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Speaker 2: Terminal and the Bloomberg Business App. President Donald Trump's Liberation
Speaker 2: Day tariffs joining us now to Discussely Senior White House
Speaker 2: Trade Advisor Piter Navarro dot Navara, Welcome back to the program, Sir.
Speaker 2: First of all, I think we've got to get into
Speaker 2: the rule in room overnight. Have you spoken to the
Speaker 2: President and ultimately what's this reaction to what we heard?
Speaker 3: Haven't forggned with the President yet, but they've forgned with
Speaker 3: people who have spocused to the president.
Speaker 4: Lord, We're in.
Speaker 3: A situation now.
Speaker 2: Big picture here is i EPA.
Speaker 3: We were using the International Emergency Economic Powers Act. There's
Speaker 3: no question that there's an economic emergency. With respect to
Speaker 3: both uses that we had. One is we are in
Speaker 3: a world where China has killed over a million Americans
Speaker 3: with fentanyl poison, and we took this step to stop that.
Speaker 3: We will continue to press on that. At the same time,
Speaker 3: we invoke that rule to stop what has been twenty
Speaker 3: million illegal abling streaming into our country, driving down wages,
Speaker 3: taking jobs away. That's an economic emergency. On top of that,
Speaker 3: the world continues to steal about a trillion dollars a
Speaker 3: year and is measured by the trade deficit, and that's
Speaker 3: an economic emergency because it's transferring our wealth abroad. So
Speaker 3: we think we have a strong case. Yes, we will
Speaker 3: immediately appeal and try to stay the ruling. But at
Speaker 3: the same time, the court, interestingly enough, basically said we
Speaker 3: were right, just use different rules and laws. So nothing
Speaker 3: has really changed here in that sense. We're still as
Speaker 3: we speak, having countries call us and tell us they
Speaker 3: want a deal. So these deals are going to happen.
Speaker 3: So that's kind of where we're at. And it's troublesome
Speaker 3: here because if you look broadly at the pattern, we've
Speaker 3: got courts in this country who are basically engaged in
Speaker 3: attacks on the American people. The President ran on stopping
Speaker 3: the Fennel poison, stopping international trade unfair practices from stealing
Speaker 3: our factories in jobs, and courts keep getting in the
Speaker 3: way of that. The courts get in the way of
Speaker 3: our trying to deal with the border issues. Now they're
Speaker 3: getting in the way of our trying to deal with
Speaker 3: the phantodol crisis. And that's where we stand here. And
Speaker 3: I think part of what's going to be important about
Speaker 3: this ruin demonstrates yet again to the American people that
Speaker 3: the judiciary in this country has been weaponized in ways
Speaker 3: which are contrary to their interests.
Speaker 2: Well, Pety, he would have had a lot of people
Speaker 2: come on this program and ultimately say, you still have
Speaker 2: tons of options, and you've alluded to one of them.
Speaker 2: You will, of course appeal, but could you describe what
Speaker 2: you might do in the interim the way you might
Speaker 2: pursue your ultimate objective anyway with the tools you have
Speaker 2: still available to you.
Speaker 3: I'm gonna let Jamison Greer, the USTR, inform you on that,
Speaker 3: and you'll be hearing from him soon on that. But look,
Speaker 3: any trade lawyer knows is just a number of different
Speaker 3: options we can take. If you look at the kind
Speaker 3: of things we've already done. It kind of give you
Speaker 3: a roadmap on that. There's all sorts of numbers out there.
Speaker 3: There's one twenty two, there's three ozho one, there's two
Speaker 3: thirty two, there's three three eight, There's all sorts of
Speaker 3: things we can do well within the law. But look,
Speaker 3: we think that what we've done already is perfectly appropriate.
Speaker 2: So that's why the appeal will take case.
Speaker 3: But you know, it's like, interestingly enough, I was scheduled
Speaker 3: to come on the program today to talk about the
Speaker 3: bond market and the Big Beautiful Tax Bill, but there
Speaker 3: is a there is a bridge to that, and if
Speaker 3: I may, we have a situation where the bond market
Speaker 3: we've seen like a fifty to fifty basis point increase
Speaker 3: in yields in the ten year since April second, And
Speaker 3: a lot of the hysteria around the Big Beautiful Tax
Speaker 3: Bill centers on the Congressional Budget Office scoring that bill
Speaker 3: in a way which says there's going to be a
Speaker 3: three point seven trillion dollar addition to America's national debt
Speaker 3: over the next ten years, and so of course you
Speaker 3: got to finance that, and that drives interest rates up
Speaker 3: and heads explode, when in fact, if you do the
Speaker 3: math properly and you look at the history of the
Speaker 3: CBO forecast, you actually see about a five trillion dollar
Speaker 3: swing to a two trillion dollar surplus from the bill.
Speaker 3: And I'd like to get you walk you through the
Speaker 3: math there. It's like the CBO, the Congressional Budget Office
Speaker 3: historically has been very bad at estimating impacts of tax bills.
Speaker 3: In the twenty seventeen tax cut that President Trump did.
Speaker 2: They got that totally wrong.
Speaker 3: They underestimated the GDP growth by a full percentage point.
Speaker 3: And what that does if they make that same mistake here,
Speaker 3: which they have done, will you add that that's about
Speaker 3: two trillion dollars of additional revenue because you got greater
Speaker 3: economic activity.
Speaker 1: And then, Peter, you also have the revenue from the tariffs,
Speaker 1: which I saw your opinion piece in the Hill.
Speaker 2: I just want to get back.
Speaker 1: To the tar I just want to get back to
Speaker 1: the tariff because you don't have that revenue.
Speaker 3: Well that's another two trillion if you.
Speaker 1: Don't have the authority to use it, though, But can
Speaker 1: I just ask you mentioned j Ambassadord Greer. We're going
Speaker 1: to hear from him soon, are we going to hear
Speaker 1: from USTR about the bridge potentially what John was talking about.
Speaker 1: If you can't use AEPA, potentially you're going to come
Speaker 1: out the administration say we're going to use one twenty
Speaker 1: two in the interim.
Speaker 3: Well, the court did in some sense tell us to
Speaker 3: do that, which is interesting. But look, here's the thing, mean, Fennyl,
Speaker 3: I just people need to wrap their heads around the
Speaker 3: fact that every day here in America people die because communists.
Speaker 3: China puts fifty gallon barrel, fifty gallon drums full of
Speaker 3: these chemicals that come over to the Mexican cartels and
Speaker 3: then are made not just into fentanyl. They use the
Speaker 3: fentanyl to spike heroin, to spike meth amphetamines, to spike ecstasy,
Speaker 3: and they're eating putting it in prescription drugs like xanax
Speaker 3: and valium, and people are dying. It's been over a
Speaker 3: million people, a million Americans, and it's an economic emergency
Speaker 3: because a lot of those people are prime age working
Speaker 3: force here in America. So this kind of court ruling
Speaker 3: the judge, I mean, look, the lead.
Speaker 1: Court said, if the ruling said, Peter, and we've been
Speaker 1: talking about this page thirty four to thirty five. They say, basically,
Speaker 1: you're in your right if you use section one twenty two.
Speaker 1: Why didn't you guys do that from the beginning?
Speaker 3: Well, Section one twenty two only gives you one hundred
Speaker 3: and fifty days, So there's your answer right there.
Speaker 5: So are you.
Speaker 1: Section one twenty two if you use this now for
Speaker 1: one hundred years, got to be a bridge to three
Speaker 1: oh one or a bridge to two thirty two.
Speaker 2: What are you thinking?
Speaker 1: More long term?
Speaker 3: You can be the strategist on that, but those are
Speaker 3: the kinds of thoughts. And look, look, if anybody thinks
Speaker 3: this caught the administration by a surprise, think again, okay,
Speaker 3: because you could see in the oral arguments where those
Speaker 3: judges were going and the lead judging this, I mean,
Speaker 3: the problem with that court. It's so such an obscure court,
Speaker 3: but it's consistently been globalist pro importer giving us bad rules.
Speaker 3: The lead judge there ruled against the two thirty two's
Speaker 3: originally and had to get overturned by the appeals court.
Speaker 3: So that gives you an idea of the bias against
Speaker 3: the president's tariff policy right on that court. But I
Speaker 3: think the big picture here is we've got a very
Speaker 3: strong case with AIPA, but the court basically tells us
Speaker 3: if we lose that, we just do some other things.
Speaker 3: So nothing's really changed. I want to say this to
Speaker 3: the world, you're cheating us. We're coming after you deal
Speaker 3: and let's make this right because ultimately what's at stake
Speaker 3: here is the global international environment getting in in a
Speaker 3: way where it's fair to America. And thereby, if it's
Speaker 3: fair to America and we westructure this thing in a way,
Speaker 3: we'll have just more stability in terms of financial flows
Speaker 3: and capital and everything like that.
Speaker 2: Nothing ifietly out of balance. Now we're going to run,
Speaker 2: but it's quite to catch up the sm We look
Speaker 2: forward to singing next step. So just got a tiny
Speaker 2: one thing, you know, a lot of high on the rate.
Speaker 2: She's with us. So right the sty in White House tried,
Speaker 2: it's not is a fit of Peter. Thank you, Sir Dobavarad.
Speaker 2: So here's the laces this morning and versus a waiting
Speaker 2: another read on the state of the labor market with
Speaker 2: initial job less claims you out in just under two
Speaker 2: hours time. But Michael A JP Morgan Asset Management right
Speaker 2: in the following. In the end, it's all about jobs
Speaker 2: and the labor market. With a FED generally looking past
Speaker 2: near term inflation data, the labor data becomes the motivating factor.
Speaker 2: Bob John just now for more, Bob, good morning.
Speaker 6: Good morning.
Speaker 2: See we've got a lot to get through. So let's
Speaker 2: start with growth. Do you think this bond market should
Speaker 2: be pricing in a step down in growth or a
Speaker 2: step up in growth?
Speaker 6: I think probably a step up in growth, and that
Speaker 6: seems to be what they're pricing in today. We were
Speaker 6: looking at effective tariff rates yesterday morning. We're about fifteen
Speaker 6: percent today. When I read Mike symbol of stuff and
Speaker 6: you look at where the courts came in. You assume
Speaker 6: the two thirty two section tariffs go through, you're talking
Speaker 6: about ten percent effective rate. The economy could absorb that.
Speaker 6: And then you've got Congress. You've got the budget Reconciliation package,
Speaker 6: which we estimate adds another three trillion to the deficit
Speaker 6: over the next ten years. So there's an upward impulse
Speaker 6: to growth today.
Speaker 7: Does that make you revise some of your expectations for
Speaker 7: how high yields can go, because what you just expressed
Speaker 7: was resilient growth. The idea that the FED can't cut
Speaker 7: rights as easily if the data doesn't roll over as
Speaker 7: quickly and the idea that supply is going to be
Speaker 7: coming out at a time or inflation could potentially say sticky.
Speaker 6: Yeah. Let's start with the FED. We looked at the
Speaker 6: minutes yesterday our AI program, let's call it. Kelsey determined
Speaker 6: that there were thirteen references to inflation expectations, whereas there
Speaker 6: were three a couple months ago at the March meeting.
Speaker 6: So the FED is clearly focused on inflation and keeping
Speaker 6: inflation expectations anchored. As you think about the way things
Speaker 6: could play out, you're looking at higher prices first. That
Speaker 6: may create demand destruction, which then causes you to raise
Speaker 6: the probability of recession. But you have to get through
Speaker 6: the higher prices and see how businesses and households react
Speaker 6: to that. Now you've got to enter Congress, and Congress
Speaker 6: is trying to push through not only extension of the
Speaker 6: Tax Cutting Jobs Act, but incremental spending, and you have
Speaker 6: to gauge will that offset some of the impact of
Speaker 6: the tariffs, And it looks like it probably will.
Speaker 7: I don't know how Kelsey Baro feels about being sort
Speaker 7: of connected to a chat GPT program. Kelsey, if you're watching,
Speaker 7: please write in and let us know what you think.
Speaker 7: I am curious, though, whether you have upgraded your expectation
Speaker 7: for yields. You didn't answer nex you'd expected yields to
Speaker 7: be going down much more significantly when there was this
Speaker 7: overhag of potentially slower growth, the drag from tariffs, the
Speaker 7: drag from policy uncertainty.
Speaker 6: Yeah, I'd be happy if yields held in Around here.
Speaker 6: I think there is going to be an upward impulse
Speaker 6: because first we're going to see higher prices, and then
Speaker 6: it does feel that businesses and households can absorb that,
Speaker 6: and you're going to get some package out of Congress
Speaker 6: which will help to offset some of that. I would
Speaker 6: say my greatest frustration of the last year is we
Speaker 6: hadn't actually been higher. I would have loved the two
Speaker 6: year to have been anchored around the Fed Funds rate
Speaker 6: four and three eight percent. I would have loved the
Speaker 6: ten year to be at five percent. To me, that
Speaker 6: would have been a relatively normal curve. And yet we
Speaker 6: still have the two year and the five year trading
Speaker 6: below the Fed Funds rate. So it makes it challenging
Speaker 6: for clients who want to get into the bond market.
Speaker 6: I'm still not having a single conversation with clients about
Speaker 6: wanting to get out of the bond market. It's all
Speaker 6: about where do we get into the bomb line market
Speaker 6: and how.
Speaker 7: And it's all about the belly of the curve, which
Speaker 7: is what we saw yesterday in the auction. So it
Speaker 7: went very well yesterday for the five year. Today we've
Speaker 7: got seven year. How closely are you watching to see,
Speaker 7: particularly with longer duration, whether you see a repeat of
Speaker 7: what happened in Japan in the United States with real
Speaker 7: pushback about long term bonds.
Speaker 6: So far, we're not seeing that. We're seeing flows coming
Speaker 6: in to the US bond market firum overseas, and we
Speaker 6: are seeing the long duration buyers, pension funds and insurance
Speaker 6: companies get interested, particularly in longer credit. So we're not
Speaker 6: seeing it, certainly. Secretary Bessett has a couple tools. One
Speaker 6: is to either cancel or dial down the thirty year auctions,
Speaker 6: and that's something we heard out at Japan. It's something
Speaker 6: we saw out of the UK that would certainly help
Speaker 6: to stabilize.
Speaker 2: The cam cell market. Council or dial down you think
Speaker 2: is real potential for that.
Speaker 6: You as God per se percent.
Speaker 2: There's enough in the market right now to force that
Speaker 2: kind of corrective action.
Speaker 6: Treasure are telling us if there's no demand, why am
Speaker 6: I selling? I don't need to do that, And you've
Speaker 6: got a Treasury Secretary who has put out there we're
Speaker 6: focused on the long end of the curve. We're focused
Speaker 6: on the tenure. By the way, I think he's right.
Speaker 6: I think you've got to look at the mortgage market.
Speaker 6: You've got to look at the housing data. That's another
Speaker 6: bit of data we're watching. Housing should be fairly strong
Speaker 6: at this point in the cycle. It's not because of
Speaker 6: housing affordability and mortgage rates are a big part of that.
Speaker 2: So it's got a strong congment to re engage with
Speaker 2: the long end of the curve right now.
Speaker 6: Okay, I quoted Kelseyum, I'm going to quote another one
Speaker 6: I've heard you quote, please Fria Misrae ten and thirty
Speaker 6: year part of the curve our risk assets. I don't
Speaker 6: want to be the one to stand in front as
Speaker 6: a steam roller right now, so I'm just going to
Speaker 6: pack into the intermediate part of the curve. There's lots
Speaker 6: for me to buy there in credit and in securitized
Speaker 6: and in are in bond markets. I'll let somebody else
Speaker 6: help statilize.
Speaker 2: The long end. You think it needs to get worse
Speaker 2: before it gets better.
Speaker 6: I'm concerned that it can. It's going to get worse
Speaker 6: before it gets better.
Speaker 2: Can you describe what worse looks like?
Speaker 6: Yeah, if I start with the ten year, I think
Speaker 6: going to four ninety five, we've been there. The market
Speaker 6: can support that. In my mind, where pain really starts
Speaker 6: to get felt is one hundred basis points shift up
Speaker 6: from where the steady state was. And the steady state's
Speaker 6: been around four forty. So once you break above five percent,
Speaker 6: if we get to five forty, that path between five
Speaker 6: and five forty becomes almost unbearable for bond investors. And
Speaker 6: I've lived through those hundred basis point shocks before. It
Speaker 6: always seems to be one hundred and then things tend
Speaker 6: to stabilize. Where does that put the long end? You know,
Speaker 6: add another twenty five basis points on top of that
Speaker 6: for the thirty year. To me, that would be real pain.
Speaker 6: You need to see policy response, both from the Treasury
Speaker 6: and from the Fed.
Speaker 2: But Michael, this was fantastic, deep, me thoughtful stuff, especial
Speaker 2: thanks to Bob Michael to Councy Barrow to primiser of
Speaker 2: JP Morgan Asset Management, reigniting AI optimism after beating earnings expectations.
Speaker 8: Well, we got a whole bunch of engines firing right now.
Speaker 8: The biggest one, of course, is the reasoning AI inference.
Speaker 8: The demand is just off the charts. You see the
Speaker 8: popularity of all these AI services.
Speaker 2: Now joining us now to discuss. Angelo Zeno of c
Speaker 2: FRA was a by rating and a one hundred and
Speaker 2: sixty five dollars price target on the stock. Great to
Speaker 2: catch up with you, and let's just start with the basics.
Speaker 2: What jumped out for you yesterday afternoon.
Speaker 4: Yeah, I mean I actually thank you guys hit it
Speaker 4: in terms of, you know, the China side of things.
Speaker 4: I think that's that's where all eyes were going into
Speaker 4: the print, and we saw them really kind of navigating
Speaker 4: the uncertainty you know from China right now and not
Speaker 4: eight billion dollars in lost revenue in terms of the
Speaker 4: guidance extremely well. We're not necessarily surprised by the fact
Speaker 4: that they're navigating it really well, because if there was
Speaker 4: a company that could do it right now in video
Speaker 4: would be that company. Because of the immense amount of
Speaker 4: demand that they're seeing right now. And say the other
Speaker 4: thing right now, is this a commentary surrounding these reasoning models,
Speaker 4: right I think you know, back at GtC, A Jensen
Speaker 4: was talking about potentially one hundred x one hundred and
Speaker 4: fifty x, you know, increased need for compute from these
Speaker 4: reasoning models. I think even when as far as going
Speaker 4: somewhere along the lines of a thousand X on the
Speaker 4: fall last night. So you're kind of seeing the fact
Speaker 4: that there is just an enormous amount of demand from
Speaker 4: the shift to AI agents here that we think will
Speaker 4: continue to rank in twenty twenty five and into two
Speaker 4: twenty twenty six. And that is given really in Video
Speaker 4: some really strong momentum and you know, not to mention blackwealth.
Speaker 4: Is this really kind of shift towards you know, the
Speaker 4: infrastructure and the system side of things, completely different from
Speaker 4: what we saw and Hopper and I think the upside
Speaker 4: we're seeing from Blackwealth is stronger than I think most
Speaker 4: analyts here had anticipated.
Speaker 7: There was a lot of positive discussion around in Video's performance.
Speaker 7: There also is this existential threat and you talked about
Speaker 7: it with China, this question of if there isn't sort
Speaker 7: of decoupling and regulatory overhang, Can and Vidia continue and
Speaker 7: maintain its model? In Jenson wank On and said, you
Speaker 7: cannot underestimate the importance of the China market. This is
Speaker 7: a home of the world's largest population of AI researchers.
Speaker 7: The company that wins China wins this war. Do you
Speaker 7: think the market's really complacent about the risk that Video
Speaker 7: gets locked out of that country?
Speaker 4: Well, I think there's two sides to this, right, I mean,
Speaker 4: I think one point here with regards to China, they've
Speaker 4: essentially be rich China in many respects, and I think
Speaker 4: that's the side that the market is taking right now.
Speaker 4: But it's one of those situations where, all right, we
Speaker 4: took the eight billion dollar hit. It was more than
Speaker 4: we thought was going to take place here in the
Speaker 4: July quarter, But we're not going to see another quarter
Speaker 4: where you know, China's going to be a huge negative
Speaker 4: headwind for this company looking ahead. But that said, you
Speaker 4: know the other side of this is when you kind
Speaker 4: of look here two three years down the road, it
Speaker 4: is a huge opportunity. Course if they can't get back
Speaker 4: into China, our belief is that they will be able
Speaker 4: to get back into China at some point in time.
Speaker 4: I think the market also has expectations, just giving the
Speaker 4: move we're seeing here, that eventually in Video will be
Speaker 4: able to find its way back, whether it be you know,
Speaker 4: from you know, some sort of deal that the administration creates,
Speaker 4: or whether it be some sort of you know, maybe
Speaker 4: performance laden type of chip that they can somehow find
Speaker 4: their way through into China, albeit you know, at significantly
Speaker 4: lower revenue potential than what they could have gotten. But nonetheless,
Speaker 4: I think there is you know, belief out there that
Speaker 4: eventually in Nvidia needs to find a way back into China.
Speaker 4: Jensen isn't given giving up on that hope that China
Speaker 4: will be a part of their business in the future.
Speaker 4: So I think that's why the stocket is moving the
Speaker 4: way it is as well.
Speaker 7: Do you think that the ruling that happened overnight really
Speaker 7: built on that belief in market so that Invidio will
Speaker 7: find its way back into China.
Speaker 2: Yeah.
Speaker 4: I mean, listen, I think when you when you look
Speaker 4: at the when you look at just semiconductors in general,
Speaker 4: I mean they're largely exempt from you know, all this
Speaker 4: taraff oriented stuff as well, they do fall under the
Speaker 4: more sectorial semiconductor investigation that we're waiting on right now.
Speaker 4: I think some of the comments that I mean, you
Speaker 4: guys earlier alluded to in terms of you know, Jensen
Speaker 4: making supporting the whole, you know, the the tariff situation,
Speaker 4: I think as it's partly due to the fact that
Speaker 4: he is trying to position himself really well in terms
Speaker 4: of semi conductor manufacturing in the US. Not to mention,
Speaker 4: a lot of users that he's making are coming from Mexico,
Speaker 4: So he's almost well kind of insulated at least for
Speaker 4: now from some of the uncertainty and some of the
Speaker 4: commentary that we've heard overnight or even over the last
Speaker 4: month or two tied to a lot of the country
Speaker 4: specific you know, tariffs that we've heard about.
Speaker 1: We do have the Trump administration, though, moving to restrict
Speaker 1: the sale of chip design software to China, and what
Speaker 1: the reports basically suggest is.
Speaker 2: This is a choke point.
Speaker 1: They want to cut off at the start where China
Speaker 1: can get access to this type of technology. But you
Speaker 1: sound optimistic that Nvidia can still make its way back
Speaker 1: in China. How when the administration seems to be clearly
Speaker 1: saying we are going to decouple when it comes to
Speaker 1: national security concerns.
Speaker 4: Yeah, I mean listen, I think and in that EDA software,
Speaker 4: you know, Ben that we're what we're seeing here. I
Speaker 4: actually think, you know, it actually took longer than we anticipated.
Speaker 4: We expected to hear it, you know, sooner than that.
Speaker 4: It'd also be interesting to see how a great of
Speaker 4: the administration really wants to get here. I mean, there
Speaker 4: are other you know, levers that they can throw out there,
Speaker 4: tied to the semiconductive equipment industry, for instance, So we'll
Speaker 4: see how far the administration wants to go with this.
Speaker 4: But as far as you know, in Video is concerned,
Speaker 4: I think ultimately, you know, the administration has a price
Speaker 4: for anything as well as long as they can kind
Speaker 4: of get their terms on the deals. So I think,
Speaker 4: you know, in Vidia is going to be a hot
Speaker 4: topic when the two sides try to come together and
Speaker 4: have conversations in the coming weeks and months. So that
Speaker 4: is why we, you know, we personally believe that there
Speaker 4: is potential for in Video that kind of get back
Speaker 4: into China. Not to mention, we do think the administration
Speaker 4: isn't necessarily against Nvidia and selling into China. As much
Speaker 4: as you know, especially if they can somehow you know,
Speaker 4: cut the you know, the the expansion efforts for the
Speaker 4: local semi conductor industry out and so we'll wait. You
Speaker 4: say there's gonna be I think there are a lot
Speaker 4: of moving parts here, and you never know what's going
Speaker 4: to come afround the administration.
Speaker 2: Angela, let's just finish on that point. Getting access and
Speaker 2: granting access to nvidio chips is becoming a foreign policy
Speaker 2: tool at something we discussed on this program just yesterday.
Speaker 2: What kind of characteristics does that introduce to the stock
Speaker 2: and how it trades, you know.
Speaker 4: I think that's I think that's a great point. I
Speaker 4: think it's a potential catalyst here for the Yeares. I
Speaker 4: think it's more upside than downside. From that, you kind
Speaker 4: of look here over the next couple of weeks, months,
Speaker 4: I think you're going to see more kind of Saudi
Speaker 4: Arabia oriented type deals, sovereign AI related deals. You've got
Speaker 4: Jensen himself saying he's going to be traveling out to
Speaker 4: Europe here over the next couple of days, you know,
Speaker 4: so it'll be interesting to kind of see when the
Speaker 4: timing of more announcements come tied to sovereign AI. But
Speaker 4: even Collette, you know, alluded to the point yesterday that
Speaker 4: you're you are going to see more, you know, ori,
Speaker 4: more sovereign AI oriented deals. It's just they wouldn't cut
Speaker 4: their head on when you're going to see these deals.
Speaker 2: Angela, I appreciate your time as always, sir. Basically night
Speaker 2: for you. I'm sure angela'sina that of CFRA with Nvidia
Speaker 2: nicely high in the pre market. Here's the license. This morning,
Speaker 2: a federal court blocking President Trump from imposing is sweeping
Speaker 2: Liberation Day tariffs. The White House is vowing to appeal.
Speaker 2: Libby canshell a Pincoach joins us now for more. Libby,
Speaker 2: good Mornic, Good morning. What's the message from you to
Speaker 2: the clients this morning.
Speaker 7: Yeah.
Speaker 5: I think what the message is is that the worst
Speaker 5: worst case has been avoided. For sure. I think that,
Speaker 5: like your previous guests, we are not going to seem
Speaker 5: unlikely to see one hundred and forty five percent tariffs
Speaker 5: rolling back on in China. However, it is not at
Speaker 5: all clear, and that's for the very reason that you
Speaker 5: just mentioned, which is that the president has wide latitude
Speaker 5: using other statutory authorities, whether it's something called Section one
Speaker 5: twenty two the nineteen seventy four Trade Act that allows
Speaker 5: him to impose up to up to fifteen percent tariffs
Speaker 5: for one hundred fifty days. I would not be surprised
Speaker 5: if we saw him actually move forward with that, replacing
Speaker 5: that ten percent baseline that was just obviously rolled back
Speaker 5: by the courts, and using that authority. He also has
Speaker 5: section threeh one which he could impose tariffs on China immediately.
Speaker 5: That's a live, active investigation. And there's something called section
Speaker 5: three three eight from nineteen thirty Tariff Act. So I
Speaker 5: think the upshot here is that AIPA provided him with
Speaker 5: a lot of flexibility, a lot of negotiating powers. He
Speaker 5: could roll tariffs on or roll tariffs off. These statutes
Speaker 5: are more limited, usually require some investigation and what have you.
Speaker 5: But the upshot here is that we are not there
Speaker 5: is not an all clear from a tariff policy perspective.
Speaker 5: We will see additional tariffs again. I will not be
Speaker 5: surprised if you didn't see them over the next few
Speaker 5: days or so.
Speaker 1: Well, let's explore the one twenty two, which everyone, even
Speaker 1: this court thinks Trump should have used. Is that the
Speaker 1: end destination or is it bridge to another authority like
Speaker 1: a three thirty eight or three oh one.
Speaker 5: Yeah, I mean, I think that's excellent question, because Section
Speaker 5: twenty two does have these sort of limitations. You can
Speaker 5: only impose them for one hundred and fifty days and
Speaker 5: then they have to basically go back to Congress to
Speaker 5: move forward. You know, I think that it will look
Speaker 5: likely a bridge to something else, probably in a section
Speaker 5: three oh one. Again, I think that if you, if
Speaker 5: you kind of go back to January twentieth, when President
Speaker 5: Trump was inaugurated, those were the authorities I think many
Speaker 5: of us thought he was going to use. I mean,
Speaker 5: there was wide question about the legal ability for him
Speaker 5: to use AIPA in this very broad based way, and
Speaker 5: then of course to use them on countries with whom
Speaker 5: we have trade surpluses. I think did quot call into question, well,
Speaker 5: this was sort of national emergency, what have you?
Speaker 8: So?
Speaker 5: I think if you again all those authorities that were
Speaker 5: available to him January twentieth that we thought he was
Speaker 5: going to use, I think those seem more likely. But again,
Speaker 5: those do have some guardrails, some of them do require
Speaker 5: some investigations, so they're longer base. I would say the upshot, though,
Speaker 5: is they're more legally durable, so once you know, they're
Speaker 5: not going to be as vulnerable to illegal challenge as
Speaker 5: certainly obviously was what happens with.
Speaker 1: The UK right now, because that is a deal that's
Speaker 1: already been struck but kept a ten percent baseline. Now
Speaker 1: the court is saying that ten percent baseline is illegal.
Speaker 5: Yes, so I think that remains to be seen.
Speaker 6: Now.
Speaker 5: I don't think, you know, the UK had not really
Speaker 5: seen we hadn't really seen that deal materialize. That was
Speaker 5: a little bit in name only, So I think, you know,
Speaker 5: again it's open question what happens to that deal, but
Speaker 5: then also to all these open negotiations, whether it's with
Speaker 5: the EU or Japan. I think importantly though, some of
Speaker 5: the more punitive tariffs as it relates to say Japan,
Speaker 5: this section two thirty two tear twenty five percent tariffs
Speaker 5: on autos, those stick around, right, So that is a
Speaker 5: legal authority that is durable, that has not been overturned
Speaker 5: by it by this court decision. So that is an
Speaker 5: important kind of you know, something that to defector in if.
Speaker 7: You're a corporate executive. There are a couple different ways
Speaker 7: to look at this. On one hand, you could say,
Speaker 7: the path of travel is still clear, there are going
Speaker 7: to be other methods of tariffs that are put on.
Speaker 7: The other way you could look at it is this
Speaker 7: all feels very fungible changes on the day. If I
Speaker 7: waited out for a couple of years, I could just
Speaker 7: keep my plans in place, maybe delay things, but keep
Speaker 7: everything kind of the way it was before.
Speaker 5: Which path that they picking, Yeah, I think that Well,
Speaker 5: that's also an open question, and I think obviously depends
Speaker 5: on on the sector. Yeah, I think what we've seen
Speaker 5: from some companies is that they have announced some some
Speaker 5: future investment. Whether that investment actually comes to fruition or not,
Speaker 5: I think, you know, again, it remains to be seen.
Speaker 5: So obviously a lot of open questions here. But I
Speaker 5: do think this underscores for a company just how much
Speaker 5: uncertainty there is around these this agenda and the fact
Speaker 5: that the President Trump is only going to be in
Speaker 5: office for the next three and a half years. You know,
Speaker 5: regardless of what happens, he is not going to be
Speaker 5: running for re election. We will, you'll, we will have
Speaker 5: a different president come twenty twenty nine. And so if
Speaker 5: you are a corporate executive, that obviously is going to
Speaker 5: inform your perspective. I only highlight that because I do
Speaker 5: think if this were the first, you know, first few
Speaker 5: months of his first administration, then those corporations may be
Speaker 5: more willing to make those those investments, and they are
Speaker 5: now just because of your shorter period.
Speaker 7: So let's build on that each to lay. Does it
Speaker 7: matter the sense that yeah, it's just okay, ten days,
Speaker 7: twenty days, two months, it's not that big of a
Speaker 7: deal if the path of travel is still the same,
Speaker 7: or does it are some of these delays actually crucial
Speaker 7: for these companies to understand how to navigate this.
Speaker 5: Yeah, and again I think this is what I mean.
Speaker 5: I think we should watch over the next few days
Speaker 5: because if they do, you know, move forward with a
Speaker 5: say universal tariff under Section one twenty two, then I
Speaker 5: think it's going to be a reminder that again this
Speaker 5: tear is these tariffs maybe via different statutory you know,
Speaker 5: avenues or what have, you are going to be here
Speaker 5: to stay. So I do think I do think it matters.
Speaker 5: But I think the upshoff for investors, for our clients
Speaker 5: is that the worst case scenario has been avoided, that
Speaker 5: thirty percent effective tariff, right that we were all looking
Speaker 5: at and you know, in those first weeks of April
Speaker 5: that is very unlikely to come to fruition just because
Speaker 5: of the limitations around these other statutes. But again, I
Speaker 5: think like this is not all clear and from you know,
Speaker 5: from a financial markets perspective, I think that's really important.
Speaker 1: Do you think though, it changes the White House stre
Speaker 1: ategy of wanting to get this all wrapped up by
Speaker 1: July ninth?
Speaker 6: Well?
Speaker 5: Yeah, I mean I think the July ninth sort of
Speaker 5: becomes that deadline becomes a little bit irrelevant, right, I mean,
Speaker 5: I don't know if you're the EU, do you still
Speaker 5: have that same sort of you know, immediacy or a
Speaker 5: sense of urgency in terms of negotiating or making concessions
Speaker 5: with the Trump administration? You know, probably not now. Again,
Speaker 5: if we think that the Section one twenty two, say
Speaker 5: it's universal tariff, is a bridge to a Section three
Speaker 5: oh one tariff, which could be you know, deeper and
Speaker 5: more broad based tariffs on country specific then that then
Speaker 5: you know, I think that will bring negotiating partners to
Speaker 5: the table. But I do think this really sort of
Speaker 5: changes the calculus. One last thing I will just say though,
Speaker 5: and something I think our traders have already asked me
Speaker 5: last night, is does this change sort of the calculus
Speaker 5: around the tax bill? Right if you're a member of
Speaker 5: Congress and you were expecting two hundred fifty three hundred
Speaker 5: million dollars of annual revenue from tariffs, you know, does
Speaker 5: this make you a little bit more queasy to actually
Speaker 5: vote for sort of this big, you know, three trillion
Speaker 5: dollar plus bill. I think probably not. I actually don't
Speaker 5: think this really does change. But I think intellectually or
Speaker 5: academically you might think that it would. I just don't
Speaker 5: think it does.
Speaker 1: Doesn't change the bond market's response.
Speaker 5: I do think, I mean, I think, you know, you're
Speaker 5: seeing a little bit of relief in the bond market.
Speaker 5: Maybe from an institutional perspective, this sort of reminds you
Speaker 5: foreign investors, in particular, that there are some checks and
Speaker 5: balances on presidential power. I think a lot of our
Speaker 5: foreign clients had thought, you know, we thought that there
Speaker 5: was you know, the Congress and the judiciary, And I
Speaker 5: do think this sort of reasserts the fact that, yes,
Speaker 5: there are going to be some limits. The president and
Speaker 5: his team, I think, by design want to push the
Speaker 5: limits of executive authority, but there obviously there are some
Speaker 5: checks the bond market, but also the courts.
Speaker 2: More importantly, this is actually an argument the piton of
Speaker 2: our mate in an opinion piece just yesterday. He's catching
Speaker 2: up with this a little bit later this morning, making
Speaker 2: the argument that he was complaining about the scoring down
Speaker 2: in Washington that it didn't didn't account for the tariff revenue,
Speaker 2: and this might be an explanation as to why it didn't.
Speaker 1: And he's still pushing for this idea of the external
Speaker 1: revenue service. This basically what we already have with the
Speaker 1: customs to bring in all of that money to offset
Speaker 1: the tax plan. But to Libby's point, it doesn't really matter.
Speaker 2: Let me just quickly for anyone playing trade section bingo
Speaker 2: this morning three one unfair trade practices, Yeah, why didn't
Speaker 2: they start that this time around? They did in the
Speaker 2: first term? Why not yet?
Speaker 5: Second serve, because that does require months long investigation. It's
Speaker 5: a little bit of a nuance. There's an open investigation
Speaker 5: on China, the three zero section three oh one investigation,
Speaker 5: So they could have imposed tariffs on just on China
Speaker 5: using that open investigation, but for any other country they
Speaker 5: would have to actually pursue another kind of months long investigation.
Speaker 5: But again, as to our conversation earlier, I think they
Speaker 5: could use Section one twenty two, a temporary tariff to
Speaker 5: get to a broader destination in terms of, you know,
Speaker 5: more tariffs on other country specifics.
Speaker 2: This was a clinic as we expected it to be.
Speaker 2: We appreciate it. Thank you. Let me cancel, that's for sure.
Speaker 2: I've Pimco sand in the gears. We've heard all sorts
Speaker 2: so far this morning, But ultimately it doesn't change the
Speaker 2: president's pursuit of his old objective, which is to put
Speaker 2: tariffs up on some of our trade partners. This is
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