Speaker 1: From the heart of where innovation, money and power collide
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Caroline Hyde and.
Speaker 2: Ed Lovelung.
Speaker 3: Live from New York and San Francisco. This is Bromberg Technology.
Speaker 3: We continue to cover the aftermath of President Donald Trump's
Speaker 3: sweeping touse, with stocks rebounding on hopes of trade deals
Speaker 3: following the biggest route in five years. I focus in
Speaker 3: on a Nazda one hundred that is up three and
Speaker 3: a half percent. Only three stocks are generally in the
Speaker 3: red on the entirety of the benchmark, as there.
Speaker 2: Are hopes on South Korea deals, Japanese deals.
Speaker 4: Ed.
Speaker 2: What's from the micro perspective.
Speaker 5: Yeah, two of the biggest technology names that are in
Speaker 5: the headlines, and that's Tesla and Micron. Tesla is based
Speaker 5: around a feud between Elon Musk and Peter Navarro. Navarro
Speaker 5: commenting on television that Tesla is not a car manufacturer,
Speaker 5: it's a car assembler, which prompted e'd On Musk to
Speaker 5: call him a moron quote and explain that actually most
Speaker 5: of Tesla's components in the car itself are filled with
Speaker 5: items originating from the US. The stock at session highs
Speaker 5: whether that's direct who knows Micron Reuter's reporting that Micron's
Speaker 5: passing on the cost of tariffs to customers at its
Speaker 5: supply base. The market cheered that no comment or official
Speaker 5: word from Micro, and yet they have an answer, Mike call.
Speaker 5: But interesting in the market's context.
Speaker 3: From a micro perspective to the macro mold broadly aired
Speaker 3: trade headlines. They're continuing to drive the markets, of course,
Speaker 3: with optimism building for trade deals with South Korea, with Japan,
Speaker 3: but China not backing down.
Speaker 2: On President Trump's Pwerff threats.
Speaker 3: Vowing to quote fight to the end as speak it
Speaker 3: all down. Blombergs, Mike Shepherd is with us very different tactics.
Speaker 3: Talk through the latest in terms of South Korea.
Speaker 6: Well, with South Korea, they seem to be following in
Speaker 6: the steps of Japan and trying to open up very
Speaker 6: quickly negotiations with Washington on some kind of deal that
Speaker 6: would ameliorate or eliminate altogether the reciprocal tariffs that are
Speaker 6: about to take effect at midnight tonight, and those tariffs,
Speaker 6: of course, would be damaging to economies around the world
Speaker 6: and especially to the trade relationships between these two tech
Speaker 6: centers Japan and South Korea that are so important as
Speaker 6: well to Silicon Valley.
Speaker 7: Now the mood.
Speaker 6: Music is leading some to think what would happen with China?
Speaker 6: Is China ready to also somehow approach President Donald Trump?
Speaker 6: And the President indicated in his truth social post that
Speaker 6: he was waiting for a call from Beijing. But the
Speaker 6: move music, as you indicated, is a little bit different.
Speaker 6: In China, They're sending mixed signals. On the one hand,
Speaker 6: they are pointing to a willingness to talk to actually
Speaker 6: have this conversation about trade, but at the same time
Speaker 6: they say that they are willing to fight to the end.
Speaker 7: And this is in response to.
Speaker 6: President Donald Trump's threat to impose even more teriffs on
Speaker 6: China if Beijing follows through with its pledge to keep
Speaker 6: its retaliatory teriffs in place.
Speaker 5: Mike, I'm trying to keep this deeply focused on the
Speaker 5: technology sector, right, and it's hard to piece it together.
Speaker 5: Why are the career headlines important? One reason Career sends
Speaker 5: ten billion dollars worth of chips to the US every year.
Speaker 5: Eighty percent of the memory saw the Micron headlines from Reuter's.
Speaker 5: That's one part. The other is that China's not moving right,
Speaker 5: and that was the speculation of the last twenty four hours.
Speaker 5: How do they react? What happened overnight was really really severe.
Speaker 5: Just recap the wording that the Chinese issued.
Speaker 6: Well, when we think about the Chinese, they were talking
Speaker 6: about how they would fight to the end, and that
Speaker 6: really sent a signal to the markets and to investors
Speaker 6: in even to companies that we could be in this
Speaker 6: for the long haul.
Speaker 7: And if your Apple with.
Speaker 6: So much production, for example, eighty percent of iPhones are
Speaker 6: still made in China. Even as Apple has tried to
Speaker 6: diversify its production lines, it has been much tougher.
Speaker 7: So the signs of a far perhaps.
Speaker 6: With Saul and with Tokyo, do lend some optimism, especially
Speaker 6: for producers of products. You think of Sony, you think
Speaker 6: of sk Heinex, you think of Tokyo Electron and some
Speaker 6: of the more sophisticated chip making equipment that they produce.
Speaker 6: All of these things are in play, but China is
Speaker 6: really the big target here just because of the size
Speaker 6: of the economy and the amount of trade that the
Speaker 6: US does with China.
Speaker 5: Bloombo's Mike Shepherd, it's Apple exactly where we want to go.
Speaker 5: Next shares of Apple rebounding in the session after what
Speaker 5: was basically three day biggest three day drop since the
Speaker 5: two thousands. President Trump's tariff frets sending customers to the stores.
Speaker 5: There's panic buying of iPhones ahead of speculated but potential
Speaker 5: price increases. Joining us, Bloomberg Intelligences and arag Rana. Your
Speaker 5: job is to take data, your own data, third party data,
Speaker 5: look at the case best, worst case scenario. What do
Speaker 5: you do with data or reporting that there's panic buying
Speaker 5: of iPhones, particularly in this country.
Speaker 8: Yeah, but the thing is that may help, you know,
Speaker 8: let's say, minor earnings in this upcoming quarter, but it
Speaker 8: doesn't take away the big risk Apple has on procuring
Speaker 8: more phones for down the road when the next iPhone
Speaker 8: cycle comes in, when the December quarter comes in. I mean,
Speaker 8: there is a lot at stake right now, especially when
Speaker 8: it comes to the size of the tariffs that may
Speaker 8: hit China.
Speaker 3: That's so important that ultimately may first when we get
Speaker 3: their fiscal second quarter earnings unlikely to show this.
Speaker 2: It's not going to show up until their fiscal third quarter.
Speaker 3: And meanwhile, they try to navigate not current inventory but
Speaker 3: future supply side, maybe coming more from India.
Speaker 2: Where is that going to help them on the margin front?
Speaker 2: How much can they rely on that?
Speaker 9: An arat see, they can bring some phones from India,
Speaker 9: but you know there are a large portion of the
Speaker 9: pro models. India is getting a hit with tariffs. Also,
Speaker 9: we don't know if somebody finds out that, okay, they
Speaker 9: are circumventing and trying to get phones from India, we
Speaker 9: won't have an additional tariffs on that. So there is
Speaker 9: a there's a lot going on right now and then
Speaker 9: almost on a daily basis, we hear about some new
Speaker 9: tariffs being slapped and but we can remember at the
Speaker 9: end of the day it's beIN brought. The whole target
Speaker 9: of that is to try to open more factories in
Speaker 9: the US unless there is some negotiation between the two countries.
Speaker 9: So I don't think Apple escapes this anytime in the
Speaker 9: near term.
Speaker 3: Andra Agrana putting it plainly, we thank you from Bloomberg
Speaker 3: Intelligence for more on tech markets be brought out from
Speaker 3: just Apple to across the board.
Speaker 2: Dip buy is emerging.
Speaker 3: Jay Jacobs is with us black Rock US head of
Speaker 3: Thematic and active ETF. Boy, have we seen some inflows
Speaker 3: and outflows? Jay, break it down what today looks like
Speaker 3: versus the last couple of trading days.
Speaker 10: We're seeing a bit of a relief rally here in
Speaker 10: very strong volumes and corners of the market where I
Speaker 10: think people have been looking for buying opportunities. If you
Speaker 10: look at areas like artificial intelligence, look at areas like
Speaker 10: small caps, a lot of investors have been hunting for
Speaker 10: deals in these areas, and now that they're off you know, ten, fifteen,
Speaker 10: twenty percent, it represents a really attractive entry point for
Speaker 10: long term investors. So we're seeing people get very granular
Speaker 10: about finding targeted opportunities for these lower evaluations here.
Speaker 3: And they therefore think that the valuation erosion that we've
Speaker 3: seen in some of these AI names, some of the
Speaker 3: chip socks in particular, that they're at the right buying
Speaker 3: price right now.
Speaker 10: Jay, Well, there's certainly at contracted valuations here. And what
Speaker 10: we've been hearing from clients for a while is, you know,
Speaker 10: they love the AI. They see the structural disruption, they
Speaker 10: see the massive total addressable market of artificial intelligence. It
Speaker 10: was really just a question of valuations. Was a scenario
Speaker 10: that was a little too hype, to little too inflated
Speaker 10: by the markets. Now that you're seeing this price is
Speaker 10: basically twenty percent off since the beginning of the year.
Speaker 11: Those concerns are gone.
Speaker 10: And yes, maybe the landscape looks a little bit different,
Speaker 10: but if you still zoom out and look ten years ahead,
Speaker 10: there's a ton of conviction and artificial intelligent GIN center
Speaker 10: these valuations.
Speaker 11: It's hard to pass over.
Speaker 5: Jay, if the trade conflict goes on indefinitely. Is there
Speaker 5: a corner specific area of the technology industry where you
Speaker 5: do want to boost your exposure?
Speaker 10: There is you know, we actually brought out a strategy
Speaker 10: a couple of years ago very focused on this, which
Speaker 10: is i et c's or US Tech focused ETF, and
Speaker 10: it's specifically looking to remove geopolitics from technology stocks. The
Speaker 10: tech sector has over sixty percent of its revenue coming
Speaker 10: from overseas, very globally integrated supply chains, and if you
Speaker 10: can really isolate companies that hire, build and sell in
Speaker 10: the United States, you can still get that tech exposure,
Speaker 10: that tech growth.
Speaker 11: But try to limit.
Speaker 10: And so and limits on the impact of supply chains.
Speaker 5: Jay, what's in it? What names are we talking about?
Speaker 5: What specific technologies, specific supply chains do you want to
Speaker 5: go into.
Speaker 10: Well, if you look at the portfolio today, it's actually
Speaker 10: underweighting several of the mag seven stocks that make up
Speaker 10: such a top heavy amount of the tech sector as
Speaker 10: well the communications sector. You know, a lot of those
Speaker 10: stocks are still very globally integrated, have a lot of
Speaker 10: sales overseas. It's looking more domestically sometimes at e commerce
Speaker 10: companies that do a lot of buying and selling within
Speaker 10: the United States, some AI related companies that are doing
Speaker 10: a lot of buying and selling in the United States.
Speaker 10: But it's really kind of rewaiting the tech sector, and
Speaker 10: that top ten looks very different in a fund like
Speaker 10: ITTC than just kind of the broad tech sector.
Speaker 3: Jay, how are you currently discussing with those of that
Speaker 3: allocating towards your funds the long term versus short term?
Speaker 3: How many are wanting to commit at this moment if
Speaker 3: they are worried about what the next headline seems to
Speaker 3: be bringing.
Speaker 10: It's really about getting granular and taking that long term view.
Speaker 10: You know, we have seen a lot of investors again
Speaker 10: are really kind of looking for what's the targeted exposure.
Speaker 11: That they have the highest conviction in over the next five.
Speaker 10: To ten years, and look, you get compensated for taking
Speaker 10: equity risk, and we're seeing equity risk play out in
Speaker 10: the markets today. So if you could take that long
Speaker 10: term view, get granular on the themes artificial intelligence that
Speaker 10: people believe in over the long term, we believe they
Speaker 10: should be rewarded over over time. So you know, in
Speaker 10: many ways it's opportunity hunting, but it's also you know,
Speaker 10: behavior and behavior of touching around being invested and staying
Speaker 10: invested during turbulent times.
Speaker 5: It's important to remind oneself that all of the things
Speaker 5: we've been spending the last two years talking about haven't
Speaker 5: ended or gone away. The AI infrastructure build out, all
Speaker 5: of the forecasts a multi year I guess fit for
Speaker 5: you when you think about construction and you think about clients,
Speaker 5: it's your conviction on whether the trajectory we were on
Speaker 5: in twenty twenty four, particularly around AI infrastructure data center continues.
Speaker 5: Do you feel that way.
Speaker 11: I don't think there's a major shift here.
Speaker 10: You know, tech companies are very good at planning for
Speaker 10: the long term around these very very you know, capital
Speaker 10: intensive buildouts, and so if you're building a data center today,
Speaker 10: it's because you believe.
Speaker 11: In AI three to five years from now.
Speaker 10: And I think What's different about this time around is
Speaker 10: you have tech companies that are flush with cash. They
Speaker 10: continue to bring in new cash through free cash flow,
Speaker 10: and they see a huge potential market in artificial intelligence.
Speaker 10: So they're excited to invest in this space. They're excited
Speaker 10: to put their capital work, and they're planning for the future.
Speaker 10: You said the word cash three times though, interesting data center,
Speaker 10: memory chips. You guys interested in that market. We are,
Speaker 10: So we look at the entire AI technology stack for opportunities,
Speaker 10: and you know, you could kind of look at the
Speaker 10: bottom of that tech stack, starting with what is the
Speaker 10: real estate that is really hosting the digital.
Speaker 11: Infrastructure required for artificial intelligence.
Speaker 10: On top of that are a lot of the semiconductor companies,
Speaker 10: not just GPUs, but memory rievers. We really like that
Speaker 10: digital infrastructure area right now because that's where a lot
Speaker 10: of revenue is being channeled in artificial intelligence for the
Speaker 10: next couple of years as we see a build.
Speaker 11: Out of AI.
Speaker 5: Right, J Jacobs of black Rock, Really great to have
Speaker 5: you back on the program. Thank you very much. Now
Speaker 5: coming up, former US Treasury Secretary Larry Summers joins us
Speaker 5: to talk if and why he expects more turbut it's
Speaker 5: a key conversation coming up here. This is Bloomberg Technology.
Speaker 4: Our Bloomberg audience is worldwide. I'm David Weston and I'm
Speaker 4: joined now by the former US treasure Sectory Larry Summers
Speaker 4: of Harvard. Larry, thank you for being back with us.
Speaker 4: When we talked just a week ago on Wednesday, the
Speaker 4: day of the announced of the tariffs, there was a
Speaker 4: lot yet to be determined. The markets have been through
Speaker 4: an amazing amount of volatility since then. Three down days,
Speaker 4: they're sharply up today. You've been quite explicitly critical of
Speaker 4: what President Trump has announced here. Do you feel better
Speaker 4: today because the markets are coming back?
Speaker 5: Sure?
Speaker 12: I feel better anytime instability seems to be calming.
Speaker 5: But be not confused.
Speaker 12: There is only one reason why instability is being reduced,
Speaker 12: and that is there's a growing hope in markets that
Speaker 12: a larger part of these policies are going to prove
Speaker 12: transitory and reversible. This does not reflect any kind of
Speaker 12: market endorsement of the approach that the President has followed. Rather,
Speaker 12: it reflects a judgment that the president might recognize the
Speaker 12: reality that markets are telling him about, that many of
Speaker 12: his advisors are telling him about that corporate CEOs across
Speaker 12: the country are articulating that this kind of wholesale tariff
Speaker 12: of policy is simply bad for economic performance. We're seeing
Speaker 12: some signs that the administration may recognize that.
Speaker 4: We're seeing signs. But do we have a better sense
Speaker 4: of the goals in the process today than we got
Speaker 4: from the Rose Garden last Wednesday.
Speaker 12: I don't think so. I think this is fundamentally a
Speaker 12: improvisational effort. You could tell that when you knew that
Speaker 12: there was a policy based on tariff reciprocity that didn't
Speaker 12: use any data on the tariffs of other countries in
Speaker 12: figuring out how to reciprocate. You could tell that from
Speaker 12: the blatant contradictions between what presidential Advisor Navarro was saying
Speaker 12: and Presidential advisor Treasury Secretary Scott Bessen was saying. You
Speaker 12: could tell that from the degree of division between close
Speaker 12: outside advisor Elon Musk and many members of the president's
Speaker 12: economic team. This is a policy, it's a hugely consequential policy,
Speaker 12: but by all aheerances, it's being improvised on a daily basis,
Speaker 12: and that's creating huge uncertainty. But it's only uncertain There's
Speaker 12: only uncertainty if things go in both directions, and today
Speaker 12: happened to be a day when things moved in a
Speaker 12: positive direction.
Speaker 5: I hope that the moves to.
Speaker 12: Back off these policies can continue, but we'll have to see.
Speaker 12: I suspect we're going to have volatile markets for some
Speaker 12: time to come, and no one can know, but my
Speaker 12: judgment is that I'd be surprised if the bottom is
Speaker 12: yet in with respect to this phase and markets.
Speaker 4: How bad could it get?
Speaker 7: Oh, I think the.
Speaker 5: Likelihood.
Speaker 12: I think it's more likely than not that we're going
Speaker 12: to have a recession. And in the context of a recession,
Speaker 12: we'll see an extra two million people be unemployed. We'll
Speaker 12: see losses in household income that are five thousand dollars
Speaker 12: a family or more. We are very likely, in the
Speaker 12: context of a recession, to see markets reach levels significantly
Speaker 12: below their current levels. So I think we could be
Speaker 12: looking for fairly serious economic problems. And I think it
Speaker 12: will cash the shadow forward, because if we have a recession,
Speaker 12: the budget deficit will go up, the accumulated debt that
Speaker 12: we have to deal with will go up. They'll be
Speaker 12: financial distress that will affect higher risk companies, so higher
Speaker 12: risk countries in the global economy. But David, there's a
Speaker 12: central thing to understand about this moment of economic and
Speaker 12: financial difficulty.
Speaker 5: To borrow a.
Speaker 12: Word from the doctors, it is our first iatrogenic recession,
Speaker 12: our first diatrogenic financial crisis. Iatrogenic illness is when you
Speaker 12: go into the hospital and you catch an infection there.
Speaker 12: It's when the people whose job it is to make
Speaker 12: things better are the active agents of making things worse.
Speaker 12: And iatrogenic illness, staff, infections and alike in hospitals is
Speaker 12: a major preoccupation for doctors. This is an iatrogenic economic challenge.
Speaker 12: Is nothing in the outside world that is causing this challenge.
Speaker 12: It is induced by the words and deeds of President
Speaker 12: Trump and his administration. The good news about that is
Speaker 12: it could be resolved with words and deeds of President
Speaker 12: Trump if they backed off these policy errors. I think
Speaker 12: there would be a substantial resumption of normality. But as
Speaker 12: long as a hospital maintains unsanitary conditions, its patients get
Speaker 12: infections when they enter, and as long as these policies
Speaker 12: are being pursued, we're going to see substantial volatility and markets,
Speaker 12: substantial recession risk, substantial damage to middle class families.
Speaker 4: So, just to follow up on that, is there any
Speaker 4: remedy for the patient other than for the chief doctor
Speaker 4: that is President Trump to back off what you just
Speaker 4: described as policy errors? Is there anybody else who can
Speaker 4: save us?
Speaker 12: Look, depending on what happens with other countries and how
Speaker 12: they handle their diplomacy, it may be easier or harder
Speaker 12: for him to back off these policies. Depending upon how
Speaker 12: the business community responds. There may be more or less
Speaker 12: ability to create an environment where there's a backing off
Speaker 12: of these policies. But there's nothing complicated about this. You
Speaker 12: impose huge tax increases on households in an uncertainty creating
Speaker 12: way that's also damaging to established business patterns, and the
Speaker 12: economy turns downwards. There's nothing subtle or sophisticated about this.
Speaker 12: This is introductory economics. It's the kind of question that
Speaker 12: could have been on an introductory economics exam for decades.
Speaker 12: Suppose the president of the United States decides suddenly to
Speaker 12: impose a massive tariff tax increase on products from all
Speaker 12: over the world. What will happen to the economy? And
Speaker 12: any b student will know that the answer to that
Speaker 12: is that it's a supply shock that raises prices and
Speaker 12: raises unemployment as well and makes the economy less efficient
Speaker 12: and substantially to uncertainty. This isn't some sophisticated, complicated thing
Speaker 12: to analyze.
Speaker 4: Larry, thank you so much for being back on I
Speaker 4: really appreciate that is former US Treasury Secretary Larry Summers
Speaker 4: of Harvard back to you.
Speaker 5: We thank you, David weston technology shares literally just touching
Speaker 5: session lows in the last couple of seconds, and now's
Speaker 5: that one hundred down up now sorry two and a
Speaker 5: half percent. We're also seeing some current downward pressure. Bitcoins
Speaker 5: being around seventy eight thousand US dollars per token over
Speaker 5: the last three or four days. Remember it traded over
Speaker 5: the weekend. There is more buoyancy. We are rebounding, but
Speaker 5: there are many, many more tariff and trade related headlines
Speaker 5: to digest. Don't go anywhere, We'll be right back. This
Speaker 5: is Bloomberg Technology.
Speaker 3: Welcome back to Bluemberg Technology and Caroine hide in New
Speaker 3: York and.
Speaker 5: I met Ladlow in San Francisco. Some markets character, yeah, let's.
Speaker 3: Check in on them because we're coming off of our
Speaker 3: highs then as at one hundred, though still clinging to
Speaker 3: two and a half percentage point gain. We're seeing very
Speaker 3: few stocks in the red today as people start to
Speaker 3: buy this dip and hope that more trade deals might
Speaker 3: come South Korea, Japan and the mix.
Speaker 2: Move on and have a look at a little chip
Speaker 2: stocks that I want to shine a light on because
Speaker 2: deals are actually getting done.
Speaker 3: Marvelle's selling is auto related part of the business to
Speaker 3: Infini in the German company. We're up six point eight
Speaker 3: percent on a two and a half billion dollar deal.
Speaker 3: Broadcom buying back its shares steep discount after the recent
Speaker 3: sell off six point seven percent high as they say
Speaker 3: they're going to be purchasing some ten billion dollars a
Speaker 3: Micron interestingly reports coming that it is looking to pass
Speaker 3: on some of those.
Speaker 2: Tariff costs to customers.
Speaker 3: It's up too and a half percent, but let's dwell
Speaker 3: on another chip company. It also makes phones and plenty
Speaker 3: of other things. Samsung shares climbed over in London trading
Speaker 3: after South Korean tech giant reported better than expect to.
Speaker 2: Pull in results for the fiscal first quarter.
Speaker 3: It also comes, of course, as President Trump, so the
Speaker 3: prospects for a trade deal with Saul were looking good.
Speaker 3: Let's dig into it. Peter Elstrom is here with us
Speaker 3: still in New York. Let's go to the earnings first.
Speaker 3: The fundamentals looking good for memory in particular.
Speaker 7: Yeah, that's right.
Speaker 13: So Samsung reports its preliminary earnings right after the quarter closes.
Speaker 13: We'll get more detail later on, but at least the
Speaker 13: preliminary numbers were very good. Revenue was up ten percent,
Speaker 13: their operating profit was four point four billion dollars, well
Speaker 13: ahead of what analysts had anticipated. There were a couple
Speaker 13: things playing into the results here. First of all, d RAM,
Speaker 13: the legacy d RAM business is taking off quite a bit,
Speaker 13: and they have a new Galaxy smartphone out there that's
Speaker 13: doing quite well at this point. So Samsung, at least
Speaker 13: at this point, is showing some progress. We know that
Speaker 13: they are well behind in terms of AI memory chips.
Speaker 13: They're trying to play ketchup with s k Heinex. They
Speaker 13: didn't give any detail on that today, but we may
Speaker 13: get it later on in the month.
Speaker 5: The memory market's very interesting in how some Sung plays
Speaker 5: it right, particularly when it relates to China, because they
Speaker 5: are that they are able to currently serve customers in
Speaker 5: China until the US titans export restrictions.
Speaker 13: Just go with that with US, Peter right, Well, the
Speaker 13: US administrations first to buy. The administration now that Trump
Speaker 13: administration has been quite concerned about some of these chips
Speaker 13: that are going into China being sold into China. In
Speaker 13: Vidia chips of course is sort of the top of
Speaker 13: the list there, but also the high end memory chips
Speaker 13: are a concern for them. So es Kehinix makes the
Speaker 13: high bandwidth memory chips, the HBM chips that are going
Speaker 13: into China. They have been affected by this. Samsung could
Speaker 13: also get affected by this in the future.
Speaker 7: And the goal the administration.
Speaker 13: Is trying to cut off some of these AI capabilities
Speaker 13: that China is trying to build. In the meantime, of course,
Speaker 13: those domestic players are competing and they're trying to gain
Speaker 13: some groundback China. Samsung in particular has been struggling because
Speaker 13: they do have customers in China they want to be
Speaker 13: able to sell to. But most importantly for them, they
Speaker 13: want to get verified by Invidia so that they can
Speaker 13: sell the HBM chips that Nvidia needs for their AI capabilities.
Speaker 5: Bloombogs Peter Elstrom, thank you very much. Let's get more
Speaker 5: on how technology investors are reacting to all of the
Speaker 5: market turbulance. Beth Kindig, lead tech analyst that Io Fund,
Speaker 5: joins us now and BEV really grateful to have you
Speaker 5: on the show. I enjoy the kind of breadth of
Speaker 5: your commentary on x Actually some of it tariff and
Speaker 5: markets focused. A lot of it actually the underlying technology.
Speaker 5: But given the markets that we find ourselves in right now,
Speaker 5: what's your latest thinking on the technology sector and how
Speaker 5: you're going to play the uncertainty of a trade war.
Speaker 14: Yeah, Look, nobody holding stocks right now is comfortable, especially
Speaker 14: tech investors. Tech will overweight impact from tariffs. Who whether's
Speaker 14: the electronics, the data center equipment. We're talking hundreds of
Speaker 14: billions and imports every year that could be impacted. Ultimately, though,
Speaker 14: the market can top on good news and it can
Speaker 14: bottom on bad news. Meaning we're seeing SMH Semiconductor at
Speaker 14: ETF up five percent despite the threat of up to
Speaker 14: one hundred percent or higher tariffs in China not confirmed,
Speaker 14: but we've seen some activity over the weekend in that regard.
Speaker 14: What that means is we are positioned for a bounce.
Speaker 14: We think that we're in.
Speaker 15: Extreme over sold conditions.
Speaker 14: If you look at the sentiment reading retail has almost
Speaker 14: never been so bearished. It's retail is more bearished than
Speaker 14: COVID and more barrished in two thousand and nine. What
Speaker 14: that means is the market is over sold. We are
Speaker 14: positioned for a bounce, and that bounce may or.
Speaker 2: May not.
Speaker 15: Continue onward.
Speaker 14: Meeting, we still remain cautious even with position for a bounce.
Speaker 5: So forgive me, Beth, Have we or have we not
Speaker 5: hit the bottom in tech?
Speaker 14: We have unlikely, It is not likely we've hit the
Speaker 14: bottom through all of the damage that was done last
Speaker 14: week and the damage that we could see this year.
Speaker 3: So, Beth, we tend to you when iofund has performed
Speaker 3: most benchmarks for the last couple of years, and indeed
Speaker 3: a lot of the other tech focused funds, do you
Speaker 3: make the most of these valuations, just go very focused
Speaker 3: on individual names and just withstand the volatility, or do
Speaker 3: you wait for a better outcome?
Speaker 2: Do you wait for more clarity from president?
Speaker 15: It's a little bit of both. We layered in on
Speaker 15: Friday and Monday.
Speaker 14: The reason is we it's clear to us probability favors
Speaker 14: that bounce. That bounce is very important for a tech
Speaker 14: investor because of the damage that was done. You have
Speaker 14: to capture that bounce if you're going to compete on
Speaker 14: an annual basis like my firm, and therefore capturing that
Speaker 14: balance is key.
Speaker 15: De Risking on a bounce rather.
Speaker 14: Than during capitulation is everything to a tech investor being
Speaker 14: very strategic, So de risking on that bounce is key
Speaker 14: to the performance this year.
Speaker 3: It's interesting Besson close Treasure Sectory has time and time
Speaker 3: again said this isn't a MAGA problem, this is a
Speaker 3: MAG seven problem. Then, as that peaked back in February,
Speaker 3: this is actually about deep seek and to that point,
Speaker 3: we've seen pressure on chip stocks running into this tariff crisis.
Speaker 3: We were worried about an AI infrastructure bubble. How much
Speaker 3: have you been paying credence to that or was the
Speaker 3: market getting that wrong too?
Speaker 15: It is a MAG seven problem.
Speaker 14: We hold very few MAG seven stocks because of the outside.
Speaker 15: Spending on cap X.
Speaker 14: You have to think about is the schedules for depreciation
Speaker 14: on servers is that even accurate? Is it really going
Speaker 14: to be a five to six year depreciation schedule?
Speaker 15: That matters because if it's not, and it's it's.
Speaker 14: More brief due to these blackwall systems coming out, and
Speaker 14: then Blackwell Ultra and then Reuben. You know, we can
Speaker 14: see more effects on the bottom line, meaning they're the customers.
Speaker 14: That is not typically the way the Mag seven was constructed,
Speaker 14: and that piece is important to understand. There's a shift
Speaker 14: in how big tech was the producer, but now it's
Speaker 14: the customer.
Speaker 5: I saw you say on X the other day that
Speaker 5: Ai needs compute and when it comes to compute and
Speaker 5: video is the gold standard. So if you don't hold
Speaker 5: many Mag seven names, do you hold in Vidia? How
Speaker 5: do you see Nvidia's ability to continue its trajectory in
Speaker 5: this environment?
Speaker 15: In Vidia is the exception.
Speaker 14: Video is the beneficiary from all of this CAPEX very
Speaker 14: low China exposure. There's a seventy conductor exemption to the tariffs.
Speaker 15: Of course there would still be there would still.
Speaker 14: Be some impact, but by far the safest stock in
Speaker 14: the market today is in Vidia.
Speaker 3: Currently trading more than five percent higher. Beth Kinnig, great
Speaker 3: to have you on the show, lead tech analyst and
Speaker 3: the Iofund.
Speaker 2: We thank you.
Speaker 3: We have some breaking news for you at the moment,
Speaker 3: and this time it's not on tariffs, but we understand
Speaker 3: that hackers have indeed been spying on one hundred bank
Speaker 3: regulators emails for over a year.
Speaker 2: Ed, we're going to be delving into the details.
Speaker 3: I know you've got the story in front of you
Speaker 3: at the moment, But hackers spying on one hundred bank regulators'
Speaker 3: emails for over a year, just showing the extent to
Speaker 3: which technology has been lapsing key overseers here.
Speaker 14: Yeah.
Speaker 5: The Bloomberg reports that site sources basically says that the
Speaker 5: hackers had access to the deliberations of regulators who are
Speaker 5: deliberating information about the banks they oversee. Clearly, it's a
Speaker 5: deep report. One hundred and fifty thousand emails from June
Speaker 5: twenty twenty three until they were discovered earlier this year.
Speaker 5: We'll get with the team that broke that story. It
Speaker 5: seems like a big one that's sarting to have repercussions
Speaker 5: from Bloomberg Tech Newsroom. There's a lot more happening in
Speaker 5: the world as well. Elon Musk took to x to
Speaker 5: criticize President Trump's top trade advisor Pete Navarro, calling him
Speaker 5: quote a moron. This was in response to Navara's comment
Speaker 5: that Musk is a car assembler rather than a car manufacturer.
Speaker 5: That also comes after Elon Musk's younger brother, Kimball Musk,
Speaker 5: criticized President Trump's tariff strategy, calling them a quote structural
Speaker 5: permanent acts on the American consumer. Bloomberg's Curra Coulson is
Speaker 5: in Austin, Texas and has the fortunate job of untangling
Speaker 5: all of that. I think we should start with the
Speaker 5: feud between Navarro and Musk. And actually, if you look
Speaker 5: at the data third Party or Tessa Zone, there is
Speaker 5: support for what Elon Musk is saying that vehicles built
Speaker 5: in the United States source components from the United States,
Speaker 5: are assembled and manufactured in the United States sort of
Speaker 5: knows the tail.
Speaker 15: Yeah, definitely.
Speaker 16: You know, this is something that Tesla's been promoting for
Speaker 16: a while. They say promotions frequently in the last few
Speaker 16: months that are you know, Tesla's are American made. They
Speaker 16: know this is something and simmers they are looking for
Speaker 16: as they get concerned about Tariff's.
Speaker 15: Something they've been touting.
Speaker 16: And you know, Elon Musk hasn't directly said anything on
Speaker 16: Trump's policies, but he has been speaking out against tariffs.
Speaker 16: He's been saying the tariffs, Trump's tariffs as well will
Speaker 16: impact Tesla you know, they're not completely insulated, even as
Speaker 16: he acknowledges that Tesla is, in his opinion, more American
Speaker 16: made than other cars.
Speaker 3: Carl What we're trying to pass here is what is
Speaker 3: happening in an administration, in a White House level, and
Speaker 3: who has the air of President Trump, and on tariffs,
Speaker 3: it feels as though Elon has not. In fact, he
Speaker 3: goes as far as to not just call Peter Navarro
Speaker 3: a moron, but calling him dumber than a sack of bricks.
Speaker 3: I mean, it feels as though he's pushing against the
Speaker 3: flow the trajectory here.
Speaker 15: Yeah, over the.
Speaker 16: Weekend, you know, Elon Musk did push back on just
Speaker 16: the concept of tariffs alone.
Speaker 15: He was saying, you know, he boughts.
Speaker 16: More of a free open trade between Europe and the US.
Speaker 16: He's he is definitely more pro free market, and it's
Speaker 16: something he has said.
Speaker 15: Before in the past.
Speaker 16: And while Tesla was initially seen as kind of an
Speaker 16: initial winner in the tariffs where it'd be less affected,
Speaker 16: you know, executives have said there is expected impact from
Speaker 16: tariff's aunt Tesla.
Speaker 3: Kyral Carlson breaking it down, We thank you. Meanwhile, let's
Speaker 3: just think about President Trump's tariff uncertainty changing the minds
Speaker 3: to some of the biggest bills on Wall Street. Dan
Speaker 3: Ives webbush slashing his Apple and Tesla price targets, writing,
Speaker 3: these tariffs are so absurd, scary, uncertain to anyone that
Speaker 3: has a basic understanding of the global supply chain and
Speaker 3: the way US tech companies operate and US consumers live
Speaker 3: their daily lives, dan Ives joins us. Now, you also
Speaker 3: wrote in your Tesla piece that Elon must needed to
Speaker 3: step up.
Speaker 2: If he needed to lead. Is this him leading?
Speaker 3: Is this him stepping up, pushing back against Peter Nevara.
Speaker 7: Look, I mean it's our view. Musk basically needs to
Speaker 7: leave the government. I mean because if you look at
Speaker 7: the brand damage, you just cannot deny it. I mean,
Speaker 7: I think there's twenty percent actually permanent brand damage in Europe,
Speaker 7: ten percent of the least in the US. And he's
Speaker 7: pushing back because look, Musk, he's getting calls from Fremont,
Speaker 7: from Arsten, from what he's hearing in China and in Jeremy.
Speaker 7: No one's probably more plugged in along with you, Nadella,
Speaker 7: and along with Jensen obviously Cook than Musk. So he
Speaker 7: knows tariffs it's a disaster across the board, and it's
Speaker 7: our view it sends the tech industry back a decade
Speaker 7: if these tariffs actually hit.
Speaker 5: And on the other hand, Tesla's more insulated than the
Speaker 5: others on tariffs, right. So what I tried to distinguish
Speaker 5: in your note is those forecasts you gave on demand loss.
Speaker 5: You said ten percent globally, but more severe in China
Speaker 5: in the EU. That's not really a tariff's issue, right,
Speaker 5: It's a reputational issue of Musk's association with Trump. Just
Speaker 5: explain your modeling.
Speaker 7: Yeah, I mean ed, Unfortunately, Tasso has become a political
Speaker 7: symbol around the world, but in a bad way, right.
Speaker 7: I mean, if any frustration toward Trump douge tariffs globally,
Speaker 7: there's one symbol, it's Tesla, and your Musk obviously went
Speaker 7: into the government, you know, in terms of Doge and
Speaker 7: everything we've seen and we've talked about, it's a leaks
Speaker 7: one hundred hour overhanging the stock. And I think when
Speaker 7: you look at trying to model it, there's brand damage,
Speaker 7: there's tariff issues, and you're just trying to take stabs
Speaker 7: at it. I mean, they just came off of a
Speaker 7: disaster one queue delivery number and you know, somebody, it's
Speaker 7: been such a long term bull and remember we didn't
Speaker 7: lower our rating, still maintain our bullshes on an autonomous
Speaker 7: on rebox in the future of Tesla. In my view,
Speaker 7: it's been it's been a sad few months to watch
Speaker 7: it because it's brand destruction by the hour, by the day.
Speaker 2: Can't deny it, Dan, can't deny it.
Speaker 3: But as you say, you're still overweight and you still
Speaker 3: see maybe twenty eight percent upside from here.
Speaker 2: So what is the recovery process here?
Speaker 3: Because it takes a long time to build brand and
Speaker 3: very quick to destroy it.
Speaker 7: There's three things. One, he has to leave government. So
Speaker 7: when you look at what's happened in Navar, like you know,
Speaker 7: investors will wonder like it's just the first step in
Speaker 7: terms of stage left, and we've talked about it's a
Speaker 7: key sixty ninety days ahead. Two. If that happens, you
Speaker 7: have brand damage. Some of that's permanent, but it's a scar,
Speaker 7: it's a black eye. It stitches, but it doesn't change
Speaker 7: the long term view of Tesla in terms of autonomous
Speaker 7: robotics in the broader future. The third thing is it's
Speaker 7: investors understanding like what the game plan is here? You
Speaker 7: have bid that's rising as a competitor global and you
Speaker 7: can in Rosecar Glass to say it, they're not you
Speaker 7: need a CEO Musk in that seat as CEO of Tesla.
Speaker 7: You can't be spending five percent, three percent, two percent
Speaker 7: of your time there and the rest of the government.
Speaker 7: That's been the frustration because Musk is Tesla.
Speaker 3: Tesla is Musk, But what does he bring out to
Speaker 3: compete against BYD when he doesn't want to erode from
Speaker 3: a price point, Everyone feeling that it would be cannibalizedation
Speaker 3: if you brought back a much lower price competitor to
Speaker 3: a Model three for example, where does he go the
Speaker 3: cyber truck isn't selling.
Speaker 7: Yeah, but our view is that ninety percent of the
Speaker 7: value of Tesla going forward is autonomous robot It's about
Speaker 7: unservised FSD in Austin. It's about launching everything robotech. When
Speaker 7: you when you look into the next year of cybercaps
Speaker 7: that they could do a core scale production. And I
Speaker 7: think that's why, like when you look at these tariffs, Tesla, Apple,
Speaker 7: Gimp could go across the board. It cuts the legs
Speaker 7: off of US tech and that's been why you know,
Speaker 7: it's just such a very frustrating uncertain time.
Speaker 5: Dan I got a question from the audience on X
Speaker 5: from Mark Munro who asks if tech companies are removing guidance.
Speaker 5: I think he means will they remove guidance?
Speaker 7: Oh yeah, I mean any tech company that gives guidance,
Speaker 7: I'd be shocked because right now it's blindfolded darts. You
Speaker 7: don't know where guidance is going to go. And that's
Speaker 7: but it speaks a point. We're gonna have rallies. You
Speaker 7: see number cuts, and we've tried to cut some numbers.
Speaker 7: Other analysts have as well. But I mean the one
Speaker 7: you put these tariffs in when it comes to China Taiwan,
Speaker 7: then ultimately you're gonna have to toss out two Q numbers.
Speaker 7: You're gonna toss out three Q numbers street assuming it's
Speaker 7: some sort of three to six month trade battle, you know,
Speaker 7: then they'll basically look at what did twenty twenty six
Speaker 7: numbers look like? And that's how investors are going to
Speaker 7: ultimately when you look like worst case, base case, best case,
Speaker 7: all the thing that we're talking about, investors around the world,
Speaker 7: you know, over the last called seventy two hours. That's
Speaker 7: where you look at n video, what's baked in, what's
Speaker 7: baked into Microsoft worst base right, barecase.
Speaker 5: I's a web bash.
Speaker 17: Thank you very much, appreciate its.
Speaker 5: Breaking use crossing the bloem bg terminal. The Supreme Court
Speaker 5: has backed President Trump for now in the issue of
Speaker 5: federal worker firings. It's a case that's being discussed as
Speaker 5: part of the broader initiative of layoffs and voluntary redundancies.
Speaker 5: Voluntary the DOGE is undertaking. The wording of the headline
Speaker 5: is for now, Caroline indicating I think that it's a
Speaker 5: temporary judgment and that there's more to come on waiting
Speaker 5: for the story to hit the terminal as well, but
Speaker 5: it's one that we're watching closely. There's another big story
Speaker 5: happening in our world on bluebog technology, and that's private markets.
Speaker 5: It was supposed to be the year for IPOs among
Speaker 5: venture catalysts and startups. Instead, President Trump's tariffs have put
Speaker 5: a pause on any ambitions to go public, with the
Speaker 5: likes of StubHub and Klana pulling back on their plans.
Speaker 5: Bluemost Katie Ruth joins us and you summarize the anxiety
Speaker 5: that's out there, the panic brilliantly in the peace out overnight.
Speaker 5: I'd be honest. When I woke up, I got text
Speaker 5: messages from both sides. Some said paralysis, some said there's
Speaker 5: some panic happening, but people are moving. Summarize your reporting.
Speaker 18: Sure, other than Trump's strongest supporter is most of Silicon Valley.
Speaker 18: Most vcs we talked to very upset about this. You know,
Speaker 18: basically there's two issues here. It's delaying some much needed
Speaker 18: IPOs due to market volatility, and then also could bring
Speaker 18: higher costs to some of their businesses, depending on the
Speaker 18: business line. But as you know, there haven't been a
Speaker 18: lot of IPOs for three years, and this is supposed
Speaker 18: to be that quarter.
Speaker 3: LPs getting pretty anxious and leaning on the vcs, Katie,
Speaker 3: But what about current funding rounds. Are there any areas where,
Speaker 3: particularly in the AI space, companies are still able to raise.
Speaker 18: Sure and so normally there's a lag effect, you know,
Speaker 18: from public market volatility to private markets. Wh It takes
Speaker 18: a few months for things to trickle down at each stage.
Speaker 18: But you know, I think it partly also depends on
Speaker 18: the sector. Obviously, if there's a direct business impact if anything,
Speaker 18: you know, if their revenue could be hit by this,
Speaker 18: if their costs could go up because of this due
Speaker 18: to international trade, those things are going to have a
Speaker 18: tougher time fundraising right now, or at least at the
Speaker 18: terms that they thought they could get. But you know,
Speaker 18: if it's something that's not directly impacted by the tariffs,
Speaker 18: then you know, you may see things remain relatively constant
Speaker 18: from a fundraising perspective, unless there's a broader issue with
Speaker 18: the market, although it seems like it's kind of resolved
Speaker 18: a little bit so far.
Speaker 3: Jake Saper, who you quote from Emergency Capital, we're trying
Speaker 3: to triage and figure out. Katie Ruth, thanks so much
Speaker 3: for that story. And let's talk about one area where
Speaker 3: a company is potentially move.
Speaker 2: Mickey moves. Billionaire Michael gonovogratz Ha's got his wish.
Speaker 3: His crypto conglomerate, Galaxy Digital Holdings Limited, has received permission
Speaker 3: for a direct listing on the Nasdaq Stock Exchange. Finally,
Speaker 3: this company can trade in the United States as well
Speaker 3: as in Canada, where we're exsuming. Trading is expected to
Speaker 3: actually happen pretty shortly ed after a special shareholder meeting
Speaker 3: on May ninth.
Speaker 2: The company has said all of this in a press release.
Speaker 5: This is the US Justice Department will limit the kinds
Speaker 5: of cryptocurrency crimes it will investigate and prosecute. We've got
Speaker 5: a memo. The DOJ said it will focus on cases
Speaker 5: related to terrorism, drug cartels, victimizing investors, and other limited categories.
Speaker 5: One story will continue to track Carrot throughout the year.
Speaker 3: Yeah, all things on Crypto News. Crypto Show coming up
Speaker 3: twelve pm at Eastern time. But that does it for
Speaker 3: this edition of Bloomberg Technology. Check in on the markets
Speaker 3: as we continue to rally today as a Bloomberg Technology