1
00:00:00,040 --> 00:00:06,720
Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

2
00:00:11,640 --> 00:00:15,440
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

3
00:00:15,480 --> 00:00:18,680
Speaker 2: with Lisa Bromwitz and Amrie Hordernt. Join us each day

4
00:00:18,720 --> 00:00:22,280
Speaker 2: for insight from the best in markets, economics, and geopolitics

5
00:00:22,400 --> 00:00:24,880
Speaker 2: from our global headquarters in New York City. We are

6
00:00:24,920 --> 00:00:27,680
Speaker 2: live on Bloomberg Television weekday mornings from six to nine

7
00:00:27,720 --> 00:00:31,280
Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

8
00:00:31,320 --> 00:00:33,919
Speaker 2: anywhere else you listen, and as always on the Bloomberg

9
00:00:34,000 --> 00:00:37,239
Speaker 2: Terminal and the Bloomberg Business app. We'll begin this out

10
00:00:37,240 --> 00:00:39,640
Speaker 2: with stocks adding to losses following the NASTAG one hundred's

11
00:00:39,640 --> 00:00:42,479
Speaker 2: biggest two day job since October. Liz Ane Sander's a

12
00:00:42,560 --> 00:00:45,720
Speaker 2: child swap, writing, corllage, and software stocks likely tied to

13
00:00:45,760 --> 00:00:48,879
Speaker 2: the nature of speculation in the AI space headlines and

14
00:00:48,920 --> 00:00:52,080
Speaker 2: even a slight change in the narrative can result in

15
00:00:52,200 --> 00:00:55,080
Speaker 2: fierce moves. Lizan joins us now for more Lizen, we

16
00:00:55,120 --> 00:00:58,320
Speaker 2: have seen some fierce moves, welcome to the program. We've

17
00:00:58,320 --> 00:01:01,400
Speaker 2: seen them in precious metals mass de leveraging there. We

18
00:01:01,440 --> 00:01:03,640
Speaker 2: looked at Bigcoin earlier on this morning. A break is

19
00:01:03,720 --> 00:01:07,560
Speaker 2: seventy thousand software more recently hammered private market firms too.

20
00:01:08,040 --> 00:01:10,839
Speaker 2: Is there a common thread to the deleveraging we've seen

21
00:01:10,840 --> 00:01:13,360
Speaker 2: in each individual pocket of the market.

22
00:01:14,120 --> 00:01:16,720
Speaker 3: Well, I think the deleveraging piece, John is an important

23
00:01:16,720 --> 00:01:19,280
Speaker 3: part of it when you look at how much leverage

24
00:01:19,280 --> 00:01:22,000
Speaker 3: it built into things like the gold trade and the

25
00:01:22,080 --> 00:01:23,840
Speaker 3: silver trade, and then the fact that you had the

26
00:01:23,880 --> 00:01:28,400
Speaker 3: CME raised margin requirements that pushed a lot of speculators

27
00:01:28,400 --> 00:01:31,880
Speaker 3: out fairly quickly. There was deleveraging there. Anytime you have

28
00:01:32,480 --> 00:01:35,720
Speaker 3: margin issues, raising of margin requires margin calls. That has

29
00:01:35,720 --> 00:01:40,479
Speaker 3: feeders into other high momentum areas. I really think one

30
00:01:40,520 --> 00:01:44,600
Speaker 3: of the threads too, is that rotation is the new

31
00:01:44,640 --> 00:01:48,040
Speaker 3: momentum trade. So there's a lot of money positioned to

32
00:01:48,120 --> 00:01:51,880
Speaker 3: find not just the shiny new object, but what's the

33
00:01:51,960 --> 00:01:55,040
Speaker 3: dull new object and kind of chase that rotation. And

34
00:01:55,120 --> 00:01:57,520
Speaker 3: I think we stay in that environment, probably at least

35
00:01:57,560 --> 00:01:58,200
Speaker 3: in the near term.

36
00:01:58,240 --> 00:02:00,600
Speaker 2: How much confidence can we take Lasan to your point

37
00:02:00,640 --> 00:02:03,200
Speaker 2: from the moves we've seen an equal white record high

38
00:02:03,240 --> 00:02:05,680
Speaker 2: regional bank stocks just short of all time highs. How

39
00:02:05,760 --> 00:02:06,880
Speaker 2: much weight can we put on that.

40
00:02:08,080 --> 00:02:11,760
Speaker 3: I think the broadening trade has legs because there's fundamental

41
00:02:11,840 --> 00:02:14,440
Speaker 3: underpinnings to it. It's not just a rotation trade. But

42
00:02:14,480 --> 00:02:18,040
Speaker 3: when you look at the direction of travel, you look

43
00:02:18,080 --> 00:02:20,400
Speaker 3: at the earnings growth rates save for the cohort that

44
00:02:20,480 --> 00:02:22,360
Speaker 3: is the Magnificent seven, and you compare it to the

45
00:02:22,360 --> 00:02:25,720
Speaker 3: other four hundred and ninety three. The growth rate for

46
00:02:25,760 --> 00:02:27,520
Speaker 3: the mag seven is still higher than the other four

47
00:02:27,560 --> 00:02:29,880
Speaker 3: in ninety three, but the direction is what matters, and

48
00:02:29,960 --> 00:02:32,720
Speaker 3: the direction is heading down a bit for the seven,

49
00:02:32,919 --> 00:02:35,200
Speaker 3: up a bit for the four ninety three. You're seeing

50
00:02:35,200 --> 00:02:37,760
Speaker 3: it down the cap space where you've actually got not

51
00:02:38,000 --> 00:02:41,560
Speaker 3: just a positive trajectory in terms of earnings growth at

52
00:02:41,639 --> 00:02:44,400
Speaker 3: higher levels for an index like the Rustle two thousand,

53
00:02:44,639 --> 00:02:47,200
Speaker 3: but a little bit more stability in that outlook as

54
00:02:47,200 --> 00:02:50,240
Speaker 3: opposed to high estimates and then they get pulled down

55
00:02:50,280 --> 00:02:52,480
Speaker 3: when you're in earning season. So I think there are

56
00:02:52,960 --> 00:02:58,799
Speaker 3: fundamental underpinnings the buildout of AI adding to the benefit

57
00:02:59,000 --> 00:03:02,200
Speaker 3: of the more cyclical areas, be it energy or industrials

58
00:03:02,560 --> 00:03:05,280
Speaker 3: and materials. That helps to explain the broadening out trade

59
00:03:05,400 --> 00:03:08,000
Speaker 3: outside of the US, because many of those more cyclical

60
00:03:08,000 --> 00:03:11,640
Speaker 3: areas is what dominate their economies as opposed to tech

61
00:03:11,680 --> 00:03:14,960
Speaker 3: having been the dominant force in our economy. So I

62
00:03:15,000 --> 00:03:18,679
Speaker 3: think it's a meaningful shift that probably will continue.

63
00:03:18,800 --> 00:03:21,240
Speaker 4: Given this meaningful shift that a lot of people are

64
00:03:21,280 --> 00:03:24,080
Speaker 4: pricing into a number of different assets, how do you

65
00:03:24,560 --> 00:03:28,080
Speaker 4: take into consideration announcement like what we got today from Challenger,

66
00:03:28,120 --> 00:03:30,480
Speaker 4: Gray and Christmas with the greatest number of job cut

67
00:03:30,520 --> 00:03:33,359
Speaker 4: announcements in a January going back to two thousand and nine.

68
00:03:34,400 --> 00:03:36,600
Speaker 3: Well, you know, at least you were right to point

69
00:03:36,600 --> 00:03:39,800
Speaker 3: out a little bit earlier that there's a concentration there

70
00:03:39,800 --> 00:03:42,400
Speaker 3: in terms of a small number of companies. But I

71
00:03:42,400 --> 00:03:45,560
Speaker 3: think this is a really well, it's a potentially important

72
00:03:45,680 --> 00:03:49,120
Speaker 3: data point here if it's not a one month blip

73
00:03:49,480 --> 00:03:52,920
Speaker 3: because much has been discussed about the low hiring, low

74
00:03:52,960 --> 00:03:58,120
Speaker 3: firing kind of backdrop. Obviously, ideally if that's going to break,

75
00:03:58,400 --> 00:04:01,320
Speaker 3: it breaks by higher hiring. But if it starts to

76
00:04:01,360 --> 00:04:05,000
Speaker 3: break in the other direction, I think that changes the

77
00:04:05,080 --> 00:04:08,040
Speaker 3: narrative around the employment picture. It may also change the

78
00:04:08,120 --> 00:04:12,040
Speaker 3: narrative as it relates to federal reserve policy. So if

79
00:04:12,080 --> 00:04:14,960
Speaker 3: you wanted to put something on the maybe the bullish

80
00:04:15,000 --> 00:04:17,600
Speaker 3: for the market side of the ledger, you could point

81
00:04:17,640 --> 00:04:19,440
Speaker 3: to that. I think it's too soon to tell. But

82
00:04:20,000 --> 00:04:22,719
Speaker 3: you guys also pointed out earlier that in the absence

83
00:04:22,800 --> 00:04:25,599
Speaker 3: of the jobs report, which of course we'll only get

84
00:04:25,680 --> 00:04:29,080
Speaker 3: we'll only get a few days delayed, we put more weight.

85
00:04:29,160 --> 00:04:32,680
Speaker 3: And when you look at the ADP data too, there

86
00:04:32,800 --> 00:04:36,920
Speaker 3: was meat in there. Smaller companies really under pressure. The

87
00:04:36,960 --> 00:04:39,520
Speaker 3: only place where job growth is robust is in those

88
00:04:39,560 --> 00:04:43,839
Speaker 3: more defensive areas like health services and education, with the

89
00:04:43,839 --> 00:04:47,400
Speaker 3: biggest draw down coming in professional and businesses services. That

90
00:04:47,480 --> 00:04:50,080
Speaker 3: ties into where you're seeing weakness and challenger.

91
00:04:50,040 --> 00:04:52,039
Speaker 4: This seems like a really mundied moment, and I really

92
00:04:52,080 --> 00:04:54,839
Speaker 4: just want to lean into impair this idea with the

93
00:04:54,920 --> 00:04:57,320
Speaker 4: leverage trades that you see unwinding and this comment that

94
00:04:57,360 --> 00:04:59,360
Speaker 4: you made that I think is fantastic, which is rotation

95
00:04:59,480 --> 00:05:02,159
Speaker 4: is a new moment um trade. Do you see a

96
00:05:02,240 --> 00:05:04,920
Speaker 4: potential at which you start to fade some of this

97
00:05:05,000 --> 00:05:07,440
Speaker 4: is broadening out in the near term, not the long term,

98
00:05:07,640 --> 00:05:09,160
Speaker 4: because the momentum gets ahead of itself.

99
00:05:09,160 --> 00:05:10,080
Speaker 5: I mean, is that sort of the.

100
00:05:10,040 --> 00:05:13,520
Speaker 4: Recipe for twenty twenty six is to sort of fade

101
00:05:13,520 --> 00:05:16,560
Speaker 4: the extremes as this rolling ball of cash just keeps

102
00:05:16,560 --> 00:05:17,960
Speaker 4: going to different sectors.

103
00:05:19,520 --> 00:05:23,599
Speaker 3: And I think there's a healthy underpinning. When you have

104
00:05:23,920 --> 00:05:30,040
Speaker 3: when you have sort of excess, get healed evaluation, excess,

105
00:05:30,080 --> 00:05:35,120
Speaker 3: speculation access via a process of rotation. I think that's

106
00:05:35,200 --> 00:05:41,120
Speaker 3: an easier to stomach kind of healing of those excesses

107
00:05:41,160 --> 00:05:43,480
Speaker 3: than if the bottom fell all at once. For instance,

108
00:05:43,560 --> 00:05:46,760
Speaker 3: the Nasdaq at the index level has only had a

109
00:05:46,839 --> 00:05:51,520
Speaker 3: four percent drawdown maximum drawdown so far this year, but

110
00:05:51,760 --> 00:05:55,400
Speaker 3: the average member within the Nasdaq is down just under

111
00:05:55,440 --> 00:05:59,280
Speaker 3: twenty percent, So you've had sort of this internal bear market.

112
00:05:59,360 --> 00:06:02,520
Speaker 3: It just happened and through a process of time. I

113
00:06:02,560 --> 00:06:05,640
Speaker 3: think probably most investors would choose that kind of twenty

114
00:06:05,720 --> 00:06:09,040
Speaker 3: percent draw down versus the index coming down twenty percent

115
00:06:09,120 --> 00:06:12,719
Speaker 3: all at once. So it's painful if you're caught on

116
00:06:12,760 --> 00:06:15,360
Speaker 3: the wrong side of the proverbial trade. But I think

117
00:06:15,400 --> 00:06:18,800
Speaker 3: that's a healthy way to go through a process of

118
00:06:18,880 --> 00:06:22,080
Speaker 3: healing some of this sexcess, particularly on the speculation side.

119
00:06:22,440 --> 00:06:26,120
Speaker 2: Stay with us more Blomberg surveillance coming up after this.

120
00:06:35,520 --> 00:06:35,719
Speaker 3: Plan.

121
00:06:35,839 --> 00:06:39,240
Speaker 2: Campex at Alphabet as much as one hundred and eighty

122
00:06:39,320 --> 00:06:42,320
Speaker 2: five billion dollars this year, so for twenty six that's

123
00:06:42,360 --> 00:06:45,240
Speaker 2: more than the previous three years combined. Who's a help

124
00:06:45,240 --> 00:06:48,279
Speaker 2: in this morning? Chip makers and video, AMD and Broadcom

125
00:06:48,360 --> 00:06:50,360
Speaker 2: looking at cash in and VideA this morning got by

126
00:06:50,360 --> 00:06:52,640
Speaker 2: more than one percent. Joining us now to discuss is

127
00:06:52,720 --> 00:06:56,200
Speaker 2: Chris Casso. It covers semiconductors for Wolf Research. Chris, Welcome

128
00:06:56,240 --> 00:06:58,880
Speaker 2: to the program. Let's talk about where we were yesterday

129
00:06:58,880 --> 00:07:01,800
Speaker 2: before we get to we are this morning. Yesterday, I

130
00:07:01,880 --> 00:07:03,720
Speaker 2: found like at one point that maybe the pain and

131
00:07:03,839 --> 00:07:07,719
Speaker 2: software is beginning to bleed into hardware, into things like

132
00:07:07,839 --> 00:07:11,200
Speaker 2: chips and semi's Chris, how insulted are they from developments elsewhere.

133
00:07:12,400 --> 00:07:16,600
Speaker 1: Well, you know that the pain and software bleeding into

134
00:07:16,640 --> 00:07:19,200
Speaker 1: ships doesn't make a ton of sense to us, because

135
00:07:19,400 --> 00:07:22,160
Speaker 1: the stocks that we cover, the semiconductor stocks, are enabling

136
00:07:22,200 --> 00:07:27,400
Speaker 1: the disruption that that's happening, or you know, as potentially happens. So,

137
00:07:27,720 --> 00:07:30,600
Speaker 1: you know, we've been pretty positive on this, and particularly

138
00:07:30,880 --> 00:07:33,960
Speaker 1: in the part of the space which is underperformed over

139
00:07:33,960 --> 00:07:36,120
Speaker 1: the last six months, which is you know, the the

140
00:07:36,640 --> 00:07:40,280
Speaker 1: chip makers themselves, the in Vidia, A m D, Broadcom.

141
00:07:40,880 --> 00:07:44,560
Speaker 1: What we've seen is the suppliers to the chip makers,

142
00:07:44,360 --> 00:07:47,840
Speaker 1: like memory and semiicap equipment has actually done very well,

143
00:07:48,160 --> 00:07:50,680
Speaker 1: but you know, in Nvidia has underperformed, and that's kind

144
00:07:50,680 --> 00:07:51,760
Speaker 1: of where we've pivoted a bit.

145
00:07:51,800 --> 00:07:53,960
Speaker 2: Now, Chris, when Alphabet comes out and says we're going

146
00:07:54,000 --> 00:07:55,480
Speaker 2: to spend as much as one hundred and eighty five

147
00:07:55,520 --> 00:07:57,360
Speaker 2: billion this year, who gets that money?

148
00:07:57,560 --> 00:07:58,280
Speaker 6: Who wins it?

149
00:07:59,320 --> 00:08:03,040
Speaker 5: Well, broad would be the biggest supplier to Google.

150
00:08:03,720 --> 00:08:07,280
Speaker 1: They do the chip that is Google's TPU chip, which

151
00:08:07,320 --> 00:08:09,240
Speaker 1: is their custom chip for AI.

152
00:08:09,560 --> 00:08:12,000
Speaker 5: So Broadcom is the biggest beneficiary of that.

153
00:08:12,360 --> 00:08:14,320
Speaker 1: But you know, we've also saw a big spending for

154
00:08:14,440 --> 00:08:17,600
Speaker 1: Meta as well last week. This is not just a

155
00:08:17,640 --> 00:08:20,040
Speaker 1: Google trend, this is a this is an overall trend.

156
00:08:20,640 --> 00:08:21,320
Speaker 5: How much does this.

157
00:08:21,280 --> 00:08:23,040
Speaker 4: Really indicate that they're going to be willing I'm talking

158
00:08:23,080 --> 00:08:26,320
Speaker 4: about Meta and Google and others who are the buyers

159
00:08:26,360 --> 00:08:28,720
Speaker 4: of the Nvidia products, of the A M D products.

160
00:08:28,800 --> 00:08:30,960
Speaker 4: How much are they willing to continue paying up? Is

161
00:08:31,000 --> 00:08:34,200
Speaker 4: this a margin story that could potentially be crimping some

162
00:08:34,280 --> 00:08:36,599
Speaker 4: of the dynamism in terms of the share performance?

163
00:08:38,240 --> 00:08:41,000
Speaker 1: Well, you know, I mean, first with regard to the spending,

164
00:08:41,200 --> 00:08:44,600
Speaker 1: there's been concern about can the spending continue, can it

165
00:08:44,640 --> 00:08:48,440
Speaker 1: grow from these levels since you know, really you know,

166
00:08:48,840 --> 00:08:51,920
Speaker 1: twenty twenty three when chet GBT came out and now

167
00:08:52,000 --> 00:08:54,880
Speaker 1: Google is spending you know, more than the entire industry

168
00:08:54,880 --> 00:08:59,000
Speaker 1: did back at that time. So you know, that's one

169
00:08:59,040 --> 00:09:02,480
Speaker 1: part of it. The where I think investors have actually

170
00:09:03,000 --> 00:09:05,920
Speaker 1: been a little more comfortable, and you know, Google's had

171
00:09:05,920 --> 00:09:06,400
Speaker 1: a good run.

172
00:09:06,440 --> 00:09:08,720
Speaker 5: Meta was up on that on that earnings.

173
00:09:08,400 --> 00:09:12,480
Speaker 1: Report despite the big capex is that the customers of

174
00:09:13,280 --> 00:09:16,280
Speaker 1: the companies I cover are actually starting to monetize this now.

175
00:09:16,640 --> 00:09:20,040
Speaker 1: So you're getting some monetization in exchange for that this.

176
00:09:20,160 --> 00:09:24,480
Speaker 5: Very high spending. Uh So, you know, I think the fact.

177
00:09:24,160 --> 00:09:28,280
Speaker 1: That the customers of the companies I cover are actually

178
00:09:28,320 --> 00:09:31,080
Speaker 1: making money on this gives us more confidence that the

179
00:09:31,200 --> 00:09:32,800
Speaker 1: spending will in fact continue.

180
00:09:32,960 --> 00:09:33,440
Speaker 5: How much is.

181
00:09:33,440 --> 00:09:36,679
Speaker 4: Google stealing in video's lunch, especially given the fact that

182
00:09:36,679 --> 00:09:41,320
Speaker 4: the TPU is considered a more efficient way to play

183
00:09:41,920 --> 00:09:44,319
Speaker 4: the AI game for a lot of different customers.

184
00:09:45,440 --> 00:09:48,400
Speaker 1: Well, TPU that that Google provides has been successful for

185
00:09:48,480 --> 00:09:51,440
Speaker 1: some time, and they still buy a lot of Nvidia chips,

186
00:09:52,000 --> 00:09:54,480
Speaker 1: and most of those chips go into their own cloud

187
00:09:54,520 --> 00:09:56,959
Speaker 1: where enterprise customers will come to the Google Cloud and

188
00:09:56,960 --> 00:09:59,080
Speaker 1: they want to use in video. And because in video

189
00:09:59,120 --> 00:10:01,520
Speaker 1: as the industry stands there, Google has to do that.

190
00:10:01,640 --> 00:10:06,560
Speaker 1: Where Google uses TPU more more significantly is in their

191
00:10:06,559 --> 00:10:10,600
Speaker 1: own internal workloads and in that, you know, the way

192
00:10:10,640 --> 00:10:12,840
Speaker 1: we look at the market is that market is considered

193
00:10:12,960 --> 00:10:16,080
Speaker 1: kind of out out of in Vidia's available market. What's

194
00:10:16,200 --> 00:10:18,600
Speaker 1: changed over the last couple of months is that Google

195
00:10:19,040 --> 00:10:22,120
Speaker 1: has also started inviting some customers like Anthropic for example,

196
00:10:22,200 --> 00:10:25,520
Speaker 1: to come onto their cloud and use TPU, which has

197
00:10:25,559 --> 00:10:29,040
Speaker 1: expanded the market some. But in general, our view is

198
00:10:29,040 --> 00:10:32,040
Speaker 1: that the vast majority of this market is still in

199
00:10:32,160 --> 00:10:35,120
Speaker 1: Vidia's domain because it's the most flexible, they have the

200
00:10:35,160 --> 00:10:38,760
Speaker 1: software support. It's very hard for other customers to kind

201
00:10:38,760 --> 00:10:41,120
Speaker 1: of get off of in Vidia. Google is a bit

202
00:10:41,160 --> 00:10:44,600
Speaker 1: of an exception, and it's a big exception, but for

203
00:10:44,640 --> 00:10:48,040
Speaker 1: the most part that this is still going to be

204
00:10:48,080 --> 00:10:49,520
Speaker 1: a majority market for Nvidia.

205
00:10:49,840 --> 00:10:52,000
Speaker 7: Is that going to change though in the future at

206
00:10:52,000 --> 00:10:55,040
Speaker 7: some point where in Vidia's biggest competition is actually going

207
00:10:55,080 --> 00:10:56,000
Speaker 7: to be Google.

208
00:10:57,240 --> 00:11:01,320
Speaker 1: Well, and the question is so who else is Google

209
00:11:01,360 --> 00:11:03,800
Speaker 1: going to be able to sell TPU too? So, you know,

210
00:11:03,840 --> 00:11:07,880
Speaker 1: Google is you know, significant part of the of the market,

211
00:11:08,120 --> 00:11:11,400
Speaker 1: but they will they start selling it to others, and

212
00:11:11,800 --> 00:11:14,760
Speaker 1: our view is that you know, preps some and Anthropic

213
00:11:15,080 --> 00:11:18,560
Speaker 1: deal is one example of that, but Google is not

214
00:11:18,720 --> 00:11:21,120
Speaker 1: likely to sell TPU to Amazon. They're not likely to

215
00:11:21,160 --> 00:11:25,120
Speaker 1: sell it to Microsoft. If you're an enterprise customer doing

216
00:11:25,840 --> 00:11:28,640
Speaker 1: work on even the Google Cloud, you still need in

217
00:11:28,760 --> 00:11:31,480
Speaker 1: VideA because in Vidia has the software support. They support

218
00:11:31,520 --> 00:11:35,400
Speaker 1: all the frameworks. So I think there is a competitive threat.

219
00:11:35,520 --> 00:11:37,840
Speaker 1: I think it's it's baked into the cake right now,

220
00:11:38,160 --> 00:11:42,319
Speaker 1: and I don't think that competitive threat gets much more

221
00:11:42,320 --> 00:11:45,640
Speaker 1: significant now. One of the other factors is that everybody

222
00:11:45,720 --> 00:11:47,679
Speaker 1: else is also trying to do.

223
00:11:47,640 --> 00:11:48,160
Speaker 5: Their own ships.

224
00:11:48,200 --> 00:11:51,320
Speaker 1: Meta has their own chip, Amazon has their own chip,

225
00:11:51,679 --> 00:11:55,160
Speaker 1: and right now, the size of those chips is much.

226
00:11:54,960 --> 00:11:58,959
Speaker 5: Smaller than we're in Vidia and Google is right now.

227
00:11:59,520 --> 00:12:02,240
Speaker 1: If those chips kind of have their TPU moment and

228
00:12:02,320 --> 00:12:05,560
Speaker 1: get larger, then that becomes a bigger threat, but so

229
00:12:05,640 --> 00:12:06,600
Speaker 1: far we haven't seen that.

230
00:12:08,200 --> 00:12:08,840
Speaker 3: Sorry about that.

231
00:12:09,200 --> 00:12:13,120
Speaker 7: So basically, if Google is ahead of Meta and all

232
00:12:13,120 --> 00:12:16,960
Speaker 7: these others that are making TPUs, who do you think

233
00:12:17,120 --> 00:12:21,320
Speaker 7: is the most competition when it comes to Google's who's

234
00:12:22,160 --> 00:12:23,240
Speaker 7: right behind them in the race.

235
00:12:25,160 --> 00:12:30,800
Speaker 1: So you know, probably the other company that's doing their

236
00:12:30,800 --> 00:12:34,480
Speaker 1: own that is probably closest would be Amazon and their

237
00:12:34,520 --> 00:12:38,880
Speaker 1: trainingum ship. And so far it's been, you know, somewhat successful,

238
00:12:38,880 --> 00:12:41,040
Speaker 1: but nowhere near as successful as Google. So I'd say

239
00:12:41,040 --> 00:12:43,000
Speaker 1: that would probably be the next one that we'd be watching.

240
00:12:43,559 --> 00:12:47,040
Speaker 2: Stay with US multilindex, Savanna's coming up off to this

241
00:12:56,400 --> 00:12:59,240
Speaker 2: at Mosa, Ryman James writes in this US eron deal

242
00:12:59,280 --> 00:13:01,640
Speaker 2: making a piss active and since there but the US's

243
00:13:01,720 --> 00:13:04,920
Speaker 2: demands will be a high bar for Tehran, Saclair joins

244
00:13:04,960 --> 00:13:06,679
Speaker 2: us now for more, ED, welcome to the program. Let's

245
00:13:06,679 --> 00:13:08,800
Speaker 2: talk about as US demands, what are they?

246
00:13:10,000 --> 00:13:13,200
Speaker 8: Well, they don't want any reactivation of the nuclear program,

247
00:13:13,559 --> 00:13:16,960
Speaker 8: as Tyler highlighted, can any support for those proxy groups

248
00:13:17,520 --> 00:13:22,480
Speaker 8: President Trump wants kind of essentially probably regime change, which

249
00:13:22,520 --> 00:13:24,480
Speaker 8: is part of the high bar that we think that

250
00:13:24,640 --> 00:13:28,800
Speaker 8: is unable to be cleared here at Raymond James, we consistently.

251
00:13:28,280 --> 00:13:29,400
Speaker 6: Get questions about this.

252
00:13:29,840 --> 00:13:32,280
Speaker 8: But one thing that we have highlighted consistently on a

253
00:13:32,320 --> 00:13:35,360
Speaker 8: lot of these high geopolitical risks out there is that

254
00:13:35,440 --> 00:13:39,280
Speaker 8: they have been coming fast and furious, oftentimes unprecedented, but

255
00:13:39,400 --> 00:13:43,280
Speaker 8: often without a huge market impact. So from a market lens,

256
00:13:43,960 --> 00:13:47,160
Speaker 8: this here kind of is important, but maybe not as

257
00:13:47,200 --> 00:13:51,559
Speaker 8: important as other geopolitical events related to Iran have been

258
00:13:51,640 --> 00:13:53,160
Speaker 8: over the last decade or two.

259
00:13:53,720 --> 00:13:55,600
Speaker 7: ED, what do you think the tolerance the patient has

260
00:13:55,920 --> 00:13:58,040
Speaker 7: the president has right now in terms of how long

261
00:13:58,080 --> 00:14:00,240
Speaker 7: he's willing to let the talks go, because we have

262
00:14:00,280 --> 00:14:02,640
Speaker 7: seen the Iranians change the tenor of the talks and

263
00:14:02,679 --> 00:14:04,000
Speaker 7: also the location of the talks.

264
00:14:05,840 --> 00:14:08,160
Speaker 8: It is I think he's open, but I don't think

265
00:14:08,160 --> 00:14:09,800
Speaker 8: he has a huge tolerance here.

266
00:14:10,160 --> 00:14:11,040
Speaker 6: I think there's two things.

267
00:14:11,040 --> 00:14:14,480
Speaker 8: When we look back to kind of the kind of

268
00:14:14,520 --> 00:14:18,840
Speaker 8: attack on Iran last summer, the President outlined kind of

269
00:14:18,840 --> 00:14:22,360
Speaker 8: some clear issues. He gave a deadline, the deadline passed,

270
00:14:22,480 --> 00:14:25,400
Speaker 8: and he gave the order to strike. I think we

271
00:14:25,440 --> 00:14:28,120
Speaker 8: could see the same thing here, Emory. What I've seen

272
00:14:28,480 --> 00:14:30,960
Speaker 8: consistently from this president though, is that he will only

273
00:14:31,320 --> 00:14:34,160
Speaker 8: strike take a military action if he thinks that he

274
00:14:34,160 --> 00:14:37,440
Speaker 8: can have a quick win as well as the response

275
00:14:37,600 --> 00:14:40,120
Speaker 8: is not going to get him entangled into something deeper.

276
00:14:40,400 --> 00:14:42,400
Speaker 8: And so to me, that's one of the big debates here.

277
00:14:42,800 --> 00:14:45,040
Speaker 8: Is there something that he can do here that he

278
00:14:45,200 --> 00:14:47,720
Speaker 8: views is that quick win that he can send that

279
00:14:47,760 --> 00:14:50,880
Speaker 8: message to the regime, that he can get that activity

280
00:14:51,320 --> 00:14:53,480
Speaker 8: or that response that does not involve the loss of

281
00:14:53,600 --> 00:14:54,240
Speaker 8: US lives.

282
00:14:54,680 --> 00:14:56,880
Speaker 6: If he has that on the table, he absolutely takes that.

283
00:14:57,160 --> 00:14:59,280
Speaker 8: If he doesn't, that's where he might pause and give

284
00:14:59,320 --> 00:15:01,000
Speaker 8: a little bit more way to these talks.

285
00:15:01,040 --> 00:15:04,120
Speaker 7: Well, and what would you characterize as a quick win,

286
00:15:04,240 --> 00:15:06,280
Speaker 7: because the Iranians say that if there is an attack,

287
00:15:06,400 --> 00:15:10,120
Speaker 7: this could be a regional conflict, a bigger one.

288
00:15:10,480 --> 00:15:10,720
Speaker 6: Yeah.

289
00:15:10,760 --> 00:15:12,840
Speaker 8: So I think that the two examples that I would

290
00:15:12,840 --> 00:15:16,520
Speaker 8: give is the kind of the assassination of Sulimany back

291
00:15:16,560 --> 00:15:20,200
Speaker 8: in twenty twenty, where that was a clear, kind of

292
00:15:20,320 --> 00:15:24,640
Speaker 8: concise military action. The attack on the military or on

293
00:15:24,680 --> 00:15:28,200
Speaker 8: the nuclear basis last summer, You could probably kind of

294
00:15:28,200 --> 00:15:30,080
Speaker 8: look to that in a pattern in terms of the

295
00:15:30,080 --> 00:15:33,120
Speaker 8: way in which he was able to capture Maduro without

296
00:15:33,200 --> 00:15:36,000
Speaker 8: the kind of loss of US lives. He looks at

297
00:15:36,080 --> 00:15:39,520
Speaker 8: a lot of these military engagements. Is there something specific

298
00:15:39,960 --> 00:15:44,000
Speaker 8: that is significant but quick that he can do? And

299
00:15:44,040 --> 00:15:46,800
Speaker 8: then we look back to what happened after Sulamani. After

300
00:15:46,800 --> 00:15:50,560
Speaker 8: those nuclear strikes. Aroan did respond, but they responded in

301
00:15:50,600 --> 00:15:52,920
Speaker 8: a way that was not escalatory, in a way that

302
00:15:53,000 --> 00:15:56,000
Speaker 8: was almost symbolic that allowed us to move on. And

303
00:15:56,040 --> 00:15:57,480
Speaker 8: I think that's actually part of the reason why the

304
00:15:57,480 --> 00:16:00,760
Speaker 8: markets have not responded, is they are used to accustom

305
00:16:00,960 --> 00:16:04,040
Speaker 8: to this quick win attitude that Trump takes to some

306
00:16:04,040 --> 00:16:06,440
Speaker 8: of these foreign policy engagements. As long as that stays

307
00:16:06,440 --> 00:16:09,560
Speaker 8: in place, that's where the market does not necessarily react

308
00:16:09,600 --> 00:16:11,200
Speaker 8: to these events just yet.

309
00:16:11,280 --> 00:16:13,240
Speaker 4: We were talking to Terry Haynes yesterday about how this

310
00:16:13,320 --> 00:16:15,440
Speaker 4: is a president who can to gum and walk at

311
00:16:15,440 --> 00:16:18,040
Speaker 4: the same time and deal with international and domestic at

312
00:16:18,080 --> 00:16:20,400
Speaker 4: the same time. The international is just getting more and

313
00:16:20,440 --> 00:16:22,000
Speaker 4: more active even as we focus on some.

314
00:16:21,920 --> 00:16:22,920
Speaker 6: Of these domestic issues.

315
00:16:22,920 --> 00:16:26,520
Speaker 4: We also had that call between Jijinping yesterday and President Trump,

316
00:16:26,520 --> 00:16:28,400
Speaker 4: a number of headlines coming out of it. What did

317
00:16:28,480 --> 00:16:31,080
Speaker 4: you take away from that, This trip by President Trump

318
00:16:31,240 --> 00:16:33,560
Speaker 4: to China and April, then the promise that by the

319
00:16:33,680 --> 00:16:36,240
Speaker 4: end of the year, Xijenping would be coming to the

320
00:16:36,240 --> 00:16:36,800
Speaker 4: White House.

321
00:16:37,920 --> 00:16:41,800
Speaker 8: Yeah, so it's basically our base case. We had last

322
00:16:41,880 --> 00:16:44,880
Speaker 8: year kind of the meeting between Trump and she in

323
00:16:45,200 --> 00:16:47,800
Speaker 8: late October, which laid out kind of these two kind

324
00:16:47,800 --> 00:16:50,960
Speaker 8: of home and away meetings. What we've heard from our

325
00:16:51,000 --> 00:16:53,360
Speaker 8: contacts is that President Trump has sent a message to

326
00:16:53,400 --> 00:16:57,120
Speaker 8: his administration, do not do anything that is seen by

327
00:16:57,200 --> 00:16:59,960
Speaker 8: China as escalatory or punitive to them.

328
00:17:00,560 --> 00:17:02,600
Speaker 6: We look at the tariffs.

329
00:17:02,240 --> 00:17:04,480
Speaker 8: That came out on semiconductors, the tariffs that came out

330
00:17:04,520 --> 00:17:07,119
Speaker 8: on critical and rare earth minerals. Those were essentially a

331
00:17:07,160 --> 00:17:10,840
Speaker 8: punt in the semiconductor tarifs were a punt until April.

332
00:17:11,280 --> 00:17:14,840
Speaker 8: What we expect as these two leaders get together is

333
00:17:15,240 --> 00:17:18,560
Speaker 8: kind of some fan fear, some announcements that sound bigger

334
00:17:18,560 --> 00:17:21,640
Speaker 8: than that they are. But there is generally a desire

335
00:17:21,680 --> 00:17:25,439
Speaker 8: between both Trump and She to contain this relationship because

336
00:17:25,440 --> 00:17:27,720
Speaker 8: they don't want the fight. Because if we look back

337
00:17:27,720 --> 00:17:30,119
Speaker 8: to last year as we entered the year, there was

338
00:17:30,160 --> 00:17:32,840
Speaker 8: a lot of escalation and some of this was mutually

339
00:17:32,880 --> 00:17:35,320
Speaker 8: a short destruction. They don't want to go back to that.

340
00:17:35,359 --> 00:17:36,960
Speaker 8: They don't want to go back to the restrictions on

341
00:17:37,040 --> 00:17:39,040
Speaker 8: rare earth. China doesn't want to go back to some

342
00:17:39,080 --> 00:17:42,040
Speaker 8: of the restrictions we're putting on airplane parts and chemicals

343
00:17:42,160 --> 00:17:47,000
Speaker 8: because both economies cannot work unless the other economy provides

344
00:17:47,000 --> 00:17:49,760
Speaker 8: them with some critical components to their supply chains.

345
00:17:49,960 --> 00:17:52,120
Speaker 4: Does this mean that we can avoid new tariff headlines

346
00:17:52,119 --> 00:17:53,600
Speaker 4: for at least the next four weeks.

347
00:17:54,200 --> 00:17:55,400
Speaker 6: I will never say that.

348
00:17:56,359 --> 00:17:59,520
Speaker 8: Kind of the reality is is that both Trump and

349
00:17:59,600 --> 00:18:02,280
Speaker 8: She like to escalate to de escalate, and so my

350
00:18:02,359 --> 00:18:05,000
Speaker 8: base case as we get closer to those April meetings

351
00:18:05,520 --> 00:18:08,760
Speaker 8: over this next couple of weeks or months is we

352
00:18:08,800 --> 00:18:11,400
Speaker 8: will always have a new tariff headline as a way

353
00:18:11,480 --> 00:18:15,240
Speaker 8: of getting negotiating position. China's actually done this probably better

354
00:18:15,280 --> 00:18:18,560
Speaker 8: than anyone else. As we go back to those October meetings,

355
00:18:18,960 --> 00:18:23,119
Speaker 8: she kind of announced a whole series of new restrictions,

356
00:18:23,160 --> 00:18:25,720
Speaker 8: only to take those off during meetings, and Trump was

357
00:18:25,760 --> 00:18:27,520
Speaker 8: able to say, hey, I got you know, she to

358
00:18:27,560 --> 00:18:30,159
Speaker 8: take all of these things off that he didn't actually

359
00:18:30,160 --> 00:18:32,399
Speaker 8: want to do. He just wanted to have something that

360
00:18:32,480 --> 00:18:35,280
Speaker 8: he could negotiate away. So I'm always telling clients at

361
00:18:35,320 --> 00:18:38,600
Speaker 8: Raymond James watch for that escalation because they want the

362
00:18:38,720 --> 00:18:41,879
Speaker 8: opportunity to de escalate during the meeting and not actually

363
00:18:41,880 --> 00:18:44,600
Speaker 8: give up something, but sound as if they gave up something.

364
00:18:45,400 --> 00:18:48,960
Speaker 2: This is the Bloomberg Survendics podcast, bringing you the best

365
00:18:48,960 --> 00:18:52,040
Speaker 2: in markets, economics, an gio politics. You can watch the

366
00:18:52,040 --> 00:18:55,080
Speaker 2: show live on Bloomberg TV weekday mornings from six am

367
00:18:55,200 --> 00:18:59,120
Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, Spotify,

368
00:18:59,320 --> 00:19:01,560
Speaker 2: or anywhere else you listen, and as always on the

369
00:19:01,560 --> 00:19:04,000
Speaker 2: Bloomberg Terminal and the Bloomberg Business app.

370
00:19:08,080 --> 00:19:08,520
Speaker 1: Mm hmm