Speaker 1: Bloomberg Audio Studios, podcasts, radio news from the heart of
Speaker 1: where innovation, money and power collide in Silicon Valley and beyond.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlowe.
Speaker 2: Good morning, everybody. I'm Tim Steneveeg and.
Speaker 3: I'm Katie Greifeld, both in New York. This is Bloomberg Technology.
Speaker 2: Coming on at Tesla's annual eb sales dropped for the
Speaker 2: first time in over a decade.
Speaker 3: And speaking of Tesla, the company also in focus following
Speaker 3: a cybertruck explosion outside the Trump Las Vegas Hotel yesterday.
Speaker 3: We'll have the latest.
Speaker 2: Man TikTok is feeling the heat as its potential ban
Speaker 2: draws near. We'll discuss a little later this hour. First, though,
Speaker 2: a check on markets on this first trading day of
Speaker 2: twenty twenty five KT. I don't know about you, but
Speaker 2: I'm still writing twenty twenty four on all my checks.
Speaker 3: That's terrible. I think we can still safely say happy New.
Speaker 2: Year, though, thanks Happy New Year.
Speaker 3: I think a lot of investors are happy we turned
Speaker 3: the page.
Speaker 2: I think they are too. Although the Nasdaq had great
Speaker 2: years back to back in twenty twenty four and twenty
Speaker 2: twenty three, up today the Nasdaq one hundred by three
Speaker 2: tenths of one percent. We do have about seventy percent
Speaker 2: of the stocks in the Nasdaq one hundred higher today
Speaker 2: five of the seven mag seven higher, with only Tesla
Speaker 2: and Apple lower weighing on today's trade. KT. I know
Speaker 2: you're gonna have more on Tesla in just a minute.
Speaker 2: I mentioned back to back years of gains twenty twenty
Speaker 2: four and Nasdaq one hundred is up nearly twenty five
Speaker 2: percent twenty twenty three, up by more than fifty percent.
Speaker 2: Speaking of back to back years of gains, Bitcoin higher
Speaker 2: today for a third day in a row, one point
Speaker 2: seven percent to the upside, up by about sixteen hundred dollars.
Speaker 2: It did fall about three percent in December, up more
Speaker 2: than one hundred twenty percent, and twenty twenty four k
Speaker 2: of more than one hundred and fifty percent in twenty
Speaker 2: twenty three.
Speaker 3: That's the thing you mentioned, some of those stats, those
Speaker 3: yearly stats, especially for the NASAQ one hundred. That's even
Speaker 3: with the big benchmarks puking in the final week of
Speaker 3: the year. So clearly a bit of relief today, even
Speaker 3: with Tesla doing its darnedness to try to drag this
Speaker 3: index down. Let's take a look at shares right now.
Speaker 3: You can see down about five point six percent. Of course,
Speaker 3: we got their fourth quarter deliveries this morning, coming in
Speaker 3: at four hundred and ninety five thousand vehicles that missed
Speaker 3: analyst projections. They had been penciling in about five hundred
Speaker 3: and twelve thousand vehicles delivered, and you can see that
Speaker 3: disappointment in the shares right now. Tesla also had a
Speaker 3: fantastic year in twenty twenty four, but it came with
Speaker 3: a ton of volatility ends a lot of political cross
Speaker 3: currents as well.
Speaker 2: Yeah, that's certainly something we'll be talking about in just
Speaker 2: a few minutes. But how about this last few months
Speaker 2: of twenty twenty four for Tesla? I know, probably remarkable.
Speaker 3: Well remarkable too because Elon Musk some have them calling
Speaker 3: him the co president President elect Donald Trump doesn't of that,
Speaker 3: and President elected Donald Trump absolutely dominating all of the
Speaker 3: year ahead outlooks. Let's talk a little bit more about that,
Speaker 3: because Wall Street has its eyes laser focused on Trump's
Speaker 3: return to the White House and trying to gauge what
Speaker 3: to expect this year from his anticipated pro business policies,
Speaker 3: but also his tough talk on global trade and general unpredictability.
Speaker 3: You can call it that. Bloomberg News has collated over
Speaker 3: seven hundred key calls from more than fifty leading financial institutions,
Speaker 3: and Bloomberg's needs to say. COVID is here to break
Speaker 3: it all down. It's the subject of today's big Take, Denitza.
Speaker 3: It's great to have you with us since I made
Speaker 3: this point, of course on open interest, so I'll make
Speaker 3: it again. It's really hard to talk about twenty twenty
Speaker 3: five without talking about Donald Trump.
Speaker 4: Yeah, it's clearly the biggest word this year. Everything is
Speaker 4: Donald Trump, Tariff's American exceptionalism. These are the worst we
Speaker 4: sow through all those outlooks, which were compiled by Sam Palter.
Speaker 4: Of course, and last year, the year before, we were
Speaker 4: talking about hardline. We're talking so much about monetary policy.
Speaker 4: We're talking about the economy, which is still an important
Speaker 4: factor here, but definitely Donald Trump has taken center stage.
Speaker 4: What we have seen is a lot of people are
Speaker 4: betting on American companies and are not pretty warming up
Speaker 4: towards international companies despite the fact that they obviously are
Speaker 4: a lot cheaper, but US assets are taking central stage.
Speaker 4: JP Morgan says, US exceptionalism is getting reinforced. We're talking
Speaker 4: about AI. We have a big call from bn Y
Speaker 4: saying that AIS role in the world will surpass that
Speaker 4: of other technologies that propel earlier periods of such growth.
Speaker 4: So we're seeing a lot of AI optimism. That comes
Speaker 4: also with conscious calls of broading of the rally of
Speaker 4: people saying that more and more companies use AI, hence
Speaker 4: they will join that.
Speaker 2: AI for Keral, It's a great piece. Check it out
Speaker 2: by Bloomberg Sam Potter, Janisa Sikoba also working on that
Speaker 2: along with many other folks of the Bloomberg News team.
Speaker 2: You can check it out now at Bloomberg dot com
Speaker 2: slash Big Take. Well, let's now bring in Keith Buchanan,
Speaker 2: senior portfolio manager at Globalt Investments and has about three
Speaker 2: billion dollars in assets under management. For more Keith, you
Speaker 2: heard me mention the back to back years of gains
Speaker 2: on the Nasdaq one hundred remarkable couple of years. Do
Speaker 2: you think there's still room to run for megacap tech?
Speaker 5: Hi, and thanks again for having me.
Speaker 6: We actually have been moving into more balanced stants over
Speaker 6: the last couple of months, and we're really focused on
Speaker 6: the growth versus value collision course, if you will, that's
Speaker 6: set up for twenty twenty five among other actually you know,
Speaker 6: carryous collision courses across our American economy and also for markets.
Speaker 6: So we've moved into a more balance stamps because we
Speaker 6: look at growth as this dominant really over the marketplace
Speaker 6: for WILLI says a pronuncial crisis minus a few years,
Speaker 6: most recently in twenty twenty.
Speaker 5: Two, and at last phase.
Speaker 6: Of course, I've been moved by AI spending the story,
Speaker 6: but you questioning at what cost does that come at?
Speaker 7: It?
Speaker 6: Are we looking at valuation that grows into infinity and
Speaker 6: what point does that price end the scenario that we're
Speaker 6: now also the growth that's over to come over the
Speaker 6: next couple of years. Also at what cost does this
Speaker 6: AI spending and this productivity come.
Speaker 5: Of course that's a boon to earnings, but does it
Speaker 5: come in.
Speaker 6: Wage gains and workers That could cause a little more
Speaker 6: consternation among the consumer and consumer spending. So we're balancing
Speaker 6: all of those right now, and it led us to
Speaker 6: a more balanced approach. Is how we look at the
Speaker 6: US markets and not preferring growth over value any longer.
Speaker 5: We actually have been in that stands for several years frior.
Speaker 3: Well when it comes to big tech and when it
Speaker 3: comes to the Magnificent seven. I think a lot of
Speaker 3: people would agree with you on these stretched valuations. But
Speaker 3: the pushback I keep hearing to that point is that
Speaker 3: you have the earnings growth to back it up. That
Speaker 3: basically the fund of mentals are justifying these eyewatering valuations.
Speaker 3: And if you expect to see some of the momentum
Speaker 3: behind big tech fade, are you saying that you'd expect
Speaker 3: earnings to disappoint a bit in twenty twenty five.
Speaker 6: Not necessarily, And that's why we haven't gone underweight and growth.
Speaker 5: We actually just in a neutral stance, if you will.
Speaker 6: We don't see the case for that disappointment to come
Speaker 6: in twenty twenty five, even twenty twenty six. As we
Speaker 6: grow into like you mentioned, are grown into multiples that
Speaker 6: seem lofty, you know a year and a half ago,
Speaker 6: don't seem as lofty anymore today. But that maturation of
Speaker 6: this growth phase and investment has to come at some
Speaker 6: point where the market price is in fully the bowlt
Speaker 6: suspending this flooding this marketplace.
Speaker 5: Agree again, we don't feel like.
Speaker 6: These stocks are broken or any the part of the
Speaker 6: story is is amiss at all. But we think that
Speaker 6: growth actually could come more and sync with the value
Speaker 6: as far as the performance over the next couple of
Speaker 6: years as the market digests those valuations and time.
Speaker 3: Well, let's talk a little bit more about value, because
Speaker 3: of course value has broken a lot of hearts over
Speaker 3: the past couple of years, and many expect that to continue.
Speaker 3: So you have the valuation piece looking good when it
Speaker 3: comes to a lot of these value names, a lot
Speaker 3: of these value indexes. But are you expecting to see
Speaker 3: actually that earnings growth broadened out, especially if we are
Speaker 3: in a higher for longer sort of environment where the
Speaker 3: FED can't cut as much as maybe some have been open.
Speaker 5: Okay, almost has to. And we've looked at this closely.
Speaker 6: From a bottom of standpoint, the market expects earnings per
Speaker 6: share growth of thirteen percent of the twenty twenty five
Speaker 6: that's not as concentrated in the max seven as it
Speaker 6: was in twenty twenty two and twenty twenty three, and
Speaker 6: especially in twenty twenty four as well, So that broadening
Speaker 6: has to occur and evaluations just don't show that that
Speaker 6: broadening is expected. If you look at names like financials
Speaker 6: that start to appreciate some of that, and those stocks
Speaker 6: have performed over the past twelve months. We look at
Speaker 6: other spaces like that offer the opportunity for the valuations
Speaker 6: to grow into a broadening of earnings that the marketing
Speaker 6: spect from a bottom up standpoint, but from a top
Speaker 6: down standpoint and also from an index standpoint, it really
Speaker 6: hasn't really materialized in a lot of those value names
Speaker 6: and those industries that traditionally are are categorized as value
Speaker 6: orient and so we're really excited about just a balance
Speaker 6: that that Arnie's growth could lead to performance and value sectors,
Speaker 6: and we feel like growth doesn't necessarily have to bleed
Speaker 6: out in order for that to happen.
Speaker 8: Keith.
Speaker 2: Over the last couple of years, really since the public
Speaker 2: introduction of chat GPT, we've seen a lot of the
Speaker 2: AI gains go to just a handful of companies, including
Speaker 2: the megacaps, you know, hyperscalers and whatnot. I'm wondering when
Speaker 2: we're starting to see those AI gains go to other
Speaker 2: types of companies, like when is AI going to allow
Speaker 2: Procter and gamble to sell more tied and toilet paper
Speaker 2: with fewer people.
Speaker 6: We're starting to see actually some implementation of AI that
Speaker 6: could benefit sectors and names and industries outside of the
Speaker 6: Max seven already.
Speaker 5: You see that in healthcare started talking about how some.
Speaker 6: Development of drugs has accelerated and they feel like they
Speaker 6: can be more efficient in how they allocate resources because
Speaker 6: of artificial intelligence. They've implement it within those platforms. So
Speaker 6: again that's the spending comes first, productivity games come next,
Speaker 6: and we should see that materialize across the board.
Speaker 5: Again, that's the case.
Speaker 6: For the spending, of course will grow to those names
Speaker 6: that put this technology and implement this within economy. But
Speaker 6: as all industries start to implement some level of higher
Speaker 6: productivity that benefits names across the board, and those with
Speaker 6: lower evaluations and theory should have a quicker move when
Speaker 6: those earnings start to accelerate it and it.
Speaker 3: Will be fascinating to see when the investing timeline sort
Speaker 3: of turns to more of those applications versus just the
Speaker 3: hardware and the chip makers. But keys, we got to
Speaker 3: leave it there. Great to kick off twenty twenty five
Speaker 3: with you. That is Buchanan. He is senior portfolio manager
Speaker 3: over at Global Investments. Now coming up, Tesla disappoints more
Speaker 3: on the carmakers delivery miss Next, This is Bloomberg.
Speaker 2: Tesla fourth quarter sales out today, the electric carmaker disappointing investors,
Speaker 2: posting an annual vehicle sales drop for the first time
Speaker 2: in more than a decade. Joining US now is Bloomberg's
Speaker 2: Detroit bureau chief David at Welch. David one point seventy
Speaker 2: nine million vehicles sold in twenty twenty four fourth quarter
Speaker 2: deliveries for to ninety five thousand, five hundred and seventy
Speaker 2: Tesla stock taking a hit as the result. To what
Speaker 2: can we attribute this decline to? I think it's just
Speaker 2: purely greater competition. Whether it's in China where Bid and
Speaker 2: the domestic EV players are doing very well with competitive product,
Speaker 2: helped buy a lot of Chinese government subsidies. It's tougher
Speaker 2: sledding there, and there's more competition in the US. You've
Speaker 2: got a lot of new EV's out there from Hyundai, Kia,
Speaker 2: General Motors. They're all pushing pretty hard here. GM's got
Speaker 2: a pretty cheap one with the Equinox sales throw under
Speaker 2: thirty five thousand. That's going to put pressure on the market.
Speaker 2: And also, you know EV sales generally still some growth there,
Speaker 2: but slower growth, So you have slower growth for the
Speaker 2: total total industry and more players fighting for that piece
Speaker 2: of the pie, and Tesla's not immune to that either.
Speaker 2: The other thing, look, Tesla's got this lineup of four
Speaker 2: vehicles that can sell in pretty decent numbers, a niche
Speaker 2: cyber truck, which has not set the world on fire
Speaker 2: in terms of growth. Unless they get this cheaper model
Speaker 2: to type of vehicle out there, they're probably not going
Speaker 2: to see a lot of electric vehicle growth from them
Speaker 2: in the US market, and they're going to have really
Speaker 2: tough competition in Europe and China going forward, So it's
Speaker 2: not a growth story on the EV side of their
Speaker 2: business right now.
Speaker 3: Maybe the hope is then that, of course Tesla, which
Speaker 3: already is the market leader, would take share from some
Speaker 3: of its competitors because Elon Musk on the latest earnings
Speaker 3: call said that he sees twenty to thirty percent growth
Speaker 3: this year, which seems optimistic. Are we hearing anywhere close
Speaker 3: to those figures When you take a look at what
Speaker 3: the cell side is actually.
Speaker 9: Expecting the sale side's not expecting that. There isn't a
Speaker 9: lot of credibility. We've seen a lot of skepticism over
Speaker 9: the twenty to thirty percent growth. Now what we don't know.
Speaker 9: Tesla's supposed to have this cheaper EV coming out this year.
Speaker 9: They famously missed their their targets for production and sales
Speaker 9: all the time. But if it does come out it
Speaker 9: is cheaper, that's where they would presumably get some growth.
Speaker 9: It's going to be really hard to steal that much
Speaker 9: market share and less Tesla res or it's just some
Speaker 9: really deep discounting. I mean, look, there's a wild card
Speaker 9: here too, which is if Tesla's not reliant on government
Speaker 9: subsidies the seventy five hundred tower tax break for evs
Speaker 9: and the other companies are, maybe they can gain share
Speaker 9: that way. But there's just not that much growth in
Speaker 9: the EV market where I think they're going to see
Speaker 9: twenty to thirty percent growth based off its US sales,
Speaker 9: And again, the Chinese competition is just too tough for
Speaker 9: them to get huge numbers there either.
Speaker 2: David a little closer to home here in the US,
Speaker 2: is there a political risk given Elon Musk's close alliance
Speaker 2: with President elect Donald Trump, and that it could alienate
Speaker 2: potential folks who would say, you know, in another world,
Speaker 2: I would have gone for a Tesla, but these days,
Speaker 2: no thanks.
Speaker 9: Look, that phenomenon I think is real. I also think
Speaker 9: it's kind of baked in already because Elon kind of
Speaker 9: went to the right side of the political aisle some
Speaker 9: time ago with the things he's been saying on X
Speaker 9: and he's been working with Donald Trump for months now.
Speaker 9: There may be more of that coming. People who were
Speaker 9: predisposed of buying avs, many of them are interested in
Speaker 9: climate change and they buy them for that reason. Others
Speaker 9: are not. But look, I think Elon has probably alienated
Speaker 9: a certain kind of consumer. How big of an impact
Speaker 9: that's having to quantify, but I think that does have
Speaker 9: an effect for sure.
Speaker 3: Well let's talk about the flip side of that, David,
Speaker 3: because Okay, maybe the left leaning customer base of Tesla
Speaker 3: doesn't want to buy more Tesla's, but there's a lot
Speaker 3: of expectations and you can see that in the stock
Speaker 3: price that a Donald Trump administration, the second Donald Trump administration,
Speaker 3: is going to be good news for Tesla. I mean,
Speaker 3: what are some of the actual policies that are potentially
Speaker 3: on the table here that would benefit Tesla.
Speaker 9: The big one, I think is the Trump administration's priority
Speaker 9: of setting up a federal framework for autonomous vehicles. What's
Speaker 9: really pushing this stock, I think to a large degree,
Speaker 9: is this idea that Tesla's not just an automaker in
Speaker 9: the way that general motors are, dime where or BMW
Speaker 9: or Toyota are. It's an AI company. It's a tech play, right,
Speaker 9: and you can only do that if you do have robots,
Speaker 9: you do have self driving cars. And without a federal
Speaker 9: framework that enables somebody like Tesla to put a vehicle
Speaker 9: on the road with no steering wheel and no braking,
Speaker 9: accelerator pedals, totally robot driven, that's not going to happen.
Speaker 9: Trump's the Trump administration will make it a priority. Elon
Speaker 9: is camped out at Maro Lago trying to help write that,
Speaker 9: I would assume. But anyway, he's going to have influence
Speaker 9: that will help Tesla certainly, depending on how the rules
Speaker 9: are done. And then with the other thing, Elon has said,
Speaker 9: we don't need federal subsidies to sell our evs. It
Speaker 9: would affect other companies more and he's probably right about that,
Speaker 9: But how much getting rid of those would help Tesla
Speaker 9: sell more evs that it remains to be seen. I
Speaker 9: think it's tough on them to get rid of those
Speaker 9: incentives as well, because one that's free money to consumers
Speaker 9: that they don't get anymore, and to Tesla might have
Speaker 9: to discount more. So, even if they do steal market share,
Speaker 9: it might be less profitable share if they have to
Speaker 9: have big discounts in order to sell those vehicles. So
Speaker 9: the bottom line is any kind of tax policy on
Speaker 9: evs could benefit Elon if he has an outsized voice
Speaker 9: in crafting it to help his company. So, you know,
Speaker 9: we don't know what that looks like, but that certainly
Speaker 9: could happen.
Speaker 7: Well.
Speaker 3: Tesla sharre is currently down almost six percent. David Welts,
Speaker 3: thank you for that. Let's turn to the other major
Speaker 3: Tesla news that we're following this morning, and that is
Speaker 3: Elon Musk saying that the explosion of a Tesla cybertruck
Speaker 3: outside of the Trump Las Vegas hotel was probably an
Speaker 3: act of terrorism. The driver was killed and seven people
Speaker 3: suffered minor injuries. For more, let's break it down with
Speaker 3: Wloomberg's Mike Sheppard joining us now. And this is a
Speaker 3: developing situation, of course, Mike. But what do we know
Speaker 3: so far?
Speaker 7: Well, what we know is that this vehicle, like the
Speaker 7: vehicle used in the New Orleans terror attack, was rented
Speaker 7: via the Touro app. But the company itself maintains that
Speaker 7: there is no connection whatsoever between them that they can see.
Speaker 7: Neither the suspect in New Orleans nor the man who
Speaker 7: rented the cyber truck that exploded in Las Vegas had
Speaker 7: any kind of a criminal background that would have shown
Speaker 7: up in the checks that the company run. What we
Speaker 7: know about the man he has been identified in Las
Speaker 7: Vegas is that he is identified as an Army reservist
Speaker 7: his on leave from the service temporarily. He was from
Speaker 7: Colorado Springs. And we don't know yet what exactly the
Speaker 7: cause was of this explosion in Las Vegas. Elon Musk
Speaker 7: has said on x he posted last night that he
Speaker 7: thought it looked more like and the company had concluded,
Speaker 7: but did not offer more evidence of an explosion related
Speaker 7: to either what he said were fireworks or perhaps a
Speaker 7: bomb in the bed or back of the truck, rather
Speaker 7: than a malfunction by the batteries. We've seen in some
Speaker 7: other Tesla vehicles.
Speaker 2: Mike, As Katie said, this is a developing story. We
Speaker 2: don't know much yet, but I'm curious what has come
Speaker 2: out at this point. Do we know how, if any
Speaker 2: the ignition actually happened, how whatever was in the back
Speaker 2: of the truck ignited, And do we know if the
Speaker 2: vehicle's battery earned or if fire officials were able to
Speaker 2: put out the fire before that happened.
Speaker 7: Those are really good and still very open questions, Tim
Speaker 7: that we're waiting for authorities to shed more light on.
Speaker 7: We have heard, of course from Elon mus the world's
Speaker 7: richest man and one of the co founders of Tesla
Speaker 7: and now the owner of x laying this out for
Speaker 7: us on social media, but the detailed account from authorities,
Speaker 7: including the Las Vegas Fire Department and FBI, which is
Speaker 7: also investigating this incident, we still do not have a
Speaker 7: full accounting of what had happened, including the kind of
Speaker 7: forensic questions that you're asking now, So we'll be eager
Speaker 7: to hear from law enforcement and safety authorities there as
Speaker 7: we get more.
Speaker 2: Answers, again, more questions than answers that we have right now, Mike,
Speaker 2: But I'm curious about potential similarities between what happened in
Speaker 2: New Orleans and what happened in Las Vegas. The tech
Speaker 2: angle here with vehicles rented on the app turo, the
Speaker 2: connection of both being members or former members of used
Speaker 2: armed forces. What are similarities we have right now?
Speaker 7: You know, those are similarities, but authorities would be quick
Speaker 7: to caution that they are all coincidental. Many people use
Speaker 7: this Touro app to rent vehicles. Conversing with a friend
Speaker 7: this morning, they happened to note that, Hey, you know,
Speaker 7: I have an acquaintance who rented a cyber truck in
Speaker 7: Las Vegas about the same time. So it is not
Speaker 7: an uncommon thing for people to be using something like this.
Speaker 7: If it were Avis or Hertz, I don't know if
Speaker 7: we'd be asking sort of the same kinds of questions.
Speaker 7: And again, when it comes to prior military service, we
Speaker 7: have seen this again and again that sometimes actors in
Speaker 7: these mass casualty events, and we can think all the
Speaker 7: way back to nineteen ninety five, the bomb that took
Speaker 7: out the Edward R. Murrah building in Oklahoma City that
Speaker 7: was perpetrated by two men who had previously served in
Speaker 7: the US Army so again coincidence, but we don't know
Speaker 7: whether there is any connection valid or viable whatsoever, or
Speaker 7: even if what happened in Las Vegas was an accident
Speaker 7: or a deliberate and malicious act.
Speaker 3: All right, Mike, really appreciate your reporting here. That is
Speaker 3: Bloomberg's Mike Sheppard. Of course, we'll bring you more details
Speaker 3: as we have them, but let's switch skars here and
Speaker 3: discuss the future of H one B VISUS under the
Speaker 3: new administration and the impact on the America's tech industry.
Speaker 3: Of course, this was a firestorm over social media over
Speaker 3: the holiday.
Speaker 2: Well, coming up much more on Bloomberg Technology. This is Bloomberg.
Speaker 7: Well.
Speaker 3: Twenty twenty four was deemed the year of Artificial intelligence.
Speaker 3: But why you're waiting to see if Wall Street will
Speaker 3: grow impatient with the AI movement Bloomberg Opinions Davely wrote
Speaker 3: about it in his latest column. He joins, us, now
Speaker 3: tie this into what you call the brain rot economy,
Speaker 3: all this enthusiasm that we're seeing over AI and what's
Speaker 3: actually happening on a lot.
Speaker 5: Of these apps.
Speaker 10: Yeah, well, I mean we're seeing investors being extremely excited
Speaker 10: that AI is going to come good this year earn
Speaker 10: them lots of money. The revenue is going to start
Speaker 10: pouring in and that's going to offset the worries about
Speaker 10: capital expenditure going through the roof for just about all
Speaker 10: major tech companies in twenty twenty four. Where that links
Speaker 10: is the brain rot side of things, is that one
Speaker 10: of the early uses of AI has been to fill
Speaker 10: things like Facebook with just nonsense, really like pictures that
Speaker 10: don't make any sense or text has been generated it
Speaker 10: isn't really fun to read. And I think and in
Speaker 10: my column there I wrote that there's going to be
Speaker 10: this sort of awakening I hope from people saying, well,
Speaker 10: why am I looking at this? And as soon as
Speaker 10: people stop looking at this, that could spell trouble for
Speaker 10: companies like Meta that rely on that.
Speaker 2: Well, maybe they move away from that. Go to TikTok.
Speaker 2: Your prediction about TikTok this year at least here in
Speaker 2: the US will it be banned?
Speaker 10: Well, the question is, you know what the Supreme Court's
Speaker 10: going to do. They're going to hear arguments on January tenth,
Speaker 10: and many legal observers say it's unlikely that the Supreme
Speaker 10: Court is going to overturn the lower courts ruling which
Speaker 10: was that the ban was constitutional. The next wildcard is
Speaker 10: going to be what's Donald Trump going to do?
Speaker 7: Now?
Speaker 10: He's already asked for the band to be paused. He's
Speaker 10: asked the Supreme Court for that. Whether or not they
Speaker 10: grant him that, it's not it's not clear yet. But
Speaker 10: I think it's going to take some overturning for this
Speaker 10: for this ban on TikTok to stop. So I think
Speaker 10: if you're on TikTok, you should be getting ready to
Speaker 10: perhaps sort of move somewhere else.
Speaker 3: Well, Dave Lee from Bloomberg Opinion, That is the perfect
Speaker 3: segue into our next guest. Let's keep this discussion going
Speaker 3: now with Godam Hans. He is a law professor at
Speaker 3: Cornell and founding director of the university's Civil Rights and
Speaker 3: Civil Liberties Clinic. Great to have you with us, of course,
Speaker 3: so the Supreme Court will hear TikTok's argument on January tenth.
Speaker 3: Of course, the ban would kick in on January nineteenth.
Speaker 3: If it goes through. That is a very very quick
Speaker 3: possible turnaround. And then you add President Donald president elect
Speaker 3: rather Donald Trump into the equation. How are you thinking
Speaker 3: that things will shake out from where it stands right now.
Speaker 5: Yes, so thank you for having me. I am.
Speaker 8: Similarly skeptical that the Supreme Court will overturn the lower
Speaker 8: court's ruling. I think the schedule of the argument means
Speaker 8: that we may hear something quickly before the effective date
Speaker 8: of the ban, but I am not optimistic that the
Speaker 8: court will make a different finding.
Speaker 5: Ultimately.
Speaker 8: Whether or not President lect Trump is able to change
Speaker 8: that through urging Congress to override or rescind the law,
Speaker 8: or some other kind of executive action, I think we'll
Speaker 8: have to wait and see. I also don't think the
Speaker 8: Supreme Court itself will take up President elect Trump's call
Speaker 8: for a stay, given the sort of lack of precedent
Speaker 8: for that kind of move.
Speaker 2: You have been supportive of TikTok from a legal perspective,
Speaker 2: Why is that? What's the case?
Speaker 8: I think that this law is targeted pretty explicitly at
Speaker 8: the company the Commeress. People who talked about it at
Speaker 8: the time of its anactment earlier in twenty twenty four
Speaker 8: said that there were major national security concerns that they
Speaker 8: had been briefed onne privately, but that evidence has not
Speaker 8: been made public. And while I agree that national security.
Speaker 5: Is an important governmental interest.
Speaker 8: I also think that when it comes to banning a
Speaker 8: social media platform where millions of people exchange content and ideas,
Speaker 8: that evans should be public. I did filend sign on
Speaker 8: to an amicus brief both in the DC Circuit and
Speaker 8: in the Supreme Court. We and that amicus brief argued
Speaker 8: that the law really creates some fundamental First Amendment problem
Speaker 8: is that I don't think are supported by the Supreme
Speaker 8: Court President here. But of course we'll have to see
Speaker 8: what the Court itself says in the coming weeks.
Speaker 2: Cornell Law Professor Godham Hans, thanks so much for joining us.
Speaker 2: Do appreciate it now. Potential TikTok ben would also pave
Speaker 2: the way for metas reels or YouTube shorts to fill
Speaker 2: in entertainment void for one hundred and seventy million Americans,
Speaker 2: entertainment and the online advertising that comes with it. Let's
Speaker 2: bring in Rachel Tipograph, founder and the CEO of Mickmac.
Speaker 2: It's an e commerce marketing platform for multi channel brands.
Speaker 2: Good to have you with us, Rachel, you have some
Speaker 2: incredible data on the micmac platform about where the advertising
Speaker 2: money is leaving to go to TikTok Let's start there
Speaker 2: for context. Yeah, who's losing money as a result of
Speaker 2: TikTok's growing popularity.
Speaker 3: Absolutely.
Speaker 11: My company, Mick Mac works with over two thousand of
Speaker 11: the biggest brands in the world, and what we've seen
Speaker 11: this year is a two hundred percent year over year
Speaker 11: growth in TikTok. At the same time, we've seen a
Speaker 11: sixty five percent decline in Alphabet. Alphabet for US is
Speaker 11: paid search, it's YouTube, it's DV three sixty everyone else
Speaker 11: is menual compared to this, So if a TikTok ban
Speaker 11: were to occur, you can believe that Alphabet is going
Speaker 11: to see big regains in brand advertising traffic.
Speaker 3: It's interesting. I mean, I'm speaking from personal experience when
Speaker 3: I talk about TikTok shop. I actually used it for
Speaker 3: holiday shopping, which I wasn't expecting to. Do you think
Speaker 3: about TikTok potentially being banned. That would, theoretically, as to mention,
Speaker 3: be a benefit for YouTube shorts for of course metas
Speaker 3: reels as well. But when it comes to the actual
Speaker 3: e commerce spit do they have the same infrastructure and
Speaker 3: ease of use as you have on a TikTok shop.
Speaker 11: It's interesting about TikTok TikTok has the power of television
Speaker 11: with the backbone of direct response advertising, so you can
Speaker 11: build brand and drive conversion all at once. That being said,
Speaker 11: when it comes to bottom of the funnel, I want
Speaker 11: to drive sales advertising. The two best places to do
Speaker 11: it today still are alphabet meaning paid search, and meta.
Speaker 11: And so if this were to happen, I still believe
Speaker 11: you're gonna see a massive shift back to alphabet, a
Speaker 11: little bit back to meta. But in terms of TikTok,
Speaker 11: it has become the fourth biggest marketplace in the US.
Speaker 11: So who's gonna gain from marketplace sales. It's gonna be Amazon,
Speaker 11: it's gonna be Walmart, it's gonna be eBay, it's gonna
Speaker 11: be Temu. So there's gonna be a lot of companies
Speaker 11: to gain in this disruptive shift. If a TikTok band were.
Speaker 2: To occur, Rachel, who do you think or what should
Speaker 2: the companies that our clients of yours be doing to
Speaker 2: prepare for a possible ban? How should they be changing
Speaker 2: the way they're looking at things.
Speaker 11: I believe first of all that a band is going
Speaker 11: to be delayed. I think that this is a hot
Speaker 11: opportunity for the Supreme Court and Trump. That's my hot
Speaker 11: take as Rachel. But in terms of my customers, I'm
Speaker 11: working with the biggest brands in the world. They're used
Speaker 11: to this. When Elon Musk took ownership of Twitter now X,
Speaker 11: we saw x traffic go to zero. What did they do?
Speaker 11: They just reallocated spend overnight. It's not the big brands
Speaker 11: to be worried about. It's the small medium businesses that
Speaker 11: are heavily dependent on TikTok and the creators. Some people
Speaker 11: rely one hundred percent on TikTok for their income. The
Speaker 11: big brands will be resilient. The small businesses are the
Speaker 11: ones who are going to experience tough times.
Speaker 3: And Rachel, we only have about thirty seconds, but you
Speaker 3: mentioned some of the beneficiaries here. Of course, the Amazon's,
Speaker 3: the alphabets of the world. What about Ets? What about eBay?
Speaker 3: Some of these marketplaces that have been kind of left behind.
Speaker 11: Yeah, there's going to be a shift back to seeing
Speaker 11: sales in places like eBay and ets and Tamu. But
Speaker 11: Walmart and Amazon are huge players now in three P marketplaces.
Speaker 11: All of these players will see gains.
Speaker 3: All right, Rachel, really appreciate you taking the trip to
Speaker 3: New York. Of course, that is Nick mac founder and
Speaker 3: CEO Rachel Tipograph, And that does it for this edition
Speaker 3: of Bloomberg Technology. I believe we'll both be back tomorrow.
Speaker 2: Hez a treat. If they'll have us, we'll be back.
Speaker 2: Don't forget to check out our podcast though. In the meantime,
Speaker 2: you can find her on the terminal as well as
Speaker 2: online at Apple, Spotify, and iHeart this is Bloomberg.
Speaker 5: Then Quick, then rectal, Quick and
Speaker 2: Quick