really wants to
Speaker 3: rock the boat. And that is back in the pricing here.
Speaker 3: But up ahead, I think let's just see you know
Speaker 3: where US growth, how US growth is going to consolidate,
Speaker 3: and I think this will hinge on the FED. And
Speaker 3: I think again, you know, this is where the domestic
Speaker 3: side of the US inflation, the labor market that's going
Speaker 3: to matter a lot more.
Speaker 2: Is it so cool that we have Jeffrey You and
Speaker 2: Jordan Rochester back to back. Let's continue with jeffre you
Speaker 2: a little bit more.
Speaker 5: Hey, Jeffrey, you know we had stories just as recently
Speaker 5: as a week ago of ships coming from China turning
Speaker 5: around and going back to China, not coming to the
Speaker 5: port of Los Angeles.
Speaker 2: How do we think about that? That's the key question?
Speaker 5: Yes, exactly where are ships going now?
Speaker 2: Where a Hawai stecked up like Newark exactly?
Speaker 3: So, so what I would focus on right now? And
Speaker 3: I know the commerce departments very focused on transshipments, but
Speaker 3: are we seeing a pickup in Chinese ship and the
Speaker 3: likes of Malaysia, Singapore, Southeast how those deals have progress?
Speaker 3: And then are you going to see a corresponding pickup
Speaker 3: in exports you know from these regions are to the
Speaker 3: US as well. But then let's see how much volume
Speaker 3: clears customs in the US from Asia in general? Is
Speaker 3: that coming down? If not? And I don't think it
Speaker 3: will come down that much because demand is going to
Speaker 3: be in place. What's the weighted average pricing that matters
Speaker 3: for the FED? Will that feed into inflation? So I
Speaker 3: don't worry about supply, but there's still will be a
Speaker 3: price issue and that's something that the FED will need
Speaker 3: to look into when setting policy, and ultimately that's what
Speaker 3: USXC markets will react to as well.
Speaker 2: Jeff you've fooled the bonds, the currency, the commodity correlations
Speaker 2: into the equity market. For our listeners seeing this relief rally,
Speaker 2: is it all clear for Jeffrey? You in the stock.
Speaker 3: Market, US exceptionalism means you buy stocks, you buy US stocks,
Speaker 3: you buy US bonds, and you buy the dollar. We
Speaker 3: think that the only thing which may decorrelate slightly or
Speaker 3: not just be as full on is on the dollar
Speaker 3: side to compensate for maybe a little bit more risk
Speaker 3: premia due to the recent uncertainty is a softer dollar.
Speaker 3: But again, this shouldn't be seen as a bad thing. A.
Speaker 3: It's something that the Trump administration, perhaps on and off,
Speaker 3: has been talking about. But b what if US companies
Speaker 3: become exporters as well, then you can benefit from that
Speaker 3: FX earnings translation that Europe, Switzerland, you know, Japan and
Speaker 3: even China Asia they always look for so that correlationship
Speaker 3: is perhaps taking place, But don't read it as a
Speaker 3: negative for US exceptionalism, at least not yet. Let's say
Speaker 3: if US companies can adapt.
Speaker 2: This round tripidness. Here's Lula of Brazil Folcus. This is
Speaker 2: a Bloomberg headline. Brazil's Lula says can't understand Donald Trump's
Speaker 2: tariffs and not making that up. That's the actual headline. Jeffrey,
Speaker 2: You heads are spinning over this modern neo mercantilist policy.
Speaker 2: What's the outcome that you see a complete capitulation by
Speaker 2: President Trump?
Speaker 3: I would say, you know, Beijing in the US ultimately
Speaker 3: the world view that free trade or rather so any
Speaker 3: unwinding of trade decoupling as both sides and Treasury secreted.
Speaker 3: Beston has stated, there's no win in this right, so
Speaker 3: it's les Lee's for all. So there is a vested interest,
Speaker 3: or rather there is an interest for the global economy.
Speaker 3: Beijing has said this for stability, so that is something
Speaker 3: I think that both sides are now very focused on.
Speaker 3: But over the medium to longer term for the US
Speaker 3: and for China, restructuring is needed. And for Europe, look
Speaker 3: at how much Europe has rallied this year on account
Speaker 3: of Germany focused more on domestic demand. That is healthy,
Speaker 3: and that's something Bessent has highlighted, and there's absolutely correct
Speaker 3: in this right. Restructuring in favor of domestic demand matters
Speaker 3: for the exporters in China, in Japan, in Europe, and
Speaker 3: the hope is from markets that they continue along that.
Speaker 3: So as an exit investor, you focus on the domestic
Speaker 3: elements in Europe and in Asia which have been underpriced
Speaker 3: for so long.
Speaker 2: Jeff, for you, thank you for getting a started, senior
Speaker 2: strategist be and why I greatly appreciate that.
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Speaker 2: Else correlating beautifully and publishing on LinkedIn. This morning, Paul,
Speaker 2: why don't you bring in mister Rochester here at Missouo.
Speaker 5: Jordan Rochester he is head of fixed income, credit and
Speaker 5: Commodities macro strategy at miszou Ho Jordan. We wake up
Speaker 5: to the news this morning that the US and China
Speaker 5: will temporarily lower teriffs on each other's products, and the
Speaker 5: news Jordan is the US reduced its levites from one
Speaker 5: hundred and forty five percent to thirty percent, in China
Speaker 5: will reduce its duties from one hundred and twenty five
Speaker 5: percent to ten percent. Is it back to business as
Speaker 5: usual Jordan.
Speaker 4: It's back to business like it was in March.
Speaker 6: So the effective time for right, if you take all
Speaker 6: of this sort of exemptions, has gone from one hundred
Speaker 6: and eight on you on Chinese exports to US, so
Speaker 6: about twenty seven if you take it all in.
Speaker 4: So that's why we were in March.
Speaker 6: We were lower than that, of course before Donald Trump
Speaker 6: took it to the White House, so there could be
Speaker 6: a bit more to go. There's a few caveats as well.
Speaker 6: This is a ninety day reprieve. Things could escalate flower
Speaker 6: down the line. But in the sort of press conference
Speaker 6: with Scott Best earlier, what was quite clear was the
Speaker 6: hurdle to extending beyond ninety days is quite low.
Speaker 4: It was just as long as talks remained constructive.
Speaker 6: So it's quite clear that Scott Bessett leaned the charge
Speaker 6: on this in Switzerland that there is a move by
Speaker 6: the US to get rid of what was a de
Speaker 6: facto trade tariff embargo, a trade tariff wall. It was
Speaker 6: such a high tariff that business was freezing up, and
Speaker 6: as the previous speaker was talking about, lots of trade
Speaker 6: shipments were being re routed and Chinese exporters were considering
Speaker 6: ways of paying for the tariffs at lower prices.
Speaker 4: Than what they possibly are.
Speaker 6: So there's all these sorts of complex parts of international
Speaker 6: trade that the sort of cogs were being put into motion.
Speaker 6: Now they don't need to be at the same level
Speaker 6: because we are now down to the tariff rates that
Speaker 6: I think US firms can swallow.
Speaker 5: So what's next to you? If you're in the C suite,
Speaker 5: you're CEO, your CFO, you're purchasing manager. How do you
Speaker 5: navigate here? Do you think I mean, I mean much
Speaker 5: less being an investor here? If you're just an executive
Speaker 5: trying to run your business.
Speaker 6: Well before Liberation Day, it was quite clear what a
Speaker 6: lot of firms had been doing was that China might
Speaker 6: have been the original creator of an item, but it
Speaker 6: was being shipped to a third country and final construction
Speaker 6: of that product was being made in Vietnam or elsewhere,
Speaker 6: and then ships to the US at lower tariff rates
Speaker 6: than what was previously applied upon China. What changed on
Speaker 6: Liberation days everybody got this ten percent tariff, so it
Speaker 6: becomes a lot less effective to do so, even for
Speaker 6: countries with free trade agreements that there's a ten percent tariff,
Speaker 6: and then there was the extra kicker there was a
Speaker 6: higher rates of reciprocal on top of that, and countries
Speaker 6: like Vietnam and others who had been part of this
Speaker 6: China needs rerouting system face a much larger tariff. So
Speaker 6: if you're in a C suite right now, you're thinking, well,
Speaker 6: I can't.
Speaker 4: It's hard for me to avoid tariffs.
Speaker 6: It's more about going with the importer of choice that
Speaker 6: can help your supply chain in the first place, but
Speaker 6: also bringing it back to the US. I think this
Speaker 6: is a key part of the administration's focus. If it
Speaker 6: can be produced in the US for a similar economic cost,
Speaker 6: it will be sorgan.
Speaker 2: Have you the terrific Massouu team not only in Tokyo
Speaker 2: but in London and worldwide. Have you and Dominic constant
Speaker 2: sever shootout, have you come up with an optimum terraff
Speaker 2: statistic something less than ten percent back towards a blended
Speaker 2: three percent level. We were at. Is there a tip
Speaker 2: point where we get an optimum tariff?
Speaker 6: I think getting down to three or four percent like
Speaker 6: it was is pretty much impossible with this administration. But
Speaker 6: the level to consider the number is that the effective
Speaker 6: tariff rate that the sort of cell side consensus amongst
Speaker 6: banks were expecting on Liberation Day was roughly between twelve
Speaker 6: and a half to seventeen and a half.
Speaker 4: So let's call it fifteen in the middle we get
Speaker 4: If we get an.
Speaker 6: Effective tariffreight back down to fifteen percent, this market will
Speaker 6: handle it pretty well because we went into Liberation Day
Speaker 6: with the stock market down three or four percent year today,
Speaker 6: but nothing too crazy, and most self side analysts were
Speaker 6: expecting stock market to rally into year end. So if
Speaker 6: we get that number, Tom, that's the crucial tipping point,
Speaker 6: and the moves from China today really do get us
Speaker 6: closer to that bol As.
Speaker 2: An economist, where's your tip point? In the second vesper? Yes?
Speaker 2: What percent?
Speaker 4: What?
Speaker 2: Seriously? What percent tariff? Would you say? I don't care
Speaker 2: about the tariff. I need a second vestment.
Speaker 5: I need a second vestment. I don't I have a
Speaker 5: trade deficit with Italy right now? Buying my vest of
Speaker 5: four thousand dollars. I think, Jordan, what do we do
Speaker 5: here in the marketplace?
Speaker 7: Here?
Speaker 5: How much risk this morning are you suggesting your client
Speaker 5: to take here.
Speaker 6: In a big way, We've got a use the recent narrative,
Speaker 6: which is the sell America theme, which I never truly
Speaker 6: believed in as a theme.
Speaker 4: It was mostly a positioning point of view.
Speaker 6: It was an unhedged dollar exposure that needed to be hedged. Well,
Speaker 6: now it's been hedged, and the reasons for hedging it
Speaker 6: have really really fallen down if you think about it.
Speaker 6: And so a lot of the euro dollar buying we
Speaker 6: saw will not be fully unwound. But you're not gonna
Speaker 6: have the same pace of buying the same with the
Speaker 6: yen as well. So I think the dollar's going to
Speaker 6: rebound here because you've got essentially a lot of people
Speaker 6: who've positioned for continued dollar weakness, but forgetting that this
Speaker 6: is a market that has about three or four different
Speaker 6: narratives per year, and we're currently now going into a
Speaker 6: reversal of tariff tensions, and that will lead to dollar strength.
Speaker 4: On the back of it.
Speaker 2: Euro on one ten, it's under a one eleven ninety eight.
Speaker 2: I can't imagine if you formulated a new euro call,
Speaker 2: Jordan Rochester, can you get back to a one oh
Speaker 2: five or Dare I say we need a parody call
Speaker 2: in May?
Speaker 6: No, we're not going to those levels, So we have
Speaker 6: to split it into short term versus long term. Short
Speaker 6: term I talk about dollar strength there. That's kind of
Speaker 6: what needs to happen. The market's very short the dollars. However,
Speaker 6: longer term, I actually think your dollar gets to one
Speaker 6: twenty by year ends rather than the sort of one
Speaker 6: five level, which is what rate spreads currently would suggest.
Speaker 6: We've had this real problem in FX where rates are
Speaker 6: saying the euro should be weaker than what it is.
Speaker 6: But anyway, I digress one twenty by year end. Why
Speaker 6: it's because of this German fiscal story, EU joint issuance
Speaker 6: is possible and also EU reform. So we're going to
Speaker 6: see an expansion of European growth potential later this year,
Speaker 6: and that'll keep the idea of one twenty alive in you.
Speaker 2: I got to squeeze, so we're going to stop the
Speaker 2: show for Jordan Rochester. Are you suggesting with joint issuance
Speaker 2: that we finally get a coordinated fiscal policy out of Brussels.
Speaker 6: We've already had joint issuance before during the COVID pandemic,
Speaker 6: and so do we a crisis that triggers them to
Speaker 6: move again. The trade tensions were causing that crisis. I
Speaker 6: know things have come down in recent weeks, so therefore
Speaker 6: it doesn't feel as urgent as before. But the EU
Speaker 6: is looking at the US as a less trusted ally
Speaker 6: and that's going to lead to them thinking we need
Speaker 6: to boost our defense spending. That there's a summit on
Speaker 6: that in June and that will be the outcome of that.
Speaker 6: But for the other things, such as EU reform, that's
Speaker 6: going to be much more harder and longer to do.
Speaker 6: But you do have us Lavon Delaine and other EU commissioners.
Speaker 4: Pushing for it.
Speaker 6: So answer your question, I think joint commission has dropped
Speaker 6: US a probability in the past two weeks, but it
Speaker 6: still remains on the cards for me.
Speaker 2: Jordan Wrchester, thank you so much.
Speaker 1: With Missia, you're listening to the Bloomberg Surveillance Podcast. Catch
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Speaker 2: We're going to rip up the script right now. We
Speaker 2: can do that with Lori kelvisin incredibly gifted and I
Speaker 2: want to playoff Doug cass a smart note today, which
Speaker 2: is I'm paraphrasing mister cass effective Immediately, the Tarorff thing
Speaker 2: is sort of pushed aside, whatever the end outcome is,
Speaker 2: and all of a sudden, the stock market is beholden
Speaker 2: to the bond market and the debate over fiscal the
Speaker 2: debate over the tax bill. Cass trying to move into
Speaker 2: the summer of twenty five like the dreaded New York
Speaker 2: Yankees are moving into the summer of twenty twenty five.
Speaker 2: What do high yields do to the Lori kelvisina space, Well,
Speaker 2: looking just.
Speaker 7: Like higher treasury yields generally, I mean, you know, it
Speaker 7: depresses valuation multiples. I mean that's what we tend to see.
Speaker 7: And I would also point out though that when I've
Speaker 7: done my back testing and my modeling, I'll nerd out
Speaker 7: on you for a minute, we actually find the inflation
Speaker 7: rate is a little bit more sensitive with pees if
Speaker 7: you go all the way back to the sixties, as
Speaker 7: opposed to bond yields, So the bond yields matter. But
Speaker 7: I I don't think we're totally done with this tariff
Speaker 7: moment and the inflationary impacts. I would like very much
Speaker 7: to get out of this tariff moment. But I don't
Speaker 7: know if I quite agree with mister Cass that we're
Speaker 7: totally done.
Speaker 2: Oh okay, well I'm paraphrasing, and Doug, maybe will you
Speaker 2: know call up and say time you're wrong. I didn't
Speaker 2: say we're totally done. The chaos folks this morning is crazy.
Speaker 2: What will people do in the mid cap, small cap
Speaker 2: small business space. They're not Apple. Their heads have to
Speaker 2: be absolutely spinning.
Speaker 8: Yeah.
Speaker 7: So look, I would say, as you think about the
Speaker 7: size of businesses, right, I think the bigger the better
Speaker 7: in terms of your ability to navigate whatever problem, whatever
Speaker 7: headwind is out there for margins. And so while we've
Speaker 7: dialed down the China tariffs this morning, at least temporarily,
Speaker 7: we're still in a worse place than we were a
Speaker 7: couple of months ago, right, And so there are still
Speaker 7: things that have to be navigated and dealt with, and
Speaker 7: I do think small and mid cap companies have less
Speaker 7: of an ability to do that than the bigger cap companies,
Speaker 7: and you know, we are mostly done with S and
Speaker 7: P reporting season.
Speaker 8: We've still got a lot of smid companies yet to report.
Speaker 7: So I'm sure we're going to get an earful about
Speaker 7: this issue and we'll find out whether I'm right or
Speaker 7: wrong on that, But that is my general rule of thumb.
Speaker 7: That being said, small cap futures are up like five
Speaker 7: percent last I checked, so the markets are clearly celebrating
Speaker 7: in here. But that would be kind of the one
Speaker 7: word of caution I'd throw out at you.
Speaker 5: So, how has your investment out looked for equities changed
Speaker 5: this morning, if at all?
Speaker 7: You know, it's it's interesting. You know, I was watching
Speaker 7: everything last night. The best Mother's Day gift, I guess
Speaker 7: was that we got the news at night, not in
Speaker 7: the middle of the day, so we you know, all
Speaker 7: the moms could enjoy the day. But look, I think
Speaker 7: that we have known that there was a tension in
Speaker 7: the modeling right now, right so I look at a
Speaker 7: bunch of stuff, and I can give you like six
Speaker 7: or seven different things that said we had hit maximum pain.
Speaker 8: One of those was the rate.
Speaker 7: Of upward revisions, which hit twenty eight percent for both
Speaker 7: small and large cap a few weeks ago, and when
Speaker 7: we updated that at the end of the last week,
Speaker 7: small cap provisions were up to forty percent to the upside,
Speaker 7: and large caps move up to like thirty.
Speaker 8: Four to thirty five percent.
Speaker 7: So anyway, we've seen like these various stress indicators that
Speaker 7: are healing, but we also know that there's some uncertainty
Speaker 7: and there's some you know, there's some headwinds out there
Speaker 7: right from all the disruption that we've had, and that's
Speaker 7: not just trade and tariff disruption. That's the news we
Speaker 7: got out of healthcare this morning, right, that's the news
Speaker 7: we got about dose. If you look at the Challenger data,
Speaker 7: the Doge layoffs are consistent with what we see in recessions.
Speaker 7: So we've still got a lot of that stuff to
Speaker 7: sort through. I will tell you the cinnamon indicators, bullish
Speaker 7: economic indicators less so that tension. You know, the bulls
Speaker 7: went out on the day, but that doesn't mean the
Speaker 7: sort of you know, headwinds on the econ side have disappeared.
Speaker 5: How about on earnings, We saw earnings estimates come down
Speaker 5: maybe reflecting some of the trade conditions. Does that suggest
Speaker 5: maybe we can get a little bit of lift in
Speaker 5: earnings now because maybe things are a little bit less bad.
Speaker 7: I think it's not clear to me we're we're gonna
Speaker 7: be back to upward revisions anytime soon unless we just
Speaker 7: make these tariffs go away. And that's not what happened
Speaker 7: this morning, right, Companies, especially on the industrial side, saying mitigate, mitigate, mitigate, price,
Speaker 7: price price a just footprint as footprint. Okay, fine, So
Speaker 7: a lot of these companies right are coming out and
Speaker 7: saying we're going to offset this. A lot are also
Speaker 7: saying we're only giving quarterly guidance now, right, So that
Speaker 7: tells you about the conviction level and that call. I
Speaker 7: went back and looked at twenty eighteen recently, and you
Speaker 7: actually didn't see, you know, too much movement in those
Speaker 7: earnings forecasts in the second half of the year. But
Speaker 7: we still got a lot of cautions commentary in September
Speaker 7: October that year. I think earnings, you know, big cap
Speaker 7: companies find a way to make it work. But that
Speaker 7: doesn't mean the rhetoric is going to be great.
Speaker 2: We continue with Lori Kelvicina in your commute acrass Nation.
Speaker 2: Good morning, particularly out in Los Angeles. Jeans Roca of
Speaker 2: the Los Angeles Port Authority schedule to be with this Thursday.
Speaker 2: It'll be a timely conversation, Laurie. I just brought up
Speaker 2: a chart from one hundred thousand feet like almost up,
Speaker 2: Like if should I go up in the Bezos spaceship? Oh,
Speaker 2: they send up an entire group me bill Ni, bill n,
Speaker 2: I could lead it. Everybody on the spaceship would have
Speaker 2: a bow tye on. Can you see it? I can
Speaker 2: see envision that. Okay, I mean one hundred thousand feet.
Speaker 2: I got a quarterly Dow Jones industrial laverage chart. It's
Speaker 2: as vanilla as you can get, and even quarterly with
Speaker 2: a pullback. We really are still in a bull market?
Speaker 2: Are we still in a bull market?
Speaker 9: Well?
Speaker 7: Look what we and I try not to get, you know,
Speaker 7: stuck in those labels, but I'll tell you what we
Speaker 7: did on the April eighth lows, and we looked more
Speaker 7: at the S and P. But we priced in a
Speaker 7: growth scare. We priced in a near miss. We never
Speaker 7: priced in a recession, and I think that was the
Speaker 7: appropriate thing to do based on the information at hand.
Speaker 8: The recession risks feel like.
Speaker 7: They're dialing down, but they're still elevated versus where they were,
Speaker 7: So we do have to be vigilant. If you get
Speaker 7: a recession, you're going to break through those lows and
Speaker 7: probably go to something like forty two to forty five
Speaker 7: hundred on the SMP. I feel like, you know, we
Speaker 7: reduced that risk this morning, but we still have to
Speaker 7: be vigilant because we have had a lot of stuff
Speaker 7: thrown at this economy in recent months.
Speaker 5: Yeah, so I'm wondering here, Lori. Again, it feels a
Speaker 5: little bit better today. The market's telling us that today
Speaker 5: with a big lift in the futures, what are some
Speaker 5: of the sectors that today kind of.
Speaker 7: So, I would say thinking very short term and more
Speaker 7: tactically than I tend to do normally.
Speaker 8: We look six to twelve months.
Speaker 7: But if you if you just look at what's been
Speaker 7: positively correlated in terms of sector performance with Trump's favorability
Speaker 7: in the polls. We look at net favorability. We actually
Speaker 7: just published a study on this this morning. It tends
Speaker 7: to be the big growth sectors tech, consumer, discretionary, calm services.
Speaker 7: And I think that's because this tariff angst caused a
Speaker 7: rotation out of the US, right, those are the biggest weights.
Speaker 7: But also look at the financials. That's another Trump trade
Speaker 7: that's emerged. And if you dig down under the service,
Speaker 7: a lot of tech industries have been very positively correlated
Speaker 7: with Trump's positioning in the polls. But also things like apparel, autos, airlines,
Speaker 7: you know, which are a big macro bed at this
Speaker 7: point in time. So those are the things i'd watched today.
Speaker 7: Stepping out more broadly, I still really really like financials
Speaker 7: whatever's coming on our way. I think they have an
Speaker 7: ability to manage.
Speaker 2: Laurie Calvacina with us here. Okay, the financials, you're gonna
Speaker 2: tell me, I'm supposed to look at what regionals, super regionals, lessons,
Speaker 2: super regionals, some bank I don't know in Oklahoma, which
Speaker 2: which which financials I like?
Speaker 7: I like the regionals, thinking roughly kind of like the
Speaker 7: Russell two thousand, you know, kind of regional banks.
Speaker 8: I think you generally.
Speaker 2: See me one example that to buy the.
Speaker 8: Compliance gods will shoot me with a lightning.
Speaker 2: That is, our compliance gods are tougher than years continue.
Speaker 8: No, I've agreed.
Speaker 7: I agreed never to say a stock on TV. That's okay,
Speaker 7: But the but the you know, as I as I
Speaker 7: do parse out the valuations, what we see very clearly
Speaker 7: is across the Russell three thousand, your regional banks are
Speaker 7: giving you the best valuations. We look at that on
Speaker 7: a median basis. So think of kind of smitty kind
Speaker 7: of like your your bigger, you know, small caps, so
Speaker 7: to speak, kind of some of the more kind of
Speaker 7: well established ones, you know, kind of more tried and
Speaker 7: true names on Wall.
Speaker 8: Street, like that John Arthstrom would cover, for example.
Speaker 7: I do think the investment banks, which has been you know,
Speaker 7: really kind of the the you know what everyone's loved
Speaker 7: to love because of the M and A trade I
Speaker 7: would still maybe fade those relative to the regionals because
Speaker 7: I just don't think you have the same value appeal
Speaker 7: and I don't know that a ton of uncertainty was
Speaker 7: alleviated this morning, and that's been the big thing, you know,
Speaker 7: sort of holding back some of those transactions.
Speaker 5: I would think the news today about you know, declining
Speaker 5: trade tensions would be good for the consumer. How do
Speaker 5: you think about the consumer, the consumer spending and maybe
Speaker 5: how to play that in the equities.
Speaker 8: So you know, I'll tell.
Speaker 7: You the University of Michigan data is one that we
Speaker 7: watch really really closely. I'm getting a little a little
Speaker 7: tired of it. But post COVID, we've actually seen if
Speaker 7: you look at stock prices year every year, they've been
Speaker 7: very well correlated with that Michigan Sentiment index for both
Speaker 7: small and large. We think we're in a sentiment driven market,
Speaker 7: and that's, you know, frankly been better than the Conference
Speaker 7: Board data at explaining market moves. What I'm seeing in
Speaker 7: that data though, is that you're already getting back to
Speaker 7: recession type low. So we know everybody feels lousy as
Speaker 7: a strategist when those prints come out. I don't make
Speaker 7: forecasts on them, but you know, I've been telling people
Speaker 7: part of why we want to own the financials is
Speaker 7: they benefit when that indicator moves up. They outperform, and
Speaker 7: it's so bad as a strategist. Even though we all
Speaker 7: feel lousy and we're kind of you know, push you know,
Speaker 7: pushing back on some of.
Speaker 8: This trade stuff, you have to look for inflections.
Speaker 2: Barons this weekend played up buffer funds with pro and concomments.
Speaker 2: I don't want to get into do is of Borne
Speaker 2: and Belchunis will explain this when he shows up, if
Speaker 2: if he just shows up, but a buffer fund is
Speaker 2: basically I want to be in equities, but I'm scared
Speaker 2: stiff and I need something less volatile. I'm translating, folks,
Speaker 2: don't you know. I'm not a pinata here for the
Speaker 2: ETF business. Laura Calvisina, If the public is demanding buffer
Speaker 2: funds because they're scared stiff, do you frame it as
Speaker 2: a single digit future or can we get still addicted
Speaker 2: to a double digit equity return?
Speaker 7: You know, I think that we have to see what
Speaker 7: happens with the international investor and their affinity for US equities,
Speaker 7: and we know that the economic policy backdrop is more
Speaker 7: uncertain than it was in the past. That tends to
Speaker 7: be well correlated with pees as well. So I feel
Speaker 7: like we're setting up for a period of less robust
Speaker 7: returns because you know, the door to Europe has been opened,
Speaker 7: for example, and the policy environment is more volatile than
Speaker 7: it's been in the past, and that's probably not going
Speaker 7: to change entirely. So, you know, it's not to say
Speaker 7: equities can't do well, but I feel like we have
Speaker 7: lost some of the tailwinds that we had in the past.
Speaker 2: Sure, Mother's Day was perfect until four pm.
Speaker 5: Yesterday exactly hopefully. I had a good Mother's Day, was
Speaker 5: a great beach day for those that were with me
Speaker 5: on New Jersey. Sure, what do we do here? What's
Speaker 5: the call with your RBC clients today?
Speaker 7: So look, I think it's enjoy the day. Let's get
Speaker 7: some more information. There are a bunch of big retailers
Speaker 7: that are coming out in the next two weeks, and
Speaker 7: ultimately they matter more than what I think about what
Speaker 7: just came out. So I think, you know, enjoy the day.
Speaker 7: We have not wanted people to be wholly defensively positioned.
Speaker 7: We were not over weight health care. You know, some
Speaker 7: of our concerns in that sector are playing out, you know,
Speaker 7: just the disruption risk. We keep seeing one thing after
Speaker 7: another coming at that sector. So I would stay balanced.
Speaker 7: We still like the financials, We still like calm services,
Speaker 7: and there was a moment right you know where it
Speaker 7: looked like tariffs might hit that sector as well. All
Speaker 7: that seems to have gone away, But I would say
Speaker 7: stay balanced.
Speaker 8: I would stick with higher quality stocks.
Speaker 7: We are seeing that that's generally outperforming in the factor data.
Speaker 7: And to the extent you want to be defensive, do
Speaker 7: it through utilities.
Speaker 2: Laurie, thank you so much. Lorid Calvacina with us this morning.
Speaker 2: You really really appreciate that. With RBC Capital Marcus.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Cocklay and Android
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Speaker 2: You see how huvon Steinis walks in the studio and
Speaker 2: the market goes up?
Speaker 5: Is he based in London or New York?
Speaker 2: First of all, huvhon Steenis joins us is just way
Speaker 2: too much love from him over the last number of weeks.
Speaker 2: Vice chaired Oliver Wyman. First of all, let me cut
Speaker 2: to the chase. Will you join the Carnie cabinet in Canada.
Speaker 10: I'm not a Canadian system, so I don't I'll have
Speaker 10: that honor, but I'm rooting for him.
Speaker 2: It's amazing. Tell me about the clarity of thought and
Speaker 2: process of Mark Kearney as he takes on these challenges
Speaker 2: for Canada.
Speaker 10: Well, Tom, you've met him. I mean certainly, I was
Speaker 10: really honored to work for him for eighteen months. He's
Speaker 10: got a cool head in a crisis. He's got a
Speaker 10: really good strategic nows and do you know what, he
Speaker 10: loves to do the detail, so he can really fire
Speaker 10: it down. I have learned, and I think that's the
Speaker 10: great thing he can challenge. And so you look, he
Speaker 10: is at heart Remory did do thirteen years ago when
Speaker 10: he has a financier at heart, but obviously now very
Speaker 10: public spirited. So I think he's going to have a
Speaker 10: really good finger on economics. So give you an example.
Speaker 10: Seventy percent of potash you know I used for US
Speaker 10: fertilizer comes from Canada. He knows that it's the detail
Speaker 10: that actually will help in these negotiations.
Speaker 2: So I will not mince words. Folks, Hu von Steins
Speaker 2: and the Americans are going, who's the brid And the
Speaker 2: answer is the gentleman at a shockingly young age owned
Speaker 2: the analysis of European finance and he's of course parlor
Speaker 2: that over to Oliver Wyman. Now in an esteemed career,
Speaker 2: you are more qualified than anyone to say, is the
Speaker 2: investment dream of Europe actually in place? Led by the Germans?
Speaker 2: Can we actually look for a new Europe?
Speaker 10: It's a great question. I definitely see there is a
Speaker 10: really good debate about whether Europe has got a renaissance
Speaker 10: as an investment destination US investors have I gotta interrupt.
Speaker 2: Do you see the difference here? He sounds like he
Speaker 2: sounds like a masterpiece theater thing I feel like with
Speaker 2: Henry the As and Cromwell the rene help us here.
Speaker 10: Renaissance of Europe as an investment destination. Take the Black
Speaker 10: Croc data. US investors put seven times more money into
Speaker 10: European equities this year than last year in ETFs. But
Speaker 10: the key thing to me is now that was the
Speaker 10: tactical trade. What's the strategic trade? What do you think
Speaker 10: out the day of to tomorrow? And I think the
Speaker 10: big debate we're having with CIOs is actually is it
Speaker 10: an equity opportunity or a credit opportunity? And to be honest,
Speaker 10: sitting here today, I think the credit opportunity is clearer
Speaker 10: to me because there's going to be hundreds of billions
Speaker 10: of infrastructure and digital and defense to be spent. And
Speaker 10: if Europe grows faster, that's fantastic, But they're going to
Speaker 10: demand a huge amount of credit. The yield in European
Speaker 10: credit is higher than US at the moment. And what's more,
Speaker 10: as we've discussed many times, the bank rules are still
Speaker 10: really tight, and so actually it's not like the banks
Speaker 10: have got tons of capital deployees. So as a credit investor,
Speaker 10: that's a really interesting opportunity. But certainly that's certainly from
Speaker 10: the CIOs i've met.
Speaker 5: You woke up this morning, it seems like it's a
Speaker 5: little bit more of a risk on environment relative to
Speaker 5: where we've been over the last maybe four months. Here,
Speaker 5: how do you put our this tariff stuff into context
Speaker 5: for your clients? I guess context matters here.
Speaker 10: Look, I think everyone's got their own specific situation, and
Speaker 10: I think particularly if you're a European or Asian regulated investor,
Speaker 10: let's say a pension fund or an insurer, the FX
Speaker 10: of all has been wild and the State Street data
Speaker 10: show that coming into this year hedging FX hedging by
Speaker 10: international clients was at the lowest level for eight years.
Speaker 10: And so what we're picking up as all of these
Speaker 10: pension you know, a Danish pension fund, a Dutch pension fund,
Speaker 10: an Asian insurer, they want to increase their FX hedging
Speaker 10: by maybe ten to twenty points. They want to own
Speaker 10: US credit or rates or orecities, but they need to
Speaker 10: reduce that volatility' that's the number one. But then beyond that,
Speaker 10: there's also a bit of push and pull. I think
Speaker 10: there's a bit of demand to bring a bit more
Speaker 10: capital back home to redeploy, both in Canada and Europe.
Speaker 10: So I think there's also a can you take maybe
Speaker 10: three four points off the table from the US and
Speaker 10: maybe redeploy it back home.
Speaker 5: US exceptionalism still a thing from an economic perspective, or
Speaker 5: maybe less so these.
Speaker 10: Days, So I think I'm in the camp. I thought
Speaker 10: Mark Growan's line last week in milk And was great,
Speaker 10: which is that it's it's not exceptionalis at the end,
Speaker 10: and maybe it's the end of hyper exceptionalists. Okay, the
Speaker 10: US is still and the extraordinary place to be. And
Speaker 10: as I said, a lot of the CEOs I've met
Speaker 10: in the last month want to keep their holdings. They
Speaker 10: just want to mitigate the FX risk because it's just
Speaker 10: been a bit too too hot to handle. So I
Speaker 10: definitely think the exceptionalism is there.
Speaker 2: Private equity.
Speaker 5: We also heard in Milking last week a lot of
Speaker 5: discussion about private equity. I think a lot of people
Speaker 5: would like to get liquidity in their private equity, and
Speaker 5: maybe a little bit less so today maybe people change.
Speaker 2: You brought that up, you rude guys.
Speaker 5: I know, yeah, So what do we do here?
Speaker 10: So I think in the private markets that so again
Speaker 10: coming out of our conversations, and we're trying to do
Speaker 10: a survey, but no one really wants to put hard
Speaker 10: numbers around it because the maybe the quarterly investment committees
Speaker 10: haven't yet met. But I think on private equity, my
Speaker 10: gut would be people want to get reduce it by
Speaker 10: five points maybe, And some of that was already coming
Speaker 10: into this year. Public markets about performed. Private part of
Speaker 10: it is that actually about cash flow management that's said
Speaker 10: to themselves, we'll keep it, but will only put cash
Speaker 10: out when we cash in. So obviously as those exits
Speaker 10: have been pushed to the right by you tell me
Speaker 10: six nine months, maybe a bit longer, that constrains it.
Speaker 10: And there's some chips back home that said private credit
Speaker 10: raising actually hit another new record in Q one from
Speaker 10: what we can see for the top firm. So there's
Speaker 10: a pivot, and this is why it's the secondary opportunity,
Speaker 10: and it's the doubling down on wealth is kind of
Speaker 10: where it's at.
Speaker 2: You've I've seen us here for a few more minutes
Speaker 2: and we're thrillies with us with Oliver Wyman. It's not
Speaker 2: your remit there. But I have to ask. I think
Speaker 2: for Americans, either the United Kingdom at post breakfast is
Speaker 2: almost off the radar, or it's a convenient trip to
Speaker 2: LHR British Airways buying a zillion dollars worth of Boeings.
Speaker 2: Whatever we worry about the state of the United Kingdom,
Speaker 2: you've got the confusion of us, the labors and power
Speaker 2: the Democrats, the Tories are silent, the Republicans after the
Speaker 2: site is a maga like reform as well. Politically, where
Speaker 2: do you see your United Kingdom in a year or two?
Speaker 2: Do we have a clue?
Speaker 10: It's a great question. Look, if this is the moment,
Speaker 10: way to be a bit more long term. The great
Speaker 10: advantage of the UK for many years was it was
Speaker 10: mid Atlantic. It didn't have quite the US growth rate,
Speaker 10: but it certainly was growing faster than Europe. Unfortunately, since
Speaker 10: the financial crisis, but particularly since Brexit, we've lost that
Speaker 10: UK exceptionalism. In fact, in a way we were exceptional
Speaker 10: compared to Europe, and now where we've actually the end
Speaker 10: of UK exceptionalism in twenty sixteen was really the right,
Speaker 10: and actually my old Prime Minister Carney was correct. The
Speaker 10: Brexit was economically, at least put to one side, politically
Speaker 10: a poor decision. So I think that we're trying to
Speaker 10: get our act together again. I think at the moment
Speaker 10: that it's very difficult to see how you get back
Speaker 10: to the exceptionalism anytime soon.
Speaker 2: Is this accit amendable? I mean, is it all or nothing?
Speaker 2: Or is there a way in a parliamentarior system to
Speaker 2: pull away from Brexit?
Speaker 10: So why don't we do? I think one thing that
Speaker 10: the President here has really shon a light on is
Speaker 10: like the terms of trade internationally. The UK's terms of
Speaker 10: trade with its nearest counterpart is now poorer. So is
Speaker 10: there a way to put the politics one side improve
Speaker 10: trade relationships? And might be if you want to us
Speaker 10: of a Hail Mary, it would be if if Canada
Speaker 10: wants to actually have lower tariffs with Europe, maybe there's
Speaker 10: an opportunity for Ukraine Canada UK to end into a
Speaker 10: much lower tariff zone. That would be the dream. If
Speaker 10: it's I mean it's been talked about, whether it happens,
Speaker 10: I don't think I'm the right political expert to put odds.
Speaker 5: On thirty seconds. What is the politics of Brexit today?
Speaker 5: Would it Do you think it would pass or not
Speaker 5: pass if they were to go again today?
Speaker 10: Oh, based on no, there's buyer's remorse. So if you
Speaker 10: look at the polls today that it wouldn't pass part
Speaker 10: of part of which is because the older cohorts died partly,
Speaker 10: but it's also just the regret.
Speaker 5: But if I want to go see a Sacra match
Speaker 5: over in Paris, I take the train.
Speaker 8: I can't just walk in now, I got to go
Speaker 8: to a line.
Speaker 10: Yeah, well watch which possible? I mean an Englishman? Yes,
Speaker 10: I say, you probably would have been the line anyway.
Speaker 8: Anyway, special line for me.
Speaker 10: I know it's a it's a it's a pain in
Speaker 10: the neck, and I travel an awful lot. In fact,
Speaker 10: do you know what the bizarre thing is? It's now easy.
Speaker 10: It's quicker for me to get in JFK than it
Speaker 10: is in in uh in Paris. It's not really gloomed
Speaker 10: entry here. I'm through in two minutes. In Paris, you
Speaker 10: global entry.
Speaker 2: I don't have to go like six months. It's such
Speaker 2: your kid me, Hugh, thank you so much, you von
Speaker 2: Stein Oliver Wyman with some good perspective there.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Corplay and Android
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Speaker 2: Joining us right now as we continue this conversation, and
Speaker 2: here I'm America's fixation on technology, Daniel, I know a
Speaker 2: teriff when I see it, Ives, He joins us now
Speaker 2: with Webbush Securities. Describe Tim Cook's mood, Dan Iives, I
Speaker 2: mean I saw some blurb over the weekend that Tim
Speaker 2: Cook is arguably the most important American with China manufacturing,
Speaker 2: with the impact in the world. Everybody's got an iPhone
Speaker 2: up when the Pope was Saint Peter's square, I mean
Speaker 2: looked like an ad for iPhones, Danives. What does Tim
Speaker 2: Cook think this morning?
Speaker 9: I mean, Cook's probably drinking a mimosa. I love it,
Speaker 9: having a great breakfast and it's a bright day. I
Speaker 9: mean at the end of the day, for Apple, for Nvidia,
Speaker 9: for tech, this is a dream scenario and in my opinion,
Speaker 9: it puts new tech highs now back on the table.
Speaker 9: For twenty twenty five, but Apple front and center in
Speaker 9: terms of how they were exposing the China tariffs.
Speaker 5: So Dan, how do you think this impacts Apple day today?
Speaker 5: I mean, I mean they've had to live under the
Speaker 5: sword of wit, these one hundred and fifty percent tariffs and.
Speaker 8: What does that mean?
Speaker 5: Well, all companies do, of course, but Apple seems to
Speaker 5: be our postal child for kind of China here has
Speaker 5: there policy? Has there view of China change? Do you
Speaker 5: think over the last four or five six months?
Speaker 9: Yeah, made look obviously more hedge policy relative to India.
Speaker 9: But I think what this essentially does is it slows
Speaker 9: down significantly that that shift to India, especially as you
Speaker 9: go into iPhone seventeen. Now you get the engines ready,
Speaker 9: China is going to continue to be the vast majority
Speaker 9: when it comes to production for I. So the thing
Speaker 9: that's how it changes is like there was a there
Speaker 9: was a window here where this needed to change. And
Speaker 9: that's why look market also speaks to there's gonna be
Speaker 9: no retaliatory. That was to worry about China retaliatory against Apple.
Speaker 5: So Dan, in your tech space, you cover everything, how
Speaker 5: do you kind of rank kind of the opportunity now
Speaker 5: because we wake up this morning. It seems like a
Speaker 5: little bit of a different world here, maybe a little
Speaker 5: bit you know, less restrictive, a little bit more growthy
Speaker 5: outlook out there. So how does that impact your tech space?
Speaker 9: I look at a game changer because the thirty percent
Speaker 9: realistically on the China tioffs. I mean when you start
Speaker 9: thinking about now, we probably go fifteen to twenty percent.
Speaker 9: So streets already seen through that. Now you look at Apple,
Speaker 9: you can video, you get chip names, you know TSMC
Speaker 9: and O, there's those been names really table pounders here
Speaker 9: and then AI think about the AI revolution names right
Speaker 9: from pound Tier to Microsoft to all the hyperscalurs. I
Speaker 9: mean this this now puts that that that key. You know,
Speaker 9: if you think about now that that key bowl case
Speaker 9: back on the table.
Speaker 2: Do they have pricing power? I saw luxury goods in
Speaker 2: Europe raising prices and we've had a number of conversations.
Speaker 2: I think a Dana Telsey in retail well, where pricing
Speaker 2: power is everything. Do they have pricing power at Cooper Tino?
Speaker 9: Look Tom, I think they have pricing power to an extent,
Speaker 9: but the last thing they want to do is trip
Speaker 9: over their own shoelaies is you, especially when you the
Speaker 9: next two three years, I mean you're basically gonna have
Speaker 9: half their install based that are going to be going
Speaker 9: through upgrades. So the last thing they want to do
Speaker 9: is increase just to increase, and then all of a
Speaker 9: sudden there could be cannibalization five to ten percent of demand.
Speaker 9: So they're very well aware of that. But that's where
Speaker 9: the tariff situation goes. Back to the tariff situation, this
Speaker 9: gives them the flexibility they could raise in certain areas
Speaker 9: and ultimately not in others, but then also goes the
Speaker 9: AI strategy where you now need to, you know, really produce,
Speaker 9: especially when I'm to WWDC in June. What's coming on
Speaker 9: iPhone seventeen?
Speaker 5: Hey Dan, where's Elon Musk these days?
Speaker 9: I mean, thankfully, not in the way I nows, not
Speaker 9: mar Lago in the factories, and what I believe is
Speaker 9: now driving me a ton of strategy for Austin in June,
Speaker 9: and that, okay, it speaks to why Tesla's up right.
Speaker 9: I mean, you need your leader back. They got their
Speaker 9: biggest asset back, and I think that was it's gonna
Speaker 9: be as a pivotal moment for the Tesla story.
Speaker 2: Tell us about use of cash here. We had a
Speaker 2: bond transaction with Apple. I'm gonna say it was pretty
Speaker 2: small actually, and they've got a lot of short duration stuff.
Speaker 2: I assume they have to substitute in here. But do
Speaker 2: you see use of cash of I mean, Paul's screaming
Speaker 2: for dividend increases versus buy back. But even Dan I's
Speaker 2: share buyback. I think they did one hundred billion at
Speaker 2: the last at the last earnings release. I mean, do
Speaker 2: you model out they could actually do a one hundred
Speaker 2: and twenty or dare I say one hundred and fifty
Speaker 2: billion dollar announcement? Well?
Speaker 9: I think also you could they could up that And
Speaker 9: when you start to think about some of the cast,
Speaker 9: especially the next year or two, obviously diving is not
Speaker 9: really the focus, but they're gonna have a situation where
Speaker 9: they might have to do some accelerated you know, in
Speaker 9: terms of buybacks, you know, relative to the cash that
Speaker 9: they're going to generate. Because look that it's a high
Speaker 9: class problem that they're going to be, especially with no
Speaker 9: M and A. That continues to be their strategy.
Speaker 5: Hey, Dan, before you know, President Trump took office in January.
Speaker 5: All we talked about for maybe two years was AI
Speaker 5: and then now it's been on a tariff discussion non stop.
Speaker 5: Can you give us a refresh a where on Wall
Speaker 5: Street the AI story is today?
Speaker 9: Yeah, Look, we always talked about the AI party, and
Speaker 9: I'd say Trump closed the party for a little for
Speaker 9: the tariff situation. Parties back open right, it's still it's
Speaker 9: called ten thirty pm in that party that goes to
Speaker 9: four am. If you think about it, software use cases
Speaker 9: we're seeing with the hyperscalers, you're seeing a pollenteers seeing
Speaker 9: in service. Now it's playing out in front of us
Speaker 9: the three and twenty five billion of capacs that's been
Speaker 9: doubled down by tech that only four percent of US
Speaker 9: enterprise have gone down the AI path. So to my
Speaker 9: point is that tariffs have not even slowed down this
Speaker 9: AI revolution. It's two to three trillion that's going to
Speaker 9: be spent. And that's why we're seeing with open AI
Speaker 9: and others. I mean, this is just the beginning of
Speaker 9: a fourth Industrial revolution, but it also is US and China.
Speaker 9: They both blinked because they know no one wants to
Speaker 9: lose out on really what's going to be a generational
Speaker 9: environment for tech?
Speaker 2: Where's your target and We've got to make some news here, Dan,
Speaker 2: I mean fairly just spoke to best and I'm speaking
Speaker 2: to ives. It's more important than the Secretary of Treasury.
Speaker 2: Can you announce your web Bush increase in your two
Speaker 2: seventy price call on Apple?
Speaker 9: Looked time? I think now with this three is back
Speaker 9: on the table. I mean, I think now you could
Speaker 9: start irrationalize that Apple is one the next twelve months
Speaker 9: and we could be looking at you know, I think
Speaker 9: ultimately could be a stock of the three in front
Speaker 9: of it. That's my you. You could add thirty to
Speaker 9: forty dollars per share in terms of what happened here
Speaker 9: on these China taroff discussions for Apple.
Speaker 2: Was that a by recommendation?
Speaker 9: Yeah, like that's it.
Speaker 2: It was edge yep, Dan, I Ale, Thank you, Dan,
Speaker 2: greatly appreciating short notice. Is earning that with the Apple
Speaker 2: moving six percent?
Speaker 5: Uh whing whining green jacket though, just it's upsetting.
Speaker 2: Yeah, well, you know, it's just it's going to get
Speaker 2: the masters. That's master, that's its masters jacket digalized. Thank
Speaker 2: you so much.
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