WEBVTT - Google Not Required to Sell Chrome in Court Antitrust Ruling 0:00:02.520 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business 0:00:10.520 --> 0:00:14.680 Weekdaily reporting from the magazine that helps global leaders stay 0:00:14.720 --> 0:00:18.799 ahead with insight on the people, companies, and trends shaping 0:00:18.800 --> 0:00:23.760 today's complex economy. Plus global business finance and tech news 0:00:23.800 --> 0:00:28.240 as it happens. The Bloomberg Business Weekdaily Podcast with Carol 0:00:28.320 --> 0:00:31.760 Masser and Tim Stenebeck on Bloomberg Radio. 0:00:32.479 --> 0:00:34.159 Hey, I want to take a look at what's going 0:00:34.200 --> 0:00:37.400 on with Google shares in the after hours Right now, 0:00:37.720 --> 0:00:40.240 we were talking about the surge hire as a result 0:00:40.440 --> 0:00:43.640 of this ruling that emerged shares still up five point 0:00:43.920 --> 0:00:44.640 six percent. 0:00:44.760 --> 0:00:47.040 Feel like we woke up like something was happening. 0:00:47.159 --> 0:00:50.879 Oh well, absolutely, Google doesn't have to sell its popular 0:00:50.920 --> 0:00:53.680 Chrome web browser, a federal judge ruled tuesday in the 0:00:53.880 --> 0:00:57.440 Justice departments landmark anti trust case against the search engine. 0:00:57.560 --> 0:00:59.520 The ruling allows Google to avoid one of the most 0:00:59.520 --> 0:01:02.880 severe remedy requests from the US government after the court 0:01:02.960 --> 0:01:05.640 found that the company had an illegal monopoly in the 0:01:05.720 --> 0:01:09.280 search market. The judge did bar Google from entering into 0:01:09.280 --> 0:01:11.800 exclusive contracts for Internet search. 0:01:11.959 --> 0:01:13.840 All right, we knew we wanted to talk with our 0:01:13.880 --> 0:01:16.920 man deep seeing of our Bloomberg intelligence teams here in studio. 0:01:17.520 --> 0:01:19.880 Google shares are up. I mean, was this expected? First 0:01:19.880 --> 0:01:20.199 of all? 0:01:20.840 --> 0:01:23.720 No, I think that's why you see such an instance 0:01:23.760 --> 0:01:28.080 stock reaction because the judge was quite vocal about how 0:01:28.240 --> 0:01:32.000 Google had created a monopoly because of all the assets, 0:01:32.080 --> 0:01:36.039 and Chrome was one of the most prominent assets that 0:01:37.040 --> 0:01:40.679 they the judge focused on so clearly in this case, 0:01:40.720 --> 0:01:44.360 the fact that the ruling says that they don't have 0:01:44.440 --> 0:01:47.840 to divest Chrome, it's positive news. And look all the 0:01:47.920 --> 0:01:52.880 exclusive arrangements with Apple and for their operating system, I 0:01:52.880 --> 0:01:57.440 think that was expected remedy really, I mean, it kind 0:01:57.440 --> 0:01:59.840 of allows Apple to pick the. 0:01:59.800 --> 0:02:00.800 Partartner they want. 0:02:01.160 --> 0:02:04.360 There won't be an exclusive arrangement, but look, from an 0:02:04.360 --> 0:02:08.400 Apple perspective, they can still say Google has the best 0:02:08.560 --> 0:02:10.920 LLLM and you know they want to do business. So 0:02:11.360 --> 0:02:13.960 from that perspective, that's why Apple is up too. So 0:02:14.200 --> 0:02:19.040 you know, this sort of clears all the uncertainty for 0:02:19.120 --> 0:02:20.000 both the companies. 0:02:20.160 --> 0:02:22.920 Look, I'm going to ask a crazy question here. Do 0:02:23.000 --> 0:02:24.960 we care about search the way that we used to 0:02:24.960 --> 0:02:27.960 care about search in the sense of typing something into Google, 0:02:28.240 --> 0:02:31.480 or increasingly, do we care more about which LLM people choose? 0:02:32.160 --> 0:02:36.680 Well? So the search market has definitely expanded because of 0:02:36.720 --> 0:02:39.680 generative AI. So think of how Google had a ninety 0:02:39.680 --> 0:02:44.640 percent plus share. I'm sure if this lawsuit came to 0:02:44.720 --> 0:02:49.160 the scene and the hearing was happening now, the jet 0:02:49.200 --> 0:02:51.880 would say Google doesn't have ninety percent plus share because 0:02:51.960 --> 0:02:56.280 chatchbt has got one billion monthly active users. It's got 0:02:56.280 --> 0:02:59.880 the query volume not comparable to Google, but almost you know, 0:03:00.040 --> 0:03:03.960 one third of Google, And so that search market is 0:03:04.000 --> 0:03:06.480 not the same as it was, you know, probably three 0:03:06.560 --> 0:03:10.400 years back before the launch of CHATJPT. And from that perspective, 0:03:10.600 --> 0:03:14.280 I mean, look, the search pile has grown. The fact 0:03:14.320 --> 0:03:17.560 that Google owns Chrome is a big advantage. So when 0:03:17.600 --> 0:03:21.280 I look at generative AI deployments, browser is a critical 0:03:21.360 --> 0:03:22.760 aspect of how. 0:03:22.520 --> 0:03:24.080 AI agents will be deployed. 0:03:24.120 --> 0:03:27.480 That's why you're seeing such a stock reaction because everyone 0:03:27.520 --> 0:03:30.720 knows if you take out Chrome from Google, even if 0:03:30.720 --> 0:03:33.000 Google has their own chips and they have got their 0:03:33.639 --> 0:03:37.720 you know ow LLLM, without a browser, the advantage just 0:03:37.760 --> 0:03:41.320 goes away. So divesting Chrome would have been a big, 0:03:41.360 --> 0:03:44.760 big blow. And you know, that's why the combined entity 0:03:45.240 --> 0:03:48.880 owning Chrome and owning all the other assets that Google has. 0:03:48.760 --> 0:03:51.240 Is such a big advantage when it comes to generatively. 0:03:50.920 --> 0:03:52.320 Why are we getting through this ruling? 0:03:52.400 --> 0:03:54.840 And I guess I'm just bringing up in a world 0:03:54.880 --> 0:03:57.440 where we have a White House that I think it's 0:03:57.440 --> 0:04:00.400 fair to say it's transactional, and we have seen various 0:04:00.440 --> 0:04:02.880 tech executives make their way to the White House. Is 0:04:02.880 --> 0:04:05.480 there something that was going on behind the scenes of 0:04:05.760 --> 0:04:07.840 I don't know that caught the attention. I don't know 0:04:07.880 --> 0:04:08.600 what are you hearing? 0:04:08.640 --> 0:04:12.840 And I mean, there are obviously lobbies for these companies. 0:04:12.960 --> 0:04:15.560 It's not a surprise regardless of the administration. 0:04:15.840 --> 0:04:18.680 But look in this case, clearly, as you said, the 0:04:18.720 --> 0:04:23.159 administration is transactional and this was the best outcome for Alphabet, 0:04:23.600 --> 0:04:26.320 you know, not having to divest anything. There is another 0:04:26.360 --> 0:04:29.560 pending lawsuit, the ad Tech lawsuit, but even if they 0:04:29.600 --> 0:04:32.200 have to divest something there, it's not that big of 0:04:32.200 --> 0:04:32.680 a DLS. 0:04:32.760 --> 0:04:33.080 Chrome. 0:04:33.200 --> 0:04:37.360 Chrome is like the priced asset when it comes to Alphabet. 0:04:37.480 --> 0:04:39.520 When you think about YouTube and you know all the 0:04:39.560 --> 0:04:42.760 other things, Chrome is right up there. Without a browser, 0:04:43.360 --> 0:04:47.279 generative AI deployments get hard, and that's where owning the 0:04:47.320 --> 0:04:49.480 distribution through Chrome is paramount. 0:04:49.520 --> 0:04:50.839 For a company like Alphabet, we just. 0:04:50.839 --> 0:04:53.240 Want to point out shares of Alphabet are up more 0:04:53.279 --> 0:04:56.039 than six percent here in the aftermarket, and men Deep 0:04:56.160 --> 0:04:59.080 mentioned that Apple shares are also higher, and Tim they're 0:04:59.120 --> 0:05:00.280 up about four percent here. 0:05:00.440 --> 0:05:03.200 I want to bring in Tom Giles. He's senior executive 0:05:03.279 --> 0:05:06.040 editor for Global Technology. He joins us from our San 0:05:06.040 --> 0:05:10.400 Francisco bureau. Tom, this ruling obviously coming as a surprise 0:05:10.440 --> 0:05:14.119 to investors. Look no further than shares of Alphabet higher 0:05:14.160 --> 0:05:17.160 by six point four percent in the after hours. Why 0:05:17.240 --> 0:05:19.360 do you think that we got this ruling today? 0:05:20.279 --> 0:05:22.680 I mean, this is a huge sigh of relief, right. 0:05:22.839 --> 0:05:26.440 This is, as men Deep said, they avoided the most 0:05:26.560 --> 0:05:30.400 harsh penalty here, which would have been selling Chrome, which 0:05:30.839 --> 0:05:34.440 Google has woven into its products and is really an 0:05:34.520 --> 0:05:39.719 integral part of their value proposition to many customers. So 0:05:40.279 --> 0:05:44.240 major side of relief there. They're really allowed to continue 0:05:44.360 --> 0:05:47.279 to do a lot of the things that they have 0:05:47.400 --> 0:05:51.599 been doing. They're going to have to change certain certain terms. 0:05:52.200 --> 0:05:55.080 But something else that they are can they will continue 0:05:55.160 --> 0:06:00.000 to be allowed to do is paying for browser places. 0:06:00.800 --> 0:06:04.240 They can still make these big cash payments that give 0:06:04.320 --> 0:06:08.440 their browser, you know, a special h placement on a 0:06:08.960 --> 0:06:13.080 on a smartphone for example, they just need to change. 0:06:13.080 --> 0:06:16.359 They can't have the kinds of exclusivity that they have 0:06:16.560 --> 0:06:19.080 used in the past. That's really what it came down to. 0:06:19.440 --> 0:06:21.720 And as you know, we're still parsing the decision, so 0:06:21.839 --> 0:06:25.159 let me be clear about that. But what they what 0:06:25.240 --> 0:06:29.120 they said was that if we if we go too 0:06:29.240 --> 0:06:34.080 far and for example, say no to these payments, that 0:06:34.160 --> 0:06:37.360 would be onerous to the larger ecosystem. That would hurt 0:06:37.640 --> 0:06:40.159 some of the small players, some of the manufacturers, some 0:06:40.279 --> 0:06:43.080 of the other players in here. And I don't think 0:06:43.120 --> 0:06:45.880 that the DJ clearly does not want to do that 0:06:46.600 --> 0:06:49.560 at this stage. Remember that some of these decisions are 0:06:49.560 --> 0:06:52.120 going to be revisited. This is a six year decision. 0:06:52.480 --> 0:06:56.640 We just had some headlines on that, so you know, 0:06:56.680 --> 0:06:59.240 Google's going to have to continue to mind its p's 0:06:59.279 --> 0:07:02.359 and q's in the coming years to ensure that it 0:07:02.400 --> 0:07:05.320 doesn't run a foul of this ruling. But on its face, 0:07:05.400 --> 0:07:08.480 the headline here is this is great news for Google, 0:07:08.680 --> 0:07:11.200 this is great news for Apple, and you're seeing it 0:07:11.240 --> 0:07:14.040 in those shares rallying as we speak. 0:07:14.280 --> 0:07:17.960 Yeah, as you said, we've got Alphabet up six quarter percent, 0:07:18.000 --> 0:07:19.720 Tom and then you've got Apple shares up three point 0:07:19.800 --> 0:07:23.920 six percent to Mandy Pooh beyond. Apple and Alphabet are 0:07:24.000 --> 0:07:27.880 kind of watching this decision and maybe a little upset 0:07:27.920 --> 0:07:28.280 about it. 0:07:28.320 --> 0:07:31.320 I mean, remember the news when Perplexity wanted to buy 0:07:31.480 --> 0:07:34.160 Chrome and they put a value I think it's thirty 0:07:34.200 --> 0:07:34.760 four billion. 0:07:34.800 --> 0:07:37.880 Yeah, talking about this earlier, Yeah, put Perplexity on the map. 0:07:38.240 --> 0:07:40.080 Everyone was like, wait, you don't even have that cash. 0:07:41.040 --> 0:07:44.880 Even if Google had to divest Chrome. Thirty four billion 0:07:45.040 --> 0:07:48.640 is too low for price tag for an asset you 0:07:48.680 --> 0:07:51.520 know that has got over three billion monthly active users. 0:07:51.560 --> 0:07:55.160 That is at the core of deploying generative AI. I 0:07:55.200 --> 0:07:58.000 mean that's why you know, when you look at individual 0:07:58.040 --> 0:08:00.880 assets for Google, everyone looks at how much money does 0:08:00.920 --> 0:08:04.520 this make. Chrome doesn't make any money on a standalone basis, 0:08:04.520 --> 0:08:07.440 But when it comes to the value of Chrome, we're 0:08:07.560 --> 0:08:11.840 talking fifty billion plus even higher. I mean, I wouldn't 0:08:11.880 --> 0:08:15.280 be surprised if it's close to one hundred billion as 0:08:15.440 --> 0:08:18.200 just a standalone product, given how important it is. 0:08:18.160 --> 0:08:19.600 When it comes to deploying AI. 0:08:19.680 --> 0:08:21.440 So Tom Giles, come on back in here. 0:08:21.480 --> 0:08:23.160 So if you were sitting down or I don't know 0:08:23.160 --> 0:08:24.920 if Alphabet's going to do any kind of call or 0:08:24.960 --> 0:08:25.960 what have you? 0:08:26.000 --> 0:08:27.920 What would you want to be asking them right now? 0:08:29.360 --> 0:08:32.080 Well, first of all, is there a plan to appeal? 0:08:33.559 --> 0:08:35.640 And what does that look like? What are the grounds? 0:08:37.920 --> 0:08:39.680 I hate to put it this bluntly, but you guys 0:08:39.679 --> 0:08:44.280 got off really easy here. You avoided the worst possible scenarios. 0:08:44.320 --> 0:08:45.959 As we've said, as man Deep and I have been 0:08:45.960 --> 0:08:48.839 talking about, are you going to appeal? What are the 0:08:48.880 --> 0:08:52.440 grounds for that they may see something in here that 0:08:52.679 --> 0:08:54.959 is owners to them that they feel is going to 0:08:55.160 --> 0:08:57.640 tie their hands in the future. Again, it's a six 0:08:57.720 --> 0:09:01.080 year decision. DJ is giving itself leeway to kind of 0:09:01.120 --> 0:09:04.520 revisit at least part of this. And so is are 0:09:04.559 --> 0:09:07.040 there are there clauses? Are the things that they want 0:09:07.080 --> 0:09:10.200 to change? And do they you know, do they do 0:09:10.320 --> 0:09:12.480 they want to send the signal that we don't think 0:09:12.520 --> 0:09:14.480 we're monopol is here, which is of course what they've 0:09:14.480 --> 0:09:16.960 been saying all along. Do you want to hit that 0:09:17.080 --> 0:09:21.119 home with with with sending this into an appeals process? 0:09:21.400 --> 0:09:22.640 Same question to you, man Deep. 0:09:22.640 --> 0:09:24.960 So you're sitting down with these execs ever at Alphabet 0:09:25.280 --> 0:09:26.800 and what you what you would want to know? 0:09:27.440 --> 0:09:31.040 I mean, it sounds like they don't want Google to 0:09:31.120 --> 0:09:34.959 be making any exclusive payments to Apple, like the twenty 0:09:35.080 --> 0:09:39.120 billion dollar attack payment going forward, which again I view 0:09:39.160 --> 0:09:42.320 it as a positive because on the one hand, it 0:09:42.440 --> 0:09:46.720 opens up you know, other search companies to bid for Apple. 0:09:47.200 --> 0:09:50.280 But Apple has no choice but to go with Google. 0:09:50.400 --> 0:09:53.640 I mean, their users are used to, you know, the 0:09:53.679 --> 0:09:57.440 Google experience, and so it sort of saves the twenty 0:09:57.480 --> 0:10:01.640 billion dollars that Google is haying Apple, and that helps 0:10:01.679 --> 0:10:05.280 their growth Martin. So I don't think there's anything bad 0:10:05.400 --> 0:10:08.760 here in terms of, you know, the judge restricting Google 0:10:08.840 --> 0:10:11.040 from having an exclusive arrangement with Apple. 0:10:11.160 --> 0:10:13.160 Is there anything tom that if we worried though about 0:10:13.200 --> 0:10:15.000 the EU and their view on this. 0:10:17.559 --> 0:10:19.840 We always need to worry if you're Google, if you're 0:10:19.920 --> 0:10:22.800 one of the major US tech platforms, you always need 0:10:22.840 --> 0:10:26.640 to worry about what the EU is doing, what they're thinking, 0:10:27.440 --> 0:10:30.040 where they might land on some of these decisions. I 0:10:30.080 --> 0:10:34.760 do think it's a slightly different paradigm across the pond, 0:10:34.840 --> 0:10:38.040 as it were. But I do want to come back 0:10:38.080 --> 0:10:40.480 to and I'm curious I want to hear from man 0:10:40.520 --> 0:10:43.960 Deep too about you know, does the removal of the 0:10:44.080 --> 0:10:47.840 exclusive agreements, what kind of opening does that give to 0:10:48.040 --> 0:10:52.600 the other platforms how might they try to gain an 0:10:52.640 --> 0:10:56.760 advantage here. It does make a huge difference when you 0:10:56.800 --> 0:10:59.760 buy your new iPhone or you buy a new smartphone. 0:11:00.040 --> 0:11:02.600 It makes a huge difference that that there's going to 0:11:02.640 --> 0:11:07.400 be some kind of institutional or you know, existing support 0:11:07.600 --> 0:11:12.200 for Google to be the default if you cannot. If 0:11:12.200 --> 0:11:14.280 you yes, it's okay to make these payments. But if 0:11:14.280 --> 0:11:18.880 you can't have exclusive agreements? What about what about claude? 0:11:19.480 --> 0:11:22.360 What about chat gpt? Can some of these other tools 0:11:22.720 --> 0:11:29.160 start to present themselves as alternatives and do it more readily? Mendie, 0:11:29.160 --> 0:11:30.319 please tell me if i'm you. 0:11:30.240 --> 0:11:31.880 Know, yeah, no, You're all right. 0:11:32.000 --> 0:11:35.440 So I mean Google search ninety percent plus share is 0:11:35.520 --> 0:11:38.880 driven by these exclusive arrangements, So you're right. 0:11:38.960 --> 0:11:40.720 But I look at it this way. 0:11:40.840 --> 0:11:43.439 I mean, some of the ruling says Google may have 0:11:43.520 --> 0:11:47.920 to share their search index with you know, other providers. 0:11:47.960 --> 0:11:50.439 I have to read the fine print. But that again 0:11:50.679 --> 0:11:54.640 could make chat GPT better in terms of solving for 0:11:54.800 --> 0:11:57.400 all the use cases that we use Google for. So 0:11:57.520 --> 0:12:00.959 from that perspective, it is a risk. At the same time, 0:12:01.040 --> 0:12:05.080 I mean, on Android, they own the operating system, so 0:12:05.240 --> 0:12:08.720 I don't think anything will change from a search experience perspective, 0:12:09.120 --> 0:12:12.280 and for Apple, again, they want their users to get 0:12:12.320 --> 0:12:15.120 the best experience. So I don't think they're going to 0:12:15.200 --> 0:12:19.640 take a chance by completely overhauling the search experience and 0:12:19.720 --> 0:12:22.080 you know, bring in a clot or a chat GPT 0:12:22.360 --> 0:12:23.960 for the native browser search. 0:12:24.200 --> 0:12:26.000 I would be very surprised if they did that. 0:12:26.040 --> 0:12:29.679 But I guess the finer point here is if Google 0:12:29.960 --> 0:12:32.800 were forced to share some of their search index, then 0:12:32.840 --> 0:12:35.439 that could draw in more competition, and that is a risk. 0:12:35.559 --> 0:12:37.440 I just want to point out that our Josh Cisco, 0:12:37.559 --> 0:12:40.040 who's got the right through on the Bloomberg terminal, says 0:12:40.040 --> 0:12:42.160 the order is one of the most monumental court decisions 0:12:42.200 --> 0:12:44.720 affecting the tech sector in more than a quarter century, 0:12:45.040 --> 0:12:47.360 and could offer a blueprint for other judges who may 0:12:47.440 --> 0:12:51.640 end up weighing similar choices in cases against Meta, Amazon, 0:12:51.760 --> 0:12:54.600 and Apple. So I mean, Mandy, first to you, what 0:12:54.720 --> 0:12:56.880 are those like, what do we need to know about 0:12:56.880 --> 0:12:59.120 those cases and what that could mean for those companies. 0:12:59.320 --> 0:13:03.040 I mean, there is nothing as serious as there is, 0:13:03.280 --> 0:13:06.320 you know when it comes to Alphabet losing one of 0:13:06.360 --> 0:13:10.000 their core assets. I think for others, even in the 0:13:10.040 --> 0:13:13.880 case of Meta, I would have expected more fines than 0:13:13.960 --> 0:13:17.240 you know, a divestiture. I don't think anybody is forcing 0:13:17.280 --> 0:13:21.080 Meta to divest in Instagram or you know, Whatsappa. It's 0:13:21.120 --> 0:13:24.599 not the same. In the case of Google, the monopoly 0:13:24.760 --> 0:13:28.040 lawsuits said they had ninety percent plus share. That was 0:13:28.120 --> 0:13:32.040 the basis for the lawsuits. So the fact that the 0:13:32.120 --> 0:13:34.640 judge is not saying, you know, they have to divest 0:13:34.720 --> 0:13:38.440 Chrome and it is a testament to where the market 0:13:38.559 --> 0:13:42.480 is right now. The search market has changed completely over 0:13:42.520 --> 0:13:45.400 the course of the last three years. Correctly, yes, right, 0:13:45.480 --> 0:13:48.160 and so that's why I do think it's a fair 0:13:48.240 --> 0:13:49.320 ruling from that perspective. 0:13:49.360 --> 0:13:51.840 Tom Giles saving forty five seconds. Final thoughts. 0:13:53.960 --> 0:13:57.560 I am curious about what kind of precedent this does set. 0:13:57.640 --> 0:13:59.959 There had been a lot of fear about a breakup 0:14:00.040 --> 0:14:02.920 of Meta. If you're telling Google that it doesn't have 0:14:03.000 --> 0:14:07.480 to sell Chrome, and look, as Matt Deep said, Google's 0:14:07.480 --> 0:14:10.320 a very different animal from the Meta situation. Google is 0:14:10.360 --> 0:14:13.880 making these huge there's these huge payments that are being 0:14:13.920 --> 0:14:18.560 made right in favor of you know, getting that browser on. 0:14:18.760 --> 0:14:21.520 You're not seeing those kinds of same payments as big 0:14:21.640 --> 0:14:25.160 multi billion dollar payments heading to or from Meta. So 0:14:25.400 --> 0:14:28.560 that's another reason why to think that you're not. You 0:14:28.640 --> 0:14:32.000 don't you even have less reason to worry about a 0:14:32.080 --> 0:14:34.440 judge coming in or one of these regulators coming in 0:14:34.520 --> 0:14:37.520 and saying Meta, you need to divest WhatsApp, or you 0:14:37.520 --> 0:14:38.680 need to divest Instagram. 0:14:38.800 --> 0:14:40.920 Well, certainly caught our attention some big news and get 0:14:40.960 --> 0:14:41.680 some stocks moving. 0:14:41.760 --> 0:14:42.760 Hey, guys, thank you so much. 0:14:42.760 --> 0:14:45.640 Bloomberg Intelligence, Global head of Technology research Man Deep Seeing 0:14:45.720 --> 0:14:48.280 in our New York studio, and senior executive editor for 0:14:48.280 --> 0:14:50.560 Global Technology out there on the West Coast, Tom Giles, 0:14:50.640 --> 0:14:53.320 Thanks so much to both of you. Again the story 0:14:53.440 --> 0:14:56.680 Alphabet Google does not have to sell its popular Chrome 0:14:56.720 --> 0:15:00.520 web browser, a federal judge ruling that just moments ago 0:15:00.600 --> 0:15:03.520 in the Justice Department's landmark anti trust case against the 0:15:03.560 --> 0:15:06.920 search engine. Shares of Alphabet they are up three percent, 0:15:07.400 --> 0:15:10.040 and you've got actually forgive me up six point eight percent, 0:15:10.040 --> 0:15:12.320 so up almost seven percent, and then shares of Apple 0:15:12.680 --> 0:15:14.040 are up more than three percent. 0:15:15.120 --> 0:15:17.920 Stay with us more from Bloomberg Business Week Daily coming 0:15:17.960 --> 0:15:18.920 up after this. 0:15:22.960 --> 0:15:26.800 You're listening to the Bloomberg Business Week Daily Podcast. Catch 0:15:26.880 --> 0:15:29.560 us live weekday afternoons from two to five e's during 0:15:29.760 --> 0:15:33.400 listen on Applecarplay and Android Auto with the Bloomberg Business 0:15:33.400 --> 0:15:35.760 app or watch us live on YouTube. 0:15:36.960 --> 0:15:39.720 Just some of the issues tim coming at investors this month. 0:15:39.840 --> 0:15:41.800 Yeah, we're gonna stay on that and how that may be, 0:15:41.960 --> 0:15:45.400 should be, could be impacting those and how investors sum 0:15:45.480 --> 0:15:49.640 up the environment and make decisions or put off those decisions. 0:15:49.640 --> 0:15:49.960 Carol. 0:15:50.000 --> 0:15:52.640 He's the author of the Confidence Map, Charting a Path 0:15:52.640 --> 0:15:55.080 from Cast to Clarity, a book that digs deep when 0:15:55.080 --> 0:15:56.520 it comes to decision making. 0:15:56.640 --> 0:15:57.840 So delight to have back with us. 0:15:57.840 --> 0:16:00.360 A friend of the program, Peter Atwater, President of Financial 0:16:00.440 --> 0:16:03.120 Insights and adjunct lecturer of Economics at the College of 0:16:03.120 --> 0:16:06.480 William and Mary, joining us from just outside Philadelphia. Peter, 0:16:06.640 --> 0:16:09.520 great to have you back on the first trading day 0:16:09.560 --> 0:16:13.240 of September. A lot coming at US summer's over September's here, 0:16:13.360 --> 0:16:16.400 we always feel kind of a mood shift. Any reason 0:16:16.400 --> 0:16:19.440 to think that this month will also potentially be problematic 0:16:19.440 --> 0:16:20.120 for investors? 0:16:20.200 --> 0:16:22.560 Is it maybe a different September this time around? 0:16:23.240 --> 0:16:26.640 Carol, Thanks for letting me be here today. Yes, I 0:16:26.680 --> 0:16:29.640 do think it's going to be a very challenging September. 0:16:31.000 --> 0:16:36.360 Several things on my radar screen. I'm watching European sovereign 0:16:36.400 --> 0:16:42.160 yields and already today we've seen a clear linkage between 0:16:42.280 --> 0:16:47.200 higher yields and lower equity markets. And if that narrative continues, 0:16:48.560 --> 0:16:53.560 that could be quite quite a moment for the stock market. 0:16:53.720 --> 0:17:02.400 Because politically France, Germany, England is a is a real 0:17:02.560 --> 0:17:07.040 melting pot today of populism. So that's very much front 0:17:07.080 --> 0:17:08.000 and center in my mind. 0:17:08.480 --> 0:17:11.480 How bad or how problematic might it get then for investors, Like, 0:17:11.520 --> 0:17:14.440 how do you see it potentially playing out? And do 0:17:14.160 --> 0:17:17.240 you also anticipate you know, we mentioned your book the 0:17:17.280 --> 0:17:19.800 confidence Map going into this, and we do think about 0:17:19.840 --> 0:17:22.520 what's on top of mind for investors right now when 0:17:22.520 --> 0:17:25.240 it comes to making decisions whether or not to deploy assets, 0:17:25.240 --> 0:17:26.320 to pull back, like what. 0:17:26.400 --> 0:17:28.160 To do in this environment once again. 0:17:28.200 --> 0:17:30.360 And then you know, we just talked about the trade, 0:17:30.720 --> 0:17:32.600 you know, ruling on trade. You know, whether or not 0:17:33.200 --> 0:17:35.600 all of that we've been living the last what five 0:17:35.680 --> 0:17:37.280 or six months, you know comes undone. 0:17:38.520 --> 0:17:42.159 Yeah, when I look at the population today, particularly on 0:17:42.200 --> 0:17:45.960 the investment side, there is a sense of and vulnerability 0:17:46.160 --> 0:17:49.359 like I've not seen. Certainly makes what we saw in 0:17:49.400 --> 0:17:56.600 twenty twenty one look timid. You know, investors, particularly retail investors, 0:17:56.640 --> 0:18:01.840 believe this market is unsinkable. I saw somebody analogize it 0:18:01.920 --> 0:18:06.119 to resputant. You know, this is an unkillable market. Both 0:18:06.160 --> 0:18:11.159 of those really trouble me because they suggest that investors 0:18:11.560 --> 0:18:15.880 think that they can continue to ignore the geopolitics around them, 0:18:15.920 --> 0:18:19.000 and I don't think that will ultimately prove to be 0:18:19.040 --> 0:18:23.960 the case. At the same time, though, I see despondents, 0:18:24.200 --> 0:18:29.040 particularly among the low end consumer. And I used to 0:18:29.080 --> 0:18:32.840 talk about the arms and legs of the case shaped economy. 0:18:33.320 --> 0:18:36.280 Now I have to talk about fingers and toes because 0:18:36.640 --> 0:18:41.440 the clustering has become so extreme at the very top 0:18:42.040 --> 0:18:46.040 end at the very bottom, and that gap now appears 0:18:46.119 --> 0:18:49.120 to be uncrossable. And as we see over and over 0:18:49.200 --> 0:18:55.080 in history, you know, share powerlessness is something that unites 0:18:55.160 --> 0:18:58.199 those at the bottom, and so I think policymakers on 0:18:58.280 --> 0:19:01.040 both sides of the aisle to be attuned to that. 0:19:01.520 --> 0:19:05.880 Hey, Peter, we're getting some headlines from President Trump right now. 0:19:05.920 --> 0:19:08.919 He's speaking on the Scott Jennings radio show. He says 0:19:09.200 --> 0:19:12.520 he's going to appeal the tariff ruling. He said that 0:19:12.560 --> 0:19:16.840 he repeats, he repeats that global tariffs are an economic emergency, 0:19:16.880 --> 0:19:19.600 and he said we'll see a reverberation. If we don't 0:19:19.680 --> 0:19:23.240 win on tariffs, How, in your view should investors be 0:19:23.560 --> 0:19:26.880 thinking about this? Because you talk a lot about chaos 0:19:26.880 --> 0:19:30.440 and clarity, and I think there's more chaos than clarity. 0:19:30.680 --> 0:19:32.280 I think it's fair to say right now when it 0:19:32.320 --> 0:19:35.560 comes to at least the policy as a result of 0:19:36.080 --> 0:19:39.160 legal battles, as a result of you know, the back 0:19:39.200 --> 0:19:42.480 and forth with these lawyers, with these rulings, it's not 0:19:42.520 --> 0:19:44.680 necessarily clear what is happening. 0:19:46.320 --> 0:19:49.520 No, it's it's not clear. But this is a continuation 0:19:50.080 --> 0:19:54.760 of very me here now decision making that we see 0:19:54.800 --> 0:19:58.680 on the part of the new administration. And I think 0:19:58.760 --> 0:20:05.240 that for inves, they've presumed that when markets decline, the 0:20:05.320 --> 0:20:10.919 administration will step back and move pivot in their favor, 0:20:11.000 --> 0:20:15.720 you know, the taco trade. And I think what's becoming 0:20:15.800 --> 0:20:19.600 reality is that those who are running businesses, and we 0:20:19.640 --> 0:20:24.720 saw this in the manufacturing reports earlier today, that you know, 0:20:24.920 --> 0:20:28.919 they're really struggling with the uncertainty and powerlessness that they feel. 0:20:29.240 --> 0:20:32.560 And the result is in those situations, as you would expect, 0:20:32.880 --> 0:20:38.600 they're pulling back on orders, they're making more deliberate employment decisions, 0:20:38.640 --> 0:20:42.720 and so the real economy I think is decoupling from 0:20:42.720 --> 0:20:47.800 the markets, and the markets believe that they ultimately prevail, 0:20:47.880 --> 0:20:49.960 and I think the real economy is about to show 0:20:50.000 --> 0:20:51.040 them that's not the case. 0:20:52.359 --> 0:20:55.560 What's your take on the president in terms of watching 0:20:55.600 --> 0:20:59.640 the financial markets and his willingness or unwillingness to back 0:20:59.680 --> 0:21:03.520 off policies that upset things, because we did see kind 0:21:03.520 --> 0:21:05.360 of a one to eighty when it came to tariff's 0:21:05.400 --> 0:21:07.840 way back when or earlier this year. But how do 0:21:07.880 --> 0:21:09.639 you see that now or how do you factor that 0:21:09.680 --> 0:21:10.000 in now? 0:21:10.040 --> 0:21:10.280 Peter? 0:21:11.760 --> 0:21:15.399 What I see since then is a growing sense of 0:21:15.440 --> 0:21:21.000 in vulnerability, and I see that politically, financially economically, that 0:21:21.080 --> 0:21:29.600 the administration sees itself and sees its decision making as 0:21:29.680 --> 0:21:38.479 just irrepressible, unopposable, And those suggest to me a level 0:21:40.240 --> 0:21:47.600 of insolarty isolationists that is increasingly decoupled from what we're 0:21:47.640 --> 0:21:50.880 seeing on main Street. You know, it's very interesting to 0:21:50.920 --> 0:21:57.200 me that we haven't seen the President out doing rallies 0:21:57.480 --> 0:22:01.080 in this new administration the way he did before, and 0:22:01.200 --> 0:22:04.520 instead he's very isolated in the White House and mar 0:22:04.680 --> 0:22:06.960 Lago and places where. 0:22:07.840 --> 0:22:11.000 Why do you think that is because the energy of 0:22:11.040 --> 0:22:14.760 the rallies was something that a year ago we talked 0:22:14.760 --> 0:22:16.560