Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Business
Speaker 1: Weekdaily reporting from the magazine that helps global leaders stay
Speaker 1: ahead with insight on the people, companies, and trends shaping
Speaker 1: today's complex economy. Plus global business finance and tech news
Speaker 1: as it happens. The Bloomberg Business Week Daily Podcast with
Speaker 1: Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 2: We got to get back though to Intel.
Speaker 3: Yeah.
Speaker 4: Sures for Intel finished up seven point four percent today,
Speaker 4: up one point three percent in the after hours. This
Speaker 4: after Bloomberg reported exclusively that the Trump administration is said
Speaker 4: to discuss taking a steak in Intel, the US government
Speaker 4: potentially taking a steak in the chip maker, which would
Speaker 4: help support the company's effort to expand domestic manufacturing. This
Speaker 4: is according to people familiar with the plan. I want
Speaker 4: to bring in Tom Giles, He's senior executive editor for
Speaker 4: Global Technology. Tom can't stop talking about this story. Also
Speaker 4: in the context of what happened earlier this week with
Speaker 4: Nvidia and AMD, what's happened with MP Materials and a
Speaker 4: four hundred million dollar investment from the DoD Us steal
Speaker 4: as well, it really just feels like We're in a
Speaker 4: new era when it comes to industrial policy. What does
Speaker 4: it mean to you?
Speaker 5: You know, the Trump administration is doing some really unconventional
Speaker 5: things when it comes to trying to shape and influence
Speaker 5: industrial policy and US corporations. Not a ton of precedents
Speaker 5: for this, at least not in the US. We've seen
Speaker 5: it in other types of economies where the government leaves
Speaker 5: it to its role to shape industry and shape the
Speaker 5: direction of companies. That doesn't always end well. I'm a
Speaker 5: little surprised that the stock rallied as much as it did.
Speaker 5: To be totally honest with you, I think in the
Speaker 5: near term, investors are looking at hey, look this is
Speaker 5: a bit of money, and think of it maybe as
Speaker 5: a bailout for Intel. The company get its financial house
Speaker 5: in order and accelerate these plans to build a foundry
Speaker 5: in Ohio on a space All of that stuff sounds good.
Speaker 5: Go ahead.
Speaker 2: Well, I'm glad you.
Speaker 4: I'm glad you brought up the term bailout because I
Speaker 4: was talking to Carol about this. It kind of also
Speaker 4: feels reminiscent of you know, we talked about the US
Speaker 4: taking stakes and companies. It's not unprecedented. During the financial crisis.
Speaker 4: We saw this happen with rescuing banks. We saw it
Speaker 4: happening with rescuing automakers. The question I have for you,
Speaker 4: and it really sticks to it doesn't always end well,
Speaker 4: is the concern about when you have investment from the
Speaker 4: US government, the government picking winners and losers. When it
Speaker 4: comes to a so called quote unquote free market.
Speaker 5: That's not a really it's not a very free market.
Speaker 4: This isn't the principles.
Speaker 2: He's the quotes that I that.
Speaker 5: I studied, certainly in macro and you know, all the
Speaker 5: all the economics courses, all the finance courses that I've taken,
Speaker 5: don't really this doesn't look like the capitalism that we
Speaker 5: learned about growing up. What this is is and there's
Speaker 5: a difference between a bailout per se and a government
Speaker 5: taking a financial stake. This is about an ongoing relationship.
Speaker 5: And again, in the short term, I see why the
Speaker 5: stock popped, right, it's seen as like, hey, Intel could
Speaker 5: use could get help wherever, you know, wherever it can.
Speaker 5: Longer term, do you really want the government? Are the
Speaker 5: government's interests aligned with those of shareholders? The government might
Speaker 5: might want to shape things for its own political interests,
Speaker 5: But are those the interests the long term interests of
Speaker 5: the shareholders of the company.
Speaker 4: I think that's a really good point. And I would
Speaker 4: also say, Tom, since we're talking about sort of the
Speaker 4: philosophical definition of capitalism right now, that one could maybe
Speaker 4: listen to our conversation or watch our conversation and say,
Speaker 4: wait a second, we've never really lived in a free
Speaker 4: market when local and federal subsidies power so much of
Speaker 4: this economy. I mean, you look at corn farming, for example,
Speaker 4: agriculture in the US. You look at subsidies that are
Speaker 4: given by states to llure businesses. We all remember what
Speaker 4: happened with Fox Con in Wisconsin for example. That should
Speaker 4: be an entirely different conversation. But any you know, you
Speaker 4: name it. There are Boeing in South Carolina for example.
Speaker 4: Those sorts of things. There are different reasons that companies
Speaker 4: go places.
Speaker 5: Tax breaks all over the place. Yes, you know, the
Speaker 5: city of San Francisco just down the street incentivized Twitter
Speaker 5: to locate its headquarters right in central San Francisco, and
Speaker 5: they have lots of incentives. Think about the corporate tax
Speaker 5: cuts that we've seen in recent administrations. Those are all
Speaker 5: ways that the government is sort of giving financial incentives
Speaker 5: to these companies and incentivizing them to make investments in
Speaker 5: a city, in a state, in a county, for example.
Speaker 5: There's a difference between that and taking a long term
Speaker 5: stake in a company. And remember the thing that I
Speaker 5: you know, I'm not I'm not an authority on corn farming,
Speaker 5: but I do know Silicon Valley, and if you think
Speaker 5: about how the way things have run here, things have
Speaker 5: gone historically over decades, the precedent is Company X in
Speaker 5: this in Silicon Valley, in the tech industry says to DC,
Speaker 5: stay out of our hair, leave us alone. For the
Speaker 5: most part, will build, will create jobs, will build new
Speaker 5: and innovative technology that's going to change the way you
Speaker 5: live and work and the way we do business. And
Speaker 5: that has historically been the case. Government has had a
Speaker 5: relatively hands off stance towards Silicon Valley. But that is
Speaker 5: changing dramatically, and it's changing much more quickly under the
Speaker 5: Trump administration then it has in recent memory as long
Speaker 5: as I can remember covering this industry. What are the
Speaker 5: long term implications? I don't think people are really thinking
Speaker 5: about that right now.
Speaker 2: It's really good kind of mind boggling.
Speaker 6: We're talking with Tom Giles, Senior executive editor for Global
Speaker 6: Tech out there on the West Coast here in our
Speaker 6: Bloomberg Interactive Broker studio. Ron Gould just coming back into
Speaker 6: our studio, Bloomberg News Deals reporter. He along with Josh
Speaker 6: Wingrove and Leanna Baker, breaking this story.
Speaker 2: It is our most read on.
Speaker 6: The Bloomberg Tom, stay with us, Ron, I want to
Speaker 6: roll you into this conversation. Remind everybody what you found out,
Speaker 6: and you know, do we have any insight or do
Speaker 6: you guys have any insight about how much the Trump administration,
Speaker 6: which has been called an activist administration, would want to
Speaker 6: be involved on an ongoing basis if it made this investment.
Speaker 7: Carol, We have very few details as to the numbers.
Speaker 7: I mean, it's something we're obviously looking to find out
Speaker 7: at this point. But I think it's just worth recapping
Speaker 7: that just how novel this type of structure would be
Speaker 7: or could be. I think i Am came on here
Speaker 7: earlier on and said that they're the very good perils
Speaker 7: parallels to be drawn between MP materials and the DD
Speaker 7: that deal. I think if you just break that down,
Speaker 7: what did that mean for MP materials and what could
Speaker 7: it mean for Intel. I mean, you look at that deal,
Speaker 7: it's something like you know, guaranteed purchases, loans, private financing,
Speaker 7: equity investment. I think these are all types of things
Speaker 7: that the government perhaps feels. And again this is what
Speaker 7: you would think from a sort of outside view looking
Speaker 7: in that if you give confidence capital in this sense,
Speaker 7: which I think is a good way to think about
Speaker 7: what this would be for Intel shareholders. If you give
Speaker 7: confidence capital to Intel as the you know, the most
Speaker 7: credit worthy institution the world, coming in and saying where
Speaker 7: behind you, where we're here for the long term, that's
Speaker 7: a massive drawer, especially if you're Intel and you're looking
Speaker 7: to bring in customers like Apple or Qualcomm, which by
Speaker 7: the way, has been its mission for a long long
Speaker 7: time to make its foundery solvent.
Speaker 6: Tom is that what Intel needs? Confidence capital?
Speaker 2: Is that what's.
Speaker 6: Gonna be the turnaround key for this company that's been
Speaker 6: kind of struggling for a while.
Speaker 5: It has been struggling. I mean you think about what
Speaker 5: where they're lacking, right, They have fallen behind technology technologically,
Speaker 5: particularly in an age of AI. They are they have
Speaker 5: lost market share. Lipputan, the CEO has come in and
Speaker 5: he has been cutting jobs and taking some hard steps
Speaker 5: financially to shore up them from a financial perspective, but
Speaker 5: in terms of products, in terms of like making themselves attractive,
Speaker 5: making themselves the place that customers around the world want
Speaker 5: to come for their chip making needs. That's something where
Speaker 5: they've fallen desperately behind. And so if you have a foundry,
Speaker 5: I mean, on its face, the idea of building a foundry,
Speaker 5: that's that's an alternative to TSMC. Right this this Taiwan
Speaker 5: based mammoth company that that is making most of the
Speaker 5: most advanced chips in the world. If customers want an
Speaker 5: alternative to that, Ryan mentioned Apple in Nvidia, they all
Speaker 5: would like to have alternatives to TSMC. You want you
Speaker 5: don't want someone to have a monopoly, right So, there
Speaker 5: are certain things about this idea of advancing this chip
Speaker 5: making capabilities for Intel in Ohio on it it makes sense,
Speaker 5: but it's really hard for a company that's struggling financially
Speaker 5: to get that off the ground. So again getting back
Speaker 5: to that near term equation, it makes sense for them
Speaker 5: to get a capital infusion in the near term. Longer term,
Speaker 5: does it make sense for the federal government to be
Speaker 5: making decisions and to be influencing the direction of companies.
Speaker 5: In many instances, the interests of the government and the
Speaker 5: shareholders may be very much aligned, but there will come
Speaker 5: a day where the government may want to politicize things
Speaker 5: in a way that doesn't work to the longer term
Speaker 5: advantages of shareholders. That's the thing that people need to
Speaker 5: be asking hard questions about right now.
Speaker 6: Yeah, exactly, Tom Giles, so appreciative, Senior executive editor for
Speaker 6: Global Technology with his view and reporting there.
Speaker 2: Also on Intel, intelstrial is still up about two point
Speaker 2: eight percent here in the aftermarket.
Speaker 4: You want to keep Ryan Gould in here as part
Speaker 4: of the team that broke the news that's still moving
Speaker 4: shares of Intel higher once again more than seven percent
Speaker 4: to the upside earlier in the session, up another two
Speaker 4: point nine percent as we speak, right. I want to
Speaker 4: go to you off of what Tom just said, the
Speaker 4: difficult questions that need to be asked right now, because
Speaker 4: you and the team right about the President and his
Speaker 4: administration are adamant about boosting domestic champions and sectors that
Speaker 4: it deems critical to combating China on national security grounds.
Speaker 4: I can imagine there are a lot of companies out
Speaker 4: there with executives who are raising their hands and saying,
Speaker 4: wait a second, I'm critical, where's my money?
Speaker 2: Exactly?
Speaker 7: I think Timmy raise a good point because if you're
Speaker 7: any other company that operates in semiconductive manufacturing or even
Speaker 7: so reconductive, you know, chip design, Hey, this isn't fair. Yeah,
Speaker 7: I mean you would be looking on and thinking what
Speaker 7: is the power play here? Yeah?
Speaker 6: I mean a MATS down twenty three percent following its
Speaker 6: latest quarterly update. I'm not saying anything is related, but
Speaker 6: it's like, hey, maybe I need as six exactly.
Speaker 7: And you know, if you think back, let's just retrace
Speaker 7: those steps a little bit. Some of these challenges and
Speaker 7: some of these questions are being raised a couple of
Speaker 7: months ago, quite a few months ago now, before Lipbouteen
Speaker 7: became became the CEO. When Pat left, you know, there
Speaker 7: was a big search that went underway. They used a
Speaker 7: head hunter. They spoke to people like Gary Dickison a
Speaker 7: mat about the job. I mean, they spoke to a
Speaker 7: ton of people about the job. There is actually only
Speaker 7: one person who really wanted that job for the challenge
Speaker 7: that is on the table right now, and there's Libu ten.
Speaker 7: Libbhuten is currently in that seat. He turned up with
Speaker 7: the White House earlier this week, cut a fairly you know,
Speaker 7: confident figure walking into the White House grounds and is
Speaker 7: now on the face of this coming out with something
Speaker 7: that looks like a potentially very favorable deal, at least
Speaker 7: in the short term, I think to Tom's point earlier on,
Speaker 7: at least in the short term for what you know,
Speaker 7: Intel is looking to do, which is right size it's
Speaker 7: balance sheet, stems some of those losses and make sorry
Speaker 7: to use the Trump term, but you know, make Intel
Speaker 7: grade again.
Speaker 6: It's kind of wild, kind of wild before we get
Speaker 6: caught up in the exuberance. That is very easy to
Speaker 6: get caught up in this environment, especially when you've got
Speaker 6: a stock that pops seven percent in the regular trade,
Speaker 6: another three percent here in the aftermarket. Early stages like
Speaker 6: do you have any you guys talk to a lot
Speaker 6: of folks who reported this at it's a.
Speaker 2: Bloomberg exclusive, it's a most red story.
Speaker 6: But do you have a feeling of again, I'm going
Speaker 6: to go back to kind of where this process maybe.
Speaker 7: I mean, we actually don't. I mean, that's one of
Speaker 7: the challenges is you know, finding out how big this
Speaker 7: is I think, you know where on the case. I'm
Speaker 7: sure many of our competitors are now in the case.
Speaker 7: But I think one of the things I point out
Speaker 7: is that the presidents said on truth Social this week
Speaker 7: that these meetings will be happening with Commerce and with
Speaker 7: Treasury this week. You can probably assume that there are
Speaker 7: a ton of people down in Washington and right now,
Speaker 7: both on the Intel side and the government side, who
Speaker 7: are putting minds together to figure out exactly what it
Speaker 7: will require to get Intel into on a stronger footing.
Speaker 7: I think, you know, if you look at what Intel
Speaker 7: has said. It declined to comment I should notes on
Speaker 7: the deal discussions, but it's said in a statement to
Speaker 7: Bloomberg that it remains deeply committed to supporting the Trump's
Speaker 7: efforts to strength in US technology and manufacturing leadership.
Speaker 2: Just quickly, we've not heard anything from the White House.
Speaker 2: Not yet. Okay, good to know you.
Speaker 6: Rock again, Ryan gold, Deal's reporter here at Bloomberg News Again.
Speaker 6: Intel shares tim up two point six percent here in
Speaker 6: the aftermarket, after about a seven percent.
Speaker 2: Gain in the regular training session.
Speaker 4: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 4: up after this.
Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch
Speaker 1: us live weekday afternoons from two to five ees during
Speaker 1: listen on Applecarplay and Android Otto with the Bloomberg Business app,
Speaker 1: or watch us live on YouTube.
Speaker 6: Right now, though, we want to stay with what we
Speaker 6: just heard from the President, an array of topics. We've
Speaker 6: got with us our own Jenny Welch, she is with us,
Speaker 6: joining us from our bureau in the nation's capital.
Speaker 2: She is Bloomberg Economics Chief geoeconomics analyst. Jenny. Good to
Speaker 2: have you back with us. There was a lot from
Speaker 2: the President.
Speaker 6: I'm always curious because he certainly says things that might
Speaker 6: be Strewda's opinion or thoughts and speculation about things. What
Speaker 6: is it that from what we just heard from the
Speaker 6: President anything in terms of new messaging that is something
Speaker 6: certainly the Bloomberg audience wants to know about well.
Speaker 8: I think in particular as it relates to geopolitics and
Speaker 8: the summit taking place tomorrow between him and President putin that,
Speaker 8: what especially European partners are likely paying attention to is
Speaker 8: the fact that he just once again tried to set
Speaker 8: expectations slow for that meeting. But I think the new
Speaker 8: element was indicating he might be open to having European
Speaker 8: partners join some sort of subsequent summit that he hopes
Speaker 8: to be able to arrange between Putin and Ukrainian President Zelenski.
Speaker 8: I think we would say the odd of that coming
Speaker 8: together or rather low, given Putin's previous opposition to meeting
Speaker 8: with Zelenski. But nevertheless, that seems to be a goal
Speaker 8: that Trump is very much keen to get across the
Speaker 8: finish line in tomorrow's conversation with Putin.
Speaker 4: Jennifer, nobody has a crystal ball here, but we're thinking
Speaker 4: about possible and probable outcomes at this meeting. How are
Speaker 4: you thinking about these? What could end up happening post
Speaker 4: meeting tomorrow?
Speaker 8: We see three broad potential pathways for the meeting. As
Speaker 8: you noted, it's hard to say for sure, so we
Speaker 8: developed multiple scenarios and hope that one of them pans out.
Speaker 8: I think the first one, in what we would consider
Speaker 8: to be pretty unlikely, is that talks collapse in such
Speaker 8: a colamous way that Trump actually feels embarrassed and feels
Speaker 8: he needs to follow through on his previous threat of
Speaker 8: sanctions against Russia, which he's been lobbying since he returned
Speaker 8: to office in January, but hasn't actually taken any steps on.
Speaker 8: A second potential pathway is that they do make enough
Speaker 8: progress for Trump to declare victory of a sort and
Speaker 8: walk back those previous threats, which is probably his prefer
Speaker 8: but we remain rather skeptical that the two sides will
Speaker 8: be able to reach some sort of agreement that leads
Speaker 8: to lasting, sustainable peace.
Speaker 2: A key reason.
Speaker 8: Behind that is that Putin thinks times on his side
Speaker 8: and that he's winning on the battlefield, and so his
Speaker 8: incentives to negotiate are pretty low, which means the third
Speaker 8: possibility that they agree to something that will actually put
Speaker 8: them on the path towards a full peace deal with Ukraine,
Speaker 8: we see, is still relatively low at this point in time.
Speaker 6: Is there any chance, if there is no kind of
Speaker 6: peace deal worked out in a first or even second meeting,
Speaker 6: that what ultimately happens is the US steps up its
Speaker 6: efforts and support of Ukraine.
Speaker 8: I think there's certainly that possibility out there, and that's
Speaker 8: what Zelenski and many of the European partners are hoping
Speaker 8: that certainly that Trump doesn't make any agreements with Putin
Speaker 8: without them being there, and if he doesn't agree to
Speaker 8: anything with Putin that will lead them to the negotiating
Speaker 8: table as a sort of a unified force that the
Speaker 8: very least, he'll follow through on his threats to up
Speaker 8: the pressure on Russia while backing Ukraine stronger. I think
Speaker 8: my skeptics is and comes from we've been here multiple
Speaker 8: times since January and have yet to see Trump actually
Speaker 8: follow through on those threats. He certainly has a number
Speaker 8: of sanctions options at his disposal, but they all come
Speaker 8: with additional risks and costs, especially to the global oil
Speaker 8: market and to his relationships with other key countries, namely China,
Speaker 8: which is a major economic partner for Russia.
Speaker 4: It's hard not to think about tomorrow's meeting in the
Speaker 4: context of when we've seen these two leaders meet in
Speaker 4: the past, and Helsinki in the first term certainly comes
Speaker 4: to mind and everything that came along with that. Jennifer,
Speaker 4: what do we know about the relationship between these two
Speaker 4: leaders and what we could see and from a negotiating perspective,
Speaker 4: from a behavioral perspective, from the way that we could
Speaker 4: see gifts too or from one another.
Speaker 8: Yeah, the relationship between these two leaders is of high interests,
Speaker 8: especially here domestically in the United States, subject to previous inquiries,
Speaker 8: and I think will continue to be subject to a
Speaker 8: lot of skepticism. They're also have extremely different negotiating styles.
Speaker 8: Putin is a former KGB and intelligence officer that really
Speaker 8: shines through and how he approaches diplomacy, focusing on control,
Speaker 8: psychological manipulation, playing the long game as part of these talks.
Speaker 8: We've seen him, for example, before play out international negotiations
Speaker 8: pretending like he's interested in peace while continuing to make
Speaker 8: games on the battlefield, most notably in Crimean in twenty
Speaker 8: fourteen and twenty fifteen with President Trump. He is a
Speaker 8: deal maker. He comes from New.
Speaker 2: York real estate.
Speaker 8: He's interested in creating some sort of win for himself,
Speaker 8: especially something that he can sell publicly. At the same time,
Speaker 8: he's someone who has shown he's willing to walk away
Speaker 8: from the table if he doesn't get what he wants.
Speaker 8: That was apparent in his first term with negotiations with
Speaker 8: North Korean leader Kim Jung un, and I think that's
Speaker 8: something he's trying to sort of put down a marker
Speaker 8: for he's willing to do tomorrow. I think the question
Speaker 8: is will putin sort of outmatch him and out maneuver
Speaker 8: him on that front and be able to provide him
Speaker 8: some sort of tangible win that Trump says is this
Speaker 8: is a victory or play into Trump's at long standings
Speaker 8: skepticism of Ukraine.
Speaker 6: We are living in interesting times. A headline just crossing
Speaker 6: the bloomberg. I have a five point two mag earthquake
Speaker 6: one hundred and thirty two kilometers southwest of Nikolski, Alaska.
Speaker 2: So this is just crossing. It looks like probably from
Speaker 2: the US Geological Service.
Speaker 6: So I'm just putting it out there because it all
Speaker 6: kind of is this big whiteboard, and it all just connects,
Speaker 6: doesn't it. Hey, Jennie, One last question you mentioned about
Speaker 6: I think you know, people moving ahead, forging agreements and
Speaker 6: so on and so forth. The President was asked specifically
Speaker 6: about Latin America and China getting closer, closer and cozier.
Speaker 6: How are you looking at that, continuing to look at
Speaker 6: how things are changing when it comes to important global relationships,
Speaker 6: and is the US increasingly being left out or no?
Speaker 6: Is the President showing that he definitely has strength and
Speaker 6: still has a seat at the big table.
Speaker 8: Well, certainly, China's efforts to court Latin America and other
Speaker 8: Global South countries are long standing.
Speaker 2: I think Beijing is making a.
Speaker 8: Lot of this moment where a lot of those countries,
Speaker 8: in particular Brazil, are facing a heavy weight of US
Speaker 8: terrorists and trying to gain the most that it can
Speaker 8: from those relationships, positioning itself as sort of the rock
Speaker 8: and Trump's storm, I think from the US perspective, and
Speaker 8: really from Trump's perspective in particular, he has kind of
Speaker 8: brought back this theme of almost a Monroe doctor and
Speaker 8: approach to Latin America, where this is considered the US's
Speaker 8: traditional sphere of influence, and he's going to push back
Speaker 8: on China, especially in places like the Panama Canal that
Speaker 8: are regarded as kind of strategic took points. I think
Speaker 8: for many countries in that region, though, the question is
Speaker 8: what is the US going to do to give them
Speaker 8: an alternative? Because Terris is sort of the punishment. The
Speaker 8: stick might not be enough, all right.
Speaker 2: One of our rocks.
Speaker 6: She is a rock when it comes to what's going
Speaker 6: on too out of the White House totally and putting
Speaker 6: geoeconomics into perspective.
Speaker 2: Jennifer Welch, thank you. So much. Joining us there from DC.
Speaker 6: She is Bloomberg Economics Chief Geoeconomics list.
Speaker 4: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 4: up after this.
Speaker 1: This is the Bloomberg Business Week Daily Podcast. Listen live
Speaker 1: each weekday starting at two pm Eastern on Applecarflay, and
Speaker 1: Android Auto with the Bloomberg Business App. You can also
Speaker 1: listen live on Amazon Alexa from our flagship New York station,
Speaker 1: Just say Alexa, play Bloomberg eleven thirty.
Speaker 6: As for the President, just off a press event at
Speaker 6: the White House, he did say inflation is down to
Speaker 6: a perfect number. He said, hardly any inflation at all.
Speaker 6: He also mentioned the stock market soaring for when k
Speaker 6: is soaring. He also talked about something that is certainly
Speaker 6: a focal point for us, and that is the meeting
Speaker 6: between the United States President Trump and Russian President Vladimir Putin,
Speaker 6: the President saying that he thinks President Putin will make peace,
Speaker 6: and also talked about a second meeting will be more
Speaker 6: important than tomorrow's and talked about potentially European officials being
Speaker 6: part of that meeting, and that is kind of where
Speaker 6: we want to start getting an end to that. More
Speaker 6: than three and a half year old war will likely
Speaker 6: take time.
Speaker 2: And more than one meeting. As we just heard from
Speaker 2: President Trump moments.
Speaker 9: Ago, we have a meeting with President Putin tomorrow. I
Speaker 9: think it's going to be a good meeting. But the
Speaker 9: more important meeting will be the second meeting that we're having.
Speaker 9: We're going to have a meeting with President Putin, President
Speaker 9: z Olynsky, myself, and maybe we'll bring some of the
Speaker 9: European leaders or maybe not.
Speaker 2: It's I don't know that.
Speaker 9: It's going to be very important.
Speaker 2: We're going to see what happens.
Speaker 9: And I think President Putin will make peace. I think
Speaker 9: presidents Olynsky will make peace. We'll see if they can
Speaker 9: get along, and if they can, it'll be great.
Speaker 10: All right.
Speaker 6: That, of course, was President Trump just earlier this hour
Speaker 6: talking from the White House talking about meeting President Putin,
Speaker 6: talking about expectations for a second meeting, talking about bringing
Speaker 6: European leaders in, and saying that he thinks President Putin
Speaker 6: will make peace. He also said he thinks President Zulensky
Speaker 6: of Ukraine will make peace. So going to be watching
Speaker 6: that certainly tomorrow. All right, let's get to our guests,
Speaker 6: because this is kind of our big backdrop.
Speaker 2: We welcome to our studios.
Speaker 6: She's been patient as we go through all of the
Speaker 6: news today and here at Bloomberg Headquarters Nicola Willis. She
Speaker 6: is Minister of Finance for New Zealand, joining us here
Speaker 6: in studio.
Speaker 2: There is a lot going on. Thank you for your patients. Welcome, welcome.
Speaker 6: How do you see kind of the macro environment? There's
Speaker 6: so much going on for so many different countries. We
Speaker 6: have a very active White House, we call it an
Speaker 6: activist White House, and I'm just curious, how would you
Speaker 6: describe the state of world affairs today?
Speaker 3: Well, I think that there's considerable uncertainty in world affairs today.
Speaker 3: Where there were once things that were given and were
Speaker 3: very predictable, we are now seeing more volatility and policy
Speaker 3: decision making, which has implications for investors and for sovereigns
Speaker 3: in terms of the way that we go about things.
Speaker 3: For our part in New Zealand, we tend to want
Speaker 3: to be a beacon of stability in amidst all of that,
Speaker 3: to say, you know what, We're going to continue to
Speaker 3: be rules based. We have low, stable inflation, we have
Speaker 3: declining interest rates. We're going for growth. We trade with
Speaker 3: many countries around the world and wish to continue to
Speaker 3: pursue freer trading relationships. We have prospects for growth and
Speaker 3: so we aim to be stable, predictable. We have secure institutions,
Speaker 3: and we think those things will be at a premium
Speaker 3: in the coming years as there is more volatility.
Speaker 4: Mister Willis, whenever we have officials from other countries visiting
Speaker 4: the US, which is a big part of your job,
Speaker 4: we always ask the question about a particular trip, why
Speaker 4: are you in New York right now? Why are you
Speaker 4: visiting us right now?
Speaker 3: We're here because we value very much both our economic
Speaker 3: and security relationship with the United States, and I'm pursuing
Speaker 3: more economic growth for New Zealand and New Zealanders, and
Speaker 3: we believe it's in the interests of both of our
Speaker 3: countries to forge stronger trade and investment ties in pursuit
Speaker 3: of that.
Speaker 4: So, how does that work in an America first environment?
Speaker 4: In an environment from Washington, DC, where the communication has
Speaker 4: been very strongly this is an administration that is looking
Speaker 4: at the priorities of the US, whether or not it
Speaker 4: affects other countries in a negative way.
Speaker 3: Well, quite simply, our proposition is it's in the United
Speaker 3: States interests to have a strong and growing relationship with
Speaker 3: New Zealand. We're part of the Five Eyes Security Partnership
Speaker 3: along with Canada, the United Kingdom and Australia, and we
Speaker 3: continue to believe that's very important for the United States.
Speaker 3: We also have a very complementary trade relationship. We export
Speaker 3: primary products tech services which Americans value, and equally, we
Speaker 3: import significant amounts from the United States and will continue
Speaker 3: to do so. We, like many countries, are increasing our
Speaker 3: investment and defense, and it's likely that some of the
Speaker 3: kit that we will be purchasing in future will be
Speaker 3: manufactured in the United States. Similarly, when our national Airline
Speaker 3: replaces its fleet, it's likely that some of those planes
Speaker 3: will be produced in America. We have very strong and
Speaker 3: longstanding people to people ties. Our two countries have gone
Speaker 3: along well for many many decades, and we think it
Speaker 3: is in the interests of both countries that New Zealand
Speaker 3: continue to be a strong relationship that the United States
Speaker 3: could look to and rely on.
Speaker 6: So is this White House so impacting the relationship, the
Speaker 6: strong relationship that New Zealand has had with the United
Speaker 6: States in any way.
Speaker 3: We continue to view the United States as our friends
Speaker 3: now of course, we would prefer not to be facing
Speaker 3: additional tariffs. Find me a country that says, yeah, we
Speaker 3: really like additional tariffs and we're not in that. We're
Speaker 3: not in that situation, and we have a history of
Speaker 3: pursuing freer trading agreements. We have very very low trade
Speaker 3: barriers for United States imports, and we feel we've treated
Speaker 3: American export as very well, so we would pre prefer
Speaker 3: to be on a lower tariff rate. We've ended up
Speaker 3: at fifteen percent as a base rate, which reflects the
Speaker 3: fact we have a small trade surplus with the United States.
Speaker 3: We're talking very marginal New Zealand dollars five undred millions,
Speaker 3: so it isn't big.
Speaker 2: We don't really it's.
Speaker 6: Disappointing that it wasn't. Maybe the ten percent that looks
Speaker 6: were thinking initially.
Speaker 3: We would have preferred that we understand the rule that's
Speaker 3: been applied. But it's hard to conceive that New Zealand,
Speaker 3: a country of five million people, has any kind of
Speaker 3: threat to the manufacturer in you or industrial base of America.
Speaker 6: Does it lead though, and I guess we're trying to
Speaker 6: figure out. We talk a lot about the geopolitical world
Speaker 6: order being changing around we talked about if the President
Speaker 6: was just asked about maybe closer ties between China and
Speaker 6: Latin America. China already has a presence we know in
Speaker 6: Latin America, but maybe they are increased as a result
Speaker 6: of what's going on.
Speaker 2: Are you forging different.
Speaker 6: Relationships because of some of the strained relationships.
Speaker 2: Out of the United Stations, strained relations out of the US.
Speaker 3: I wouldn't characterize it that way. New Zealand has always
Speaker 3: looked to forge relationships around the world and to reinforce
Speaker 3: the rules based system wherever we can, and to work
Speaker 3: through multi lateral institutions because we're small and our voice
Speaker 3: will never be the la artist like the United States.
Speaker 3: We have a strong and important economic relationship with China
Speaker 3: that we've been able to maintain while also taking very
Speaker 3: different points of view on many matters, and we've been
Speaker 3: able to balance those two things.
Speaker 6: So not strengthening them with China because of maybe what's
Speaker 6: going on.
Speaker 3: No, I would not characterize it that way. But continuing
Speaker 3: to lean into our relationships where we have common interests.
Speaker 3: So we are members, for example, of the CPTPP trade relationship,
Speaker 3: and we have welcomed the EU's interest in becoming a
Speaker 3: dialogue partner and looking to reinforce that trade arrangement. We've
Speaker 3: recently signed free trade agreements with the United Kingdom, with
Speaker 3: the European Union. They're important with the GCC, the UAE,
Speaker 3: and we're pursuing a trade relationship with India. We think
Speaker 3: it's very important as a small exporting country that we
Speaker 3: have options and who we trade with wherever possible, try
Speaker 3: and open more doors. We've got a grand history of
Speaker 3: doing that. We're one of the countries in the world
Speaker 3: to drop subsidies to ensure that we were genuinely open
Speaker 3: to the world. We won't get rich selling to ourselves.
Speaker 3: We're too small for that, so we do well when
Speaker 3: the world welcomes our goods and services.
Speaker 4: Mister Willis, are you meeting with any US officials on
Speaker 4: this trip?
Speaker 3: Not on this trip thirty six hours only, I'm afraid,
Speaker 3: but I look forward to returning to Washington later this
Speaker 3: year for some of the annual meetings, and at that
Speaker 3: point I would hope to meet with some people from
Speaker 3: the administration.
Speaker 4: At that point, do you will part of your job
Speaker 4: be to try to reduce the fifteen percent tariff on
Speaker 4: goods from New Zealand?
Speaker 3: Well, look, we're realistic about the fact that the Trump
Speaker 3: administration have set a clear parameter that countries that have
Speaker 3: surpluses are unlikely to get reductions in their tariffs. But
Speaker 3: we will continue to advance our case, which is that
Speaker 3: we have a very complementary trade relationship with the United States,
Speaker 3: built on a security partnership in a very long history,
Speaker 3: and we will press the case for our exporters that
Speaker 3: we think be fairly facing a lower rate, and we
Speaker 3: will continue to share that message with our friends in
Speaker 3: the United States to make sure that if there is
Speaker 3: reconsideration of the current tariff regime in future, that we're
Speaker 3: front of the line for reconsideration. We think we should be.
Speaker 3: We're keyw we play fair, we play by the rules.
Speaker 3: We sell you sauvignon blanc tourism experiences and lean red
Speaker 3: meat that Americans love, and we would like you to
Speaker 3: be getting it at fair prices into the future. And
Speaker 3: a lower tariff rate supports that we expect to continue
Speaker 3: buying huge amounts of American goods into the future. So
Speaker 3: there's nothing to fear from giving New Zealand a lower
Speaker 3: teriff right in the future.
Speaker 6: You're also great sailors I'm just going to point it
Speaker 6: out we as a fellow sailor myself. We'll talk with
Speaker 6: Nicolo Willis, she's Minister of Finance of New Zealand. Here
Speaker 6: in our studio AP Blomberg headquarters in New York City.
Speaker 2: What are you guys doing to encourage foreign direct investment? Yeah, well,
Speaker 2: we're very big on this.
Speaker 3: So we've set up a new entity in Vest New
Speaker 3: Zealand to connect international investors with New Zealand. We're reforming
Speaker 3: our legislation to make it easier for foreign investors to
Speaker 3: make investments, and administratively, we've sped up the process by
Speaker 3: which they can do that. Particular, we've introduced golden visas
Speaker 3: the Active Investor Plus, which means that investors can get
Speaker 3: residency rights in exchange for making investments either actively or
Speaker 3: passively in New Zealand assets.
Speaker 2: Is it working? That is working.
Speaker 3: We've been delighted by their response, a really high degree
Speaker 3: of interest. Hundreds of people have applied for those visas
Speaker 3: within the first few months, pledging over a billion dollars
Speaker 3: in New Zealand funds.
Speaker 2: And I think that reflects two things.
Speaker 3: One, New Zealand is a safe, secure place in a
Speaker 3: world that increasingly is less so, and people like the
Speaker 3: idea of having that residency in New Zealand. But second,
Speaker 3: they can see that many of our investment opportunities are
Speaker 3: currently undercapitalized. Investing in New Zealand is a good bet.
Speaker 2: Can they buy real estate in New Zealand?
Speaker 4: Though if we get residency not.
Speaker 3: Currently that is excluded. Our government, which is comprised of
Speaker 3: three parties, has been in discussion about loosening those regulations
Speaker 3: so that those who get an active investor visa may
Speaker 3: in future be able to purchase a proper.
Speaker 4: Far future what are we talking about for a timeline here?
Speaker 3: Those talks have been underway and you would expect that
Speaker 3: a decision would be made by our cabinet in the
Speaker 3: coming weeks.
Speaker 4: Okay, in the coming weeks. So Carol, get ready come.
Speaker 3: In your little slice of paradise. We're surrounded by a
Speaker 3: big fat ocean. I know, we have huge amounts of land.
Speaker 3: It's beautiful. I think the world should be looking at
Speaker 3: New Zealand. We have great prospects.
Speaker 2: Will the US tariffs impact growth in your nation?
Speaker 3: Well, as I said, we'd always prefer not to be
Speaker 3: facing those tariffs. But as a proportion of our overall trade,
Speaker 3: it is actually quite small. The more significant impact for
Speaker 3: us is the same as it is for many other countries,
Speaker 3: which is a lower rate of global growth resulting from
Speaker 3: tariffs and retaliat treating. You're worried about a global not
Speaker 3: a recession, but just a lower rate of potential growth
Speaker 3: would have otherwise been the case, particularly out of our
Speaker 3: trading partners. That then effects prices for our goods and
Speaker 3: demand for our goods.
Speaker 2: And it's just enough to feel like a recession.
Speaker 3: And slow enough to feel like we're not meeting the
Speaker 3: potential that would have otherwise been realized. And that's been
Speaker 3: reflected in our forecast for the New Zealand economy in
Speaker 3: which we did peer down our growth expectations for the
Speaker 3: future based on what was developing with tariffs. You know,
Speaker 3: obviously there's a lot of water to go onto the
Speaker 3: bridge to see how all of this does play out globally,
Speaker 3: how countries are affected, and what it means for New
Speaker 3: Zealand's part. We continue to forecast strong growth, low inflation.
Speaker 3: That will remain the case, but a terriff free world
Speaker 3: is one in which we grow faster.
Speaker 6: Do you think that might come back if there's a
Speaker 6: different president in the way it house.
Speaker 3: I think countries will always continue to pursue their own
Speaker 3: interests as they should, and that's why I will keep
Speaker 3: singing the song for freer trade, because that is in
Speaker 3: New Zealand's interests.
Speaker 6: So glad to get some time with you. Thank you
Speaker 6: so much, Tom and I both enjoyed it. Nikola Willis,
Speaker 6: she's Minister of Finance for New Zealand. Right here in
Speaker 6: our studio.
Speaker 4: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 4: up after this.
Speaker 1: You're listening to the Bloomberg Business Week Daily podcast. Catch
Speaker 1: us live weekday afternoons from two to five Easter and
Speaker 1: listen on Apple Karplay and Android Auto with the Bloomberg
Speaker 1: Business app, or watch us live on YouTube.
Speaker 4: I want to bring in Sarah Ponsig. She's senior vice
Speaker 4: president and financial advisor for BB Group in Boca Raton, Florida.
Speaker 4: It's a UBS private wealth management team. It manages over
Speaker 4: four billion dollars. Sarah, this was not on your radar
Speaker 4: for discussing today, but that's not going to stop me
Speaker 4: from asking you about it. I know you are nimble
Speaker 4: on this stuff, being a former reporter here at Bloomberg News.
Speaker 4: I think it's fair to say, so what do you say,
Speaker 4: what do you make of just the big picture in
Speaker 4: the you know, quote unquote industrial policy of the of
Speaker 4: the United States under the Trump administration. This is something
Speaker 4: that invests that's new to investors in the US and
Speaker 4: they're kind of having to deal with.
Speaker 5: No.
Speaker 10: This has been a very big week in terms of
Speaker 10: news related to the presidential administration in the United States
Speaker 10: and their view on US tech. You know, as I
Speaker 10: heard you and Carol reading off the headlines, my mind
Speaker 10: immediately went to the news from earlier this week about
Speaker 10: Nvidiana and d As as you you know, rightfully laid out,
Speaker 10: and I think, you know, there's there's a lot of
Speaker 10: information to learn and to glean to see how these
Speaker 10: relationships are going to pan out. But from an investor's
Speaker 10: standpoint and point of view, you know, what it does
Speaker 10: show is that the administration cares about you know, US
Speaker 10: industry and our stance and our strength, I should say,
Speaker 10: when it comes to chip manufacturing and you know, being
Speaker 10: at the top of the helm in the technological industry,
Speaker 10: and it shows that they support a lot of these
Speaker 10: tech you know, technology companies that are in communication with
Speaker 10: them too, So I think it's probably a little bit
Speaker 10: too early. I'm just hearing the headlines. Yeah, you are
Speaker 10: to take an immedia and definitive, right, take a definitive
Speaker 10: you know, investment point of view away from the.
Speaker 2: News, but high level top view.
Speaker 10: You know. I do think it's somewhat supportive of showing that,
Speaker 10: you know, we're living through a time in which the
Speaker 10: US presidential administration really cares about technology, and you know
Speaker 10: where our country and where our companies stand at the
Speaker 10: forefront of that technology going forwards.
Speaker 6: All right, Sarah, But as you know, there's policy that
Speaker 6: supports an industry. There's incentives, there's an assists, there's tax breaks,
Speaker 6: and then there's making an investment in a company.
Speaker 2: And we've even looked at Fanny.
Speaker 6: Freddie, which are these quasi public private and it's been
Speaker 6: kind of a tortured relationship and right and then throwing
Speaker 6: the Great Financial Crisis. So I do wonder we are
Speaker 6: so critical of Chinese companies in some regards or some
Speaker 6: are because of the Chinese government involvement or perceived involvement
Speaker 6: or actual involvement when it comes to their industries. And
Speaker 6: so wouldn't that be a fundamental shift perhaps in kind
Speaker 6: of the corporate government and maybe the investment environment here
Speaker 6: in the United States.
Speaker 2: It certainly could be.
Speaker 10: It's a fine line to walk, and not that I
Speaker 10: want to bring up, you know, the crypto industry either,
Speaker 10: but that's also I'm not going to say new, but
Speaker 10: you know, it's been newly more so embraced by institutional
Speaker 10: investors in large institutions, and that's another area that the
Speaker 10: administration has really put themselves at the forefront of. So
Speaker 10: you're right, it's definitely a change in tech and it's
Speaker 10: a very fine line to walk. But at this point
Speaker 10: in time, I still think it's too early to say.
Speaker 2: You know, none of us know how involved.
Speaker 10: The administration truly wants to be and if they're going
Speaker 10: to be making you know, decisions at the executive levels
Speaker 10: of the board of a company and whatnot, they're.
Speaker 2: Taking a stake.
Speaker 10: You know. I know that our brilliant reporters at Bloomberg
Speaker 10: will do a great, you know, great job hashing this
Speaker 10: out as it relates to the headlines that just broke.
Speaker 2: So would you suggest investors buy Intel on this?
Speaker 10: Well, I'm not supposed to speak to individual companies, unfortunately,
Speaker 10: but I think, look, I will speak to the tech
Speaker 10: sector at large and also semiconductor companies at large, especially
Speaker 10: in the face of the expectations for AI spending, artificial
Speaker 10: intelligence spending. I think if there is anything that you
Speaker 10: know investors can take away from this prior earning season,
Speaker 10: maybe you know, separate from company commentary on terriffs, because
Speaker 10: you know what everyone wants to know these days in
Speaker 10: the world that we're living in. But if you look
Speaker 10: at we're the majority of earnings growth and expected earnings
Speaker 10: growth in the future is coming from It is from
Speaker 10: our US tech companies. One statistic that I find absolutely
Speaker 10: mind boggling and really amazing is that if you look
Speaker 10: at S and P five hundred earnings estimates growth since
Speaker 10: the end of twenty twenty two, the Magnificent seven accounts
Speaker 10: for two thirds of that. Now, I know those are
Speaker 10: not all you know, AI specific and semiconductor companies, but
Speaker 10: a lot of them spend a lot on the future
Speaker 10: of artificial intelligence, as we all know. So I do think,
Speaker 10: you know, tech as a whole, even though it led
Speaker 10: on the way up ever since we saw the April
Speaker 10: market volatility, you know, the April tariff drama. Still think
Speaker 10: that's a good place that investors can look to for
Speaker 10: solid investment.
Speaker 4: Do we need to rethink the way that the US
Speaker 4: government approaches companies in general? There's a great line in
Speaker 4: the piece, and we're going to be speaking to Ryan
Speaker 4: Gould in a just a minute about everything intel in
Speaker 4: US government. But as we mentioned what we were talking
Speaker 4: about this Carol, when the headline just came out and
Speaker 4: echoes what we saw from MP materials, that four hundred
Speaker 4: million dollar Exact Priest investment from the Department of Defense,
Speaker 4: and I'm reading from the story here, Sarah, that move
Speaker 4: turned conventional wisdom on its head among investors, analysts, industry executives,
Speaker 4: and even longtime government officials in terms of how private
Speaker 4: industry has dealt with the government. Do we need to
Speaker 4: rewrite the rules? Do you need to rewrite the rules
Speaker 4: about what you tell your clients about expectations between public
Speaker 4: private partnerships when it comes to publicly traded companies.
Speaker 10: It's certainly something that needs to be kept in the
Speaker 10: back of our minds, especially when we're dealing with an
Speaker 10: administration which I think we can all say, you know,
Speaker 10: pretty fairly can act on a whim sometimes you know,
Speaker 10: may take two different social media platforms to put out
Speaker 10: thoughts and whatnot. So then if you have an administration
Speaker 10: that is not only just saying their opinion but actually
Speaker 10: owns a piece of a company, and we do have
Speaker 10: a private public or a public private partnership, they have
Speaker 10: a little little bit more control obviously as a true
Speaker 10: investor in that company than they would if they were
Speaker 10: just an unrelated third party. So is it something that
Speaker 10: we need to keep in the back.
Speaker 2: Of our minds and be aware of.
Speaker 3: Yes?
Speaker 2: Absolutely.
Speaker 10: Is it something that I think is going to completely
Speaker 10: change the name of the game when it comes to,
Speaker 10: you know, strategic investing for our clients for example. At
Speaker 10: this point, no, not necessarily.
Speaker 2: All right, we're going to leave it there. Listen.
Speaker 6: So appreciated and thanks for going with the flow. You're
Speaker 6: so used to the news world, and we really appreciate it.
Speaker 6: Our Sarah Ponzak not our hour. She was our former
Speaker 6: Sarah Ponzac. She'll always be our Sarah Ponzac, but she
Speaker 6: is senior vice president Financial Advisor for BV Group in
Speaker 6: book or atone Flauriena.
Speaker 1: This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
Speaker 1: and anywhere else you get your podcasts. Listen live weekday
Speaker 1: afternoons from two to five pm Eastern on Bloomberg dot Com,
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.
Speaker 1: You can also watch us live every weekday on YouTube
Speaker 1: and always on the Bloomberg terminal