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Speaker 2: Hey, I want to take a look at what's going
Speaker 2: on with Google shares in the after hours Right now,
Speaker 2: we were talking about the surge hire as a result
Speaker 2: of this ruling that emerged shares still up five point
Speaker 2: six percent.
Speaker 3: Feel like we woke up like something was happening.
Speaker 2: Oh well, absolutely, Google doesn't have to sell its popular
Speaker 2: Chrome web browser, a federal judge ruled tuesday in the
Speaker 2: Justice departments landmark anti trust case against the search engine.
Speaker 2: The ruling allows Google to avoid one of the most
Speaker 2: severe remedy requests from the US government after the court
Speaker 2: found that the company had an illegal monopoly in the
Speaker 2: search market. The judge did bar Google from entering into
Speaker 2: exclusive contracts for Internet search.
Speaker 4: All right, we knew we wanted to talk with our
Speaker 4: man deep seeing of our Bloomberg intelligence teams here in studio.
Speaker 3: Google shares are up. I mean, was this expected? First
Speaker 3: of all?
Speaker 5: No, I think that's why you see such an instance
Speaker 5: stock reaction because the judge was quite vocal about how
Speaker 5: Google had created a monopoly because of all the assets,
Speaker 5: and Chrome was one of the most prominent assets that
Speaker 5: they the judge focused on so clearly in this case,
Speaker 5: the fact that the ruling says that they don't have
Speaker 5: to divest Chrome, it's positive news. And look all the
Speaker 5: exclusive arrangements with Apple and for their operating system, I
Speaker 5: think that was expected remedy really, I mean, it kind
Speaker 5: of allows Apple to pick the.
Speaker 6: Partartner they want.
Speaker 5: There won't be an exclusive arrangement, but look, from an
Speaker 5: Apple perspective, they can still say Google has the best
Speaker 5: LLLM and you know they want to do business. So
Speaker 5: from that perspective, that's why Apple is up too. So
Speaker 5: you know, this sort of clears all the uncertainty for
Speaker 5: both the companies.
Speaker 2: Look, I'm going to ask a crazy question here. Do
Speaker 2: we care about search the way that we used to
Speaker 2: care about search in the sense of typing something into Google,
Speaker 2: or increasingly, do we care more about which LLM people choose?
Speaker 5: Well? So the search market has definitely expanded because of
Speaker 5: generative AI. So think of how Google had a ninety
Speaker 5: percent plus share. I'm sure if this lawsuit came to
Speaker 5: the scene and the hearing was happening now, the jet
Speaker 5: would say Google doesn't have ninety percent plus share because
Speaker 5: chatchbt has got one billion monthly active users. It's got
Speaker 5: the query volume not comparable to Google, but almost you know,
Speaker 5: one third of Google, And so that search market is
Speaker 5: not the same as it was, you know, probably three
Speaker 5: years back before the launch of CHATJPT. And from that perspective,
Speaker 5: I mean, look, the search pile has grown. The fact
Speaker 5: that Google owns Chrome is a big advantage. So when
Speaker 5: I look at generative AI deployments, browser is a critical
Speaker 5: aspect of how.
Speaker 6: AI agents will be deployed.
Speaker 5: That's why you're seeing such a stock reaction because everyone
Speaker 5: knows if you take out Chrome from Google, even if
Speaker 5: Google has their own chips and they have got their
Speaker 5: you know ow LLLM, without a browser, the advantage just
Speaker 5: goes away. So divesting Chrome would have been a big,
Speaker 5: big blow. And you know, that's why the combined entity
Speaker 5: owning Chrome and owning all the other assets that Google has.
Speaker 6: Is such a big advantage when it comes to generatively.
Speaker 3: Why are we getting through this ruling?
Speaker 4: And I guess I'm just bringing up in a world
Speaker 4: where we have a White House that I think it's
Speaker 4: fair to say it's transactional, and we have seen various
Speaker 4: tech executives make their way to the White House. Is
Speaker 4: there something that was going on behind the scenes of
Speaker 4: I don't know that caught the attention. I don't know
Speaker 4: what are you hearing?
Speaker 5: And I mean, there are obviously lobbies for these companies.
Speaker 6: It's not a surprise regardless of the administration.
Speaker 5: But look in this case, clearly, as you said, the
Speaker 5: administration is transactional and this was the best outcome for Alphabet,
Speaker 5: you know, not having to divest anything. There is another
Speaker 5: pending lawsuit, the ad Tech lawsuit, but even if they
Speaker 5: have to divest something there, it's not that big of
Speaker 5: a DLS.
Speaker 6: Chrome.
Speaker 5: Chrome is like the priced asset when it comes to Alphabet.
Speaker 5: When you think about YouTube and you know all the
Speaker 5: other things, Chrome is right up there. Without a browser,
Speaker 5: generative AI deployments get hard, and that's where owning the
Speaker 5: distribution through Chrome is paramount.
Speaker 6: For a company like Alphabet, we just.
Speaker 4: Want to point out shares of Alphabet are up more
Speaker 4: than six percent here in the aftermarket, and men Deep
Speaker 4: mentioned that Apple shares are also higher, and Tim they're
Speaker 4: up about four percent here.
Speaker 2: I want to bring in Tom Giles. He's senior executive
Speaker 2: editor for Global Technology. He joins us from our San
Speaker 2: Francisco bureau. Tom, this ruling obviously coming as a surprise
Speaker 2: to investors. Look no further than shares of Alphabet higher
Speaker 2: by six point four percent in the after hours. Why
Speaker 2: do you think that we got this ruling today?
Speaker 7: I mean, this is a huge sigh of relief, right.
Speaker 7: This is, as men Deep said, they avoided the most
Speaker 7: harsh penalty here, which would have been selling Chrome, which
Speaker 7: Google has woven into its products and is really an
Speaker 7: integral part of their value proposition to many customers. So
Speaker 7: major side of relief there. They're really allowed to continue
Speaker 7: to do a lot of the things that they have
Speaker 7: been doing. They're going to have to change certain certain terms.
Speaker 7: But something else that they are can they will continue
Speaker 7: to be allowed to do is paying for browser places.
Speaker 7: They can still make these big cash payments that give
Speaker 7: their browser, you know, a special h placement on a
Speaker 7: on a smartphone for example, they just need to change.
Speaker 7: They can't have the kinds of exclusivity that they have
Speaker 7: used in the past. That's really what it came down to.
Speaker 7: And as you know, we're still parsing the decision, so
Speaker 7: let me be clear about that. But what they what
Speaker 7: they said was that if we if we go too
Speaker 7: far and for example, say no to these payments, that
Speaker 7: would be onerous to the larger ecosystem. That would hurt
Speaker 7: some of the small players, some of the manufacturers, some
Speaker 7: of the other players in here. And I don't think
Speaker 7: that the DJ clearly does not want to do that
Speaker 7: at this stage. Remember that some of these decisions are
Speaker 7: going to be revisited. This is a six year decision.
Speaker 7: We just had some headlines on that, so you know,
Speaker 7: Google's going to have to continue to mind its p's
Speaker 7: and q's in the coming years to ensure that it
Speaker 7: doesn't run a foul of this ruling. But on its face,
Speaker 7: the headline here is this is great news for Google,
Speaker 7: this is great news for Apple, and you're seeing it
Speaker 7: in those shares rallying as we speak.
Speaker 4: Yeah, as you said, we've got Alphabet up six quarter percent,
Speaker 4: Tom and then you've got Apple shares up three point
Speaker 4: six percent to Mandy Pooh beyond. Apple and Alphabet are
Speaker 4: kind of watching this decision and maybe a little upset
Speaker 4: about it.
Speaker 5: I mean, remember the news when Perplexity wanted to buy
Speaker 5: Chrome and they put a value I think it's thirty
Speaker 5: four billion.
Speaker 2: Yeah, talking about this earlier, Yeah, put Perplexity on the map.
Speaker 2: Everyone was like, wait, you don't even have that cash.
Speaker 5: Even if Google had to divest Chrome. Thirty four billion
Speaker 5: is too low for price tag for an asset you
Speaker 5: know that has got over three billion monthly active users.
Speaker 5: That is at the core of deploying generative AI. I
Speaker 5: mean that's why you know, when you look at individual
Speaker 5: assets for Google, everyone looks at how much money does
Speaker 5: this make. Chrome doesn't make any money on a standalone basis,
Speaker 5: But when it comes to the value of Chrome, we're
Speaker 5: talking fifty billion plus even higher. I mean, I wouldn't
Speaker 5: be surprised if it's close to one hundred billion as
Speaker 5: just a standalone product, given how important it is.
Speaker 6: When it comes to deploying AI.
Speaker 3: So Tom Giles, come on back in here.
Speaker 4: So if you were sitting down or I don't know
Speaker 4: if Alphabet's going to do any kind of call or
Speaker 4: what have you?
Speaker 3: What would you want to be asking them right now?
Speaker 7: Well, first of all, is there a plan to appeal?
Speaker 7: And what does that look like? What are the grounds?
Speaker 7: I hate to put it this bluntly, but you guys
Speaker 7: got off really easy here. You avoided the worst possible scenarios.
Speaker 7: As we've said, as man Deep and I have been
Speaker 7: talking about, are you going to appeal? What are the
Speaker 7: grounds for that they may see something in here that
Speaker 7: is owners to them that they feel is going to
Speaker 7: tie their hands in the future. Again, it's a six
Speaker 7: year decision. DJ is giving itself leeway to kind of
Speaker 7: revisit at least part of this. And so is are
Speaker 7: there are there clauses? Are the things that they want
Speaker 7: to change? And do they you know, do they do
Speaker 7: they want to send the signal that we don't think
Speaker 7: we're monopol is here, which is of course what they've
Speaker 7: been saying all along. Do you want to hit that
Speaker 7: home with with with sending this into an appeals process?
Speaker 3: Same question to you, man Deep.
Speaker 4: So you're sitting down with these execs ever at Alphabet
Speaker 4: and what you what you would want to know?
Speaker 5: I mean, it sounds like they don't want Google to
Speaker 5: be making any exclusive payments to Apple, like the twenty
Speaker 5: billion dollar attack payment going forward, which again I view
Speaker 5: it as a positive because on the one hand, it
Speaker 5: opens up you know, other search companies to bid for Apple.
Speaker 6: But Apple has no choice but to go with Google.
Speaker 5: I mean, their users are used to, you know, the
Speaker 5: Google experience, and so it sort of saves the twenty
Speaker 5: billion dollars that Google is haying Apple, and that helps
Speaker 5: their growth Martin. So I don't think there's anything bad
Speaker 5: here in terms of, you know, the judge restricting Google
Speaker 5: from having an exclusive arrangement with Apple.
Speaker 4: Is there anything tom that if we worried though about
Speaker 4: the EU and their view on this.
Speaker 7: We always need to worry if you're Google, if you're
Speaker 7: one of the major US tech platforms, you always need
Speaker 7: to worry about what the EU is doing, what they're thinking,
Speaker 7: where they might land on some of these decisions. I
Speaker 7: do think it's a slightly different paradigm across the pond,
Speaker 7: as it were. But I do want to come back
Speaker 7: to and I'm curious I want to hear from man
Speaker 7: Deep too about you know, does the removal of the
Speaker 7: exclusive agreements, what kind of opening does that give to
Speaker 7: the other platforms how might they try to gain an
Speaker 7: advantage here. It does make a huge difference when you
Speaker 7: buy your new iPhone or you buy a new smartphone.
Speaker 7: It makes a huge difference that that there's going to
Speaker 7: be some kind of institutional or you know, existing support
Speaker 7: for Google to be the default if you cannot. If
Speaker 7: you yes, it's okay to make these payments. But if
Speaker 7: you can't have exclusive agreements? What about what about claude?
Speaker 7: What about chat gpt? Can some of these other tools
Speaker 7: start to present themselves as alternatives and do it more readily? Mendie,
Speaker 7: please tell me if i'm you.
Speaker 6: Know, yeah, no, You're all right.
Speaker 5: So I mean Google search ninety percent plus share is
Speaker 5: driven by these exclusive arrangements, So you're right.
Speaker 6: But I look at it this way.
Speaker 5: I mean, some of the ruling says Google may have
Speaker 5: to share their search index with you know, other providers.
Speaker 5: I have to read the fine print. But that again
Speaker 5: could make chat GPT better in terms of solving for
Speaker 5: all the use cases that we use Google for. So
Speaker 5: from that perspective, it is a risk. At the same time,
Speaker 5: I mean, on Android, they own the operating system, so
Speaker 5: I don't think anything will change from a search experience perspective,
Speaker 5: and for Apple, again, they want their users to get
Speaker 5: the best experience. So I don't think they're going to
Speaker 5: take a chance by completely overhauling the search experience and
Speaker 5: you know, bring in a clot or a chat GPT
Speaker 5: for the native browser search.
Speaker 6: I would be very surprised if they did that.
Speaker 5: But I guess the finer point here is if Google
Speaker 5: were forced to share some of their search index, then
Speaker 5: that could draw in more competition, and that is a risk.
Speaker 4: I just want to point out that our Josh Cisco,
Speaker 4: who's got the right through on the Bloomberg terminal, says
Speaker 4: the order is one of the most monumental court decisions
Speaker 4: affecting the tech sector in more than a quarter century,
Speaker 4: and could offer a blueprint for other judges who may
Speaker 4: end up weighing similar choices in cases against Meta, Amazon,
Speaker 4: and Apple. So I mean, Mandy, first to you, what
Speaker 4: are those like, what do we need to know about
Speaker 4: those cases and what that could mean for those companies.
Speaker 5: I mean, there is nothing as serious as there is,
Speaker 5: you know when it comes to Alphabet losing one of
Speaker 5: their core assets. I think for others, even in the
Speaker 5: case of Meta, I would have expected more fines than
Speaker 5: you know, a divestiture. I don't think anybody is forcing
Speaker 5: Meta to divest in Instagram or you know, Whatsappa. It's
Speaker 5: not the same. In the case of Google, the monopoly
Speaker 5: lawsuits said they had ninety percent plus share. That was
Speaker 5: the basis for the lawsuits. So the fact that the
Speaker 5: judge is not saying, you know, they have to divest
Speaker 5: Chrome and it is a testament to where the market
Speaker 5: is right now. The search market has changed completely over
Speaker 5: the course of the last three years. Correctly, yes, right,
Speaker 5: and so that's why I do think it's a fair
Speaker 5: ruling from that perspective.
Speaker 3: Tom Giles saving forty five seconds. Final thoughts.
Speaker 7: I am curious about what kind of precedent this does set.
Speaker 7: There had been a lot of fear about a breakup
Speaker 7: of Meta. If you're telling Google that it doesn't have
Speaker 7: to sell Chrome, and look, as Matt Deep said, Google's
Speaker 7: a very different animal from the Meta situation. Google is
Speaker 7: making these huge there's these huge payments that are being
Speaker 7: made right in favor of you know, getting that browser on.
Speaker 7: You're not seeing those kinds of same payments as big
Speaker 7: multi billion dollar payments heading to or from Meta. So
Speaker 7: that's another reason why to think that you're not. You
Speaker 7: don't you even have less reason to worry about a
Speaker 7: judge coming in or one of these regulators coming in
Speaker 7: and saying Meta, you need to divest WhatsApp, or you
Speaker 7: need to divest Instagram.
Speaker 4: Well, certainly caught our attention some big news and get
Speaker 4: some stocks moving.
Speaker 3: Hey, guys, thank you so much.
Speaker 4: Bloomberg Intelligence, Global head of Technology research Man Deep Seeing
Speaker 4: in our New York studio, and senior executive editor for
Speaker 4: Global Technology out there on the West Coast, Tom Giles,
Speaker 4: Thanks so much to both of you. Again the story
Speaker 4: Alphabet Google does not have to sell its popular Chrome
Speaker 4: web browser, a federal judge ruling that just moments ago
Speaker 4: in the Justice Department's landmark anti trust case against the
Speaker 4: search engine. Shares of Alphabet they are up three percent,
Speaker 4: and you've got actually forgive me up six point eight percent,
Speaker 4: so up almost seven percent, and then shares of Apple
Speaker 4: are up more than three percent.
Speaker 2: Stay with us more from Bloomberg Business Week Daily coming
Speaker 2: up after this.
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Speaker 3: Just some of the issues tim coming at investors this month.
Speaker 2: Yeah, we're gonna stay on that and how that may be,
Speaker 2: should be, could be impacting those and how investors sum
Speaker 2: up the environment and make decisions or put off those decisions.
Speaker 8: Carol.
Speaker 2: He's the author of the Confidence Map, Charting a Path
Speaker 2: from Cast to Clarity, a book that digs deep when
Speaker 2: it comes to decision making.
Speaker 3: So delight to have back with us.
Speaker 4: A friend of the program, Peter Atwater, President of Financial
Speaker 4: Insights and adjunct lecturer of Economics at the College of
Speaker 4: William and Mary, joining us from just outside Philadelphia. Peter,
Speaker 4: great to have you back on the first trading day
Speaker 4: of September. A lot coming at US summer's over September's here,
Speaker 4: we always feel kind of a mood shift. Any reason
Speaker 4: to think that this month will also potentially be problematic
Speaker 4: for investors?
Speaker 3: Is it maybe a different September this time around?
Speaker 8: Carol, Thanks for letting me be here today. Yes, I
Speaker 8: do think it's going to be a very challenging September.
Speaker 8: Several things on my radar screen. I'm watching European sovereign
Speaker 8: yields and already today we've seen a clear linkage between
Speaker 8: higher yields and lower equity markets. And if that narrative continues,
Speaker 8: that could be quite quite a moment for the stock market.
Speaker 8: Because politically France, Germany, England is a is a real
Speaker 8: melting pot today of populism. So that's very much front
Speaker 8: and center in my mind.
Speaker 4: How bad or how problematic might it get then for investors, Like,
Speaker 4: how do you see it potentially playing out? And do
Speaker 4: you also anticipate you know, we mentioned your book the
Speaker 4: confidence Map going into this, and we do think about
Speaker 4: what's on top of mind for investors right now when
Speaker 4: it comes to making decisions whether or not to deploy assets,
Speaker 4: to pull back, like what.
Speaker 3: To do in this environment once again.
Speaker 4: And then you know, we just talked about the trade,
Speaker 4: you know, ruling on trade. You know, whether or not
Speaker 4: all of that we've been living the last what five
Speaker 4: or six months, you know comes undone.
Speaker 8: Yeah, when I look at the population today, particularly on
Speaker 8: the investment side, there is a sense of and vulnerability
Speaker 8: like I've not seen. Certainly makes what we saw in
Speaker 8: twenty twenty one look timid. You know, investors, particularly retail investors,
Speaker 8: believe this market is unsinkable. I saw somebody analogize it
Speaker 8: to resputant. You know, this is an unkillable market. Both
Speaker 8: of those really trouble me because they suggest that investors
Speaker 8: think that they can continue to ignore the geopolitics around them,
Speaker 8: and I don't think that will ultimately prove to be
Speaker 8: the case. At the same time, though, I see despondents,
Speaker 8: particularly among the low end consumer. And I used to
Speaker 8: talk about the arms and legs of the case shaped economy.
Speaker 8: Now I have to talk about fingers and toes because
Speaker 8: the clustering has become so extreme at the very top
Speaker 8: end at the very bottom, and that gap now appears
Speaker 8: to be uncrossable. And as we see over and over
Speaker 8: in history, you know, share powerlessness is something that unites
Speaker 8: those at the bottom, and so I think policymakers on
Speaker 8: both sides of the aisle to be attuned to that.
Speaker 2: Hey, Peter, we're getting some headlines from President Trump right now.
Speaker 2: He's speaking on the Scott Jennings radio show. He says
Speaker 2: he's going to appeal the tariff ruling. He said that
Speaker 2: he repeats, he repeats that global tariffs are an economic emergency,
Speaker 2: and he said we'll see a reverberation. If we don't
Speaker 2: win on tariffs, How, in your view should investors be
Speaker 2: thinking about this? Because you talk a lot about chaos
Speaker 2: and clarity, and I think there's more chaos than clarity.
Speaker 2: I think it's fair to say right now when it
Speaker 2: comes to at least the policy as a result of
Speaker 2: legal battles, as a result of you know, the back
Speaker 2: and forth with these lawyers, with these rulings, it's not
Speaker 2: necessarily clear what is happening.
Speaker 8: No, it's it's not clear. But this is a continuation
Speaker 8: of very me here now decision making that we see
Speaker 8: on the part of the new administration. And I think
Speaker 8: that for inves, they've presumed that when markets decline, the
Speaker 8: administration will step back and move pivot in their favor,
Speaker 8: you know, the taco trade. And I think what's becoming
Speaker 8: reality is that those who are running businesses, and we
Speaker 8: saw this in the manufacturing reports earlier today, that you know,
Speaker 8: they're really struggling with the uncertainty and powerlessness that they feel.
Speaker 8: And the result is in those situations, as you would expect,
Speaker 8: they're pulling back on orders, they're making more deliberate employment decisions,
Speaker 8: and so the real economy I think is decoupling from
Speaker 8: the markets, and the markets believe that they ultimately prevail,
Speaker 8: and I think the real economy is about to show
Speaker 8: them that's not the case.
Speaker 4: What's your take on the president in terms of watching
Speaker 4: the financial markets and his willingness or unwillingness to back
Speaker 4: off policies that upset things, because we did see kind
Speaker 4: of a one to eighty when it came to tariff's
Speaker 4: way back when or earlier this year. But how do
Speaker 4: you see that now or how do you factor that
Speaker 4: in now?
Speaker 3: Peter?
Speaker 8: What I see since then is a growing sense of
Speaker 8: in vulnerability, and I see that politically, financially economically, that
Speaker 8: the administration sees itself and sees its decision making as
Speaker 8: just irrepressible, unopposable, And those suggest to me a level
Speaker 8: of insolarty isolationists that is increasingly decoupled from what we're
Speaker 8: seeing on main Street. You know, it's very interesting to
Speaker 8: me that we haven't seen the President out doing rallies
Speaker 8: in this new administration the way he did before, and
Speaker 8: instead he's very isolated in the White House and mar
Speaker 8: Lago and places where.
Speaker 2: Why do you think that is because the energy of
Speaker 2: the rallies was something that a year ago we talked
Speaker 2: a lot about and even up to the election, and
Speaker 2: we know he likes to even go on tour to
Speaker 2: celebrate what he views as wins. Why do you think
Speaker 2: he's been quiet about this?
Speaker 8: I my own view would be that he doesn't see
Speaker 8: it as necessary at this point. He's he's won, and
Speaker 8: so there is a sense that, you know, that support
Speaker 8: is no longer needed for him to be effective in
Speaker 8: his role. And I think that's a that's a challenge
Speaker 8: will become a challenge because it's one thing to unify
Speaker 8: a crowd against a common enemy, in this case former
Speaker 8: President Biden. The challenge is then maintaining that momentum and
Speaker 8: cohesion post victory. And so it surprises me too, Tim
Speaker 8: that we haven't seen him out there trying to sustain
Speaker 8: the crowd.
Speaker 3: So, Peter, you know, in our next segment, we're going
Speaker 3: to talk a lot.
Speaker 4: About what seems to be kind of the new access
Speaker 4: of power China, India, Russia, And I do wonder as
Speaker 4: we talk about the US seemingly or accurately or actually.
Speaker 3: Turning more inward and the rest.
Speaker 4: Of the world kind of moving on in new alliances,
Speaker 4: what does that mean for the US financial markets.
Speaker 3: What does that mean for US investors?
Speaker 8: I think you're seeing not only the United States turn inward,
Speaker 8: but Europe turn inward. Right, it too is pulling back,
Speaker 8: and not only globally but among itself. And so it's
Speaker 8: very interesting to me that we have a Western world
Speaker 8: that is increasingly isolatedationists at a time that the Eastern
Speaker 8: world appears to be coming together. Now having said that,
Speaker 8: we're talking about three very dominant independent nationalist leaders who
Speaker 8: today is very convenient for them to create what looks
Speaker 8: to be cohesion against the West. But I wouldn't underestimate
Speaker 8: that if confidence drops in those geographies, they too will
Speaker 8: become very inwardly focused.
Speaker 4: We're talking with Peter Atwater, president Financial Insights, A Jacktal,
Speaker 4: lecturer of economics at the College of William and Mary,
Speaker 4: and of course the author of the Confidence Map.
Speaker 3: Do you not.
Speaker 4: Buy the images what we're seeing in all the footage,
Speaker 4: the handshaking, the laughing between President Putin, President jimping, and
Speaker 4: of course Prime Minister Mody. Do not buy it?
Speaker 3: Is it just for the cameras?
Speaker 5: No?
Speaker 8: I do buy it. I buy it particularly symbolically that
Speaker 8: it behooves them to demonstrate that they are cohesive against
Speaker 8: the new administration. But it's one of those cases where
Speaker 8: you know, my enemy's enemy is my friend, and that
Speaker 8: is only effective so long as the three of them
Speaker 8: continue to see the Trump administration as their joint adversary.
Speaker 2: Peter, before we let you go, just an update from
Speaker 2: you about a question that we first discussed back in
Speaker 2: March when you were on the program, when we asked
Speaker 2: if you believe the US would be uninvestable. This was
Speaker 2: pre so called Liberation Day. I'm curious if you think
Speaker 2: the US is more or less uninvestible at this point
Speaker 2: now than it was back in the spring.
Speaker 3: No pressure, but that response kind of went a little viral.
Speaker 3: I'm just going to tell you that.
Speaker 8: Yeah, so I do believe that it is more uninvestable
Speaker 8: today than it was before in March, and my reason
Speaker 8: has to do with the substantial diminution of shareholder primacy
Speaker 8: that we've seen. The new administration has been very aggressive
Speaker 8: in pursuing nationalist economic policies, and I think that that
Speaker 8: makes the United States, particularly get these valuations far less
Speaker 8: attractive than it had been.
Speaker 4: All Right, we need to run, Peter, as always, Thank
Speaker 4: you so much. While Peter Atwater, President Financial Insights, egeic
Speaker 4: Lcturer of Economics over at the College of William and
Speaker 4: Mary And as we mentioned, his book something we've talked
Speaker 4: about on air with him, The Confidence Map, Charting a
Speaker 4: path from Chaos to Clarity.
Speaker 2: Stay with us. More from Bloomberg Business Week Daily coming
Speaker 2: up after this.
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Speaker 4: So you know, we say this a lot, but we're
Speaker 4: definitely living in some very interesting times.
Speaker 3: Take what happened yesterday.
Speaker 4: Cameras capturing Chinese President Xijiping in a rare, unscripted huddle
Speaker 4: with Russian President Vladimir Putin and Indian Prime Minister Narendramota.
Speaker 2: Timmy, Yeah, the point President, she's most powerful partners in
Speaker 2: resisting America on the world stage. Happened at a summit
Speaker 2: in the Chinese sport city of Tenjin. At one point,
Speaker 2: President she held the hand of his Indian counterpart as
Speaker 2: the three men laughed casually. It was a striking scene
Speaker 2: given just months earlier, New Delhi and Beijing were seen
Speaker 2: as rivals. Here's Leland Miller, co founder and CEO of
Speaker 2: China beij book taking note of the deepening relationship between
Speaker 2: India and China earlier on Bloomberg Surveillance.
Speaker 9: If you look what's happening with India right now. India
Speaker 9: doesn't want to be looking around the room and see
Speaker 9: China on the left and Pakistan on the right and
Speaker 9: Belarus across the room. I mean, it would rather be
Speaker 9: in a group of countries in the United States and
Speaker 9: others and strengthening trade relations there. But it will push
Speaker 9: back if it thinks it's being pushed into a corner.
Speaker 9: And so we're seeing a situation where China is getting
Speaker 9: is becoming an attractive option because it's not the United
Speaker 9: States right now.
Speaker 3: All right?
Speaker 4: That is the Leland Miller, co founder and CEO of
Speaker 4: China base book earlier on Bloomberg Surveillance on Bloomberg Television.
Speaker 3: Let's get to it.
Speaker 4: And explain or get a little bit more detail on
Speaker 4: how she sees what The camera is captured at the
Speaker 4: meeting of leaders of China, India and Russia and what's
Speaker 4: really going on behind the scenes back with us as
Speaker 4: Wendy Cutler, she's VP Vice president of Asia Society Policy Institute.
Speaker 4: She joins us from the nation's capital. Wendy, good to
Speaker 4: have you back on with Tim and myself. So let's
Speaker 4: go there. You spent three decades as a diplomat negotiator
Speaker 4: in the office of the US Trade Representative. The significance
Speaker 4: of what was captured on cameras of those three leaders,
Speaker 4: Let's start there and then what you think might be
Speaker 4: going on behind the scenes.
Speaker 10: Quite a big, important week on the other side of
Speaker 10: the world, where three of the most powerful leaders in
Speaker 10: the world really showed an affection and agreed on an
Speaker 10: agenda going forward. And frankly, for me, seeing mody In
Speaker 10: as one of those three leaders comes as a surprise
Speaker 10: given where we were just three months ago with India,
Speaker 10: where we were on the verge of concluding one of
Speaker 10: the earliest trade agreements with Delhi, and so boy, things
Speaker 10: have changed quickly. I'm not saying that Mody is all
Speaker 10: in with Shijinping and Putin, but he sure looked comfortable
Speaker 10: this past week and with his fellow leaders.
Speaker 2: Is there a way in your view for the US
Speaker 2: to bring India closer or back to the point where
Speaker 2: it was, as you say, three months ago. Obviously last
Speaker 2: week with those fifty percent tariffs that went into effect
Speaker 2: was a big deal between the relationship between these two countries.
Speaker 2: But is there a way to go back to what
Speaker 2: it was.
Speaker 10: I think it's going to be really hard to get
Speaker 10: back to where we were three months ago, but I
Speaker 10: do think that we can move in that direction, and
Speaker 10: the best step forward would be to find a way
Speaker 10: to agree on a trade agreement with India.
Speaker 3: We got very close.
Speaker 10: There were very few issues left, including you know, the
Speaker 10: extent we could open up India's dairy market, and given
Speaker 10: the importance of this geostrategic relationship, I would hope that
Speaker 10: we could find a way forward on the trade front,
Speaker 10: allow for the relaxation of the tariffs, and move in
Speaker 10: the direction of getting this relationship back on track. But
Speaker 10: I think some permanent damage has been done, no doubt
Speaker 10: about it.
Speaker 4: You know, Wendy, when I see these pictures, I mean,
Speaker 4: these are very important leaders, and you know it's not
Speaker 4: mean girls and they're like, don't like a girl, and
Speaker 4: you know, they're just like, let's get together to like
Speaker 4: tick somebody off.
Speaker 3: I mean, these are leaders of very important countries. Do
Speaker 3: you politically, economically what they do matter? So I just
Speaker 3: it's not just something you do casually.
Speaker 4: Right, So, as you say, this is pretty significant, and
Speaker 4: this is going to have a lasting impact beyond President
Speaker 4: Trump being in the White House.
Speaker 10: Absolutely, it took us twenty years through a number of
Speaker 10: administrations to warm relations with India to the point we
Speaker 10: were three months ago. And it's always easier to build,
Speaker 10: you know, to destroy relationships or to hurt them, versus
Speaker 10: to build them.
Speaker 3: So this is a big setback.
Speaker 10: That said, I think we should also keep in mind
Speaker 10: that India and China, you know, there's a lot going
Speaker 10: on between those two countries and why while relations may
Speaker 10: warm up, they have some serious challenges that have plagued
Speaker 10: their relationship, including a border dispute including a large and
Speaker 10: growing Indian Indian trade deficit with China, and the fact
Speaker 10: that China's flooding India, like other countries in the region,
Speaker 10: with a lot of exports that are displacing its local production.
Speaker 10: So again, I think we just need to kind of
Speaker 10: keep this all, you know, in mind as we sign
Speaker 10: off the United States and say China and India are
Speaker 10: best friends.
Speaker 3: I think each of those leaders knew what they were doing.
Speaker 10: They wanted to show the world that, you know, they're
Speaker 10: they're a group and they're working together. But they're also
Speaker 10: very skilled politicians, and I think there was a reason
Speaker 10: why each of them wanted to send that message to Washington,
Speaker 10: in particular this weekend on.
Speaker 2: China and Russia specifically, we're getting comments from President Trump
Speaker 2: right now. The Scott Jennings Show is playing a recording
Speaker 2: of an interview that was done by the President recently.
Speaker 2: The President says, quote, we'll be doing he says, quote
Speaker 2: they'd never use their military on us talking about Russia
Speaker 2: and China, and he's not concerned about ch and Russian ties.
Speaker 2: Should the president be concerned about China and Russian ties?
Speaker 10: Yeah, I think every president, every administration should be concerned.
Speaker 10: That said, these ties have been strong for many years,
Speaker 10: and Chijin Ping and Putin have met, you know, over
Speaker 10: like close to fifty times since both of them have
Speaker 10: been in office, So those ties are going to continue
Speaker 10: to be close. But to say we don't care or
Speaker 10: that it's not a big deal, I don't really agree
Speaker 10: with that. I also think that for this administration, they're
Speaker 10: looking to improve their relations not only with Russia, but
Speaker 10: with China as well, and so in some ways it's
Speaker 10: in their interests not to look like they're working against
Speaker 10: those two countries working together, but more trying to be
Speaker 10: more nonchalant about it.
Speaker 4: Wendy Cythia, I want to ask you, and also the
Speaker 4: President speaking as to mention on Scott Jennings radio show.
Speaker 4: Another headline is the President repeating that the global tariff
Speaker 4: situation or global tariff is.
Speaker 3: An economic emergency.
Speaker 4: There are some that would argue that the US needed
Speaker 4: to step up its efforts to protect its markets, and
Speaker 4: it wasn't just a Republican thing, it was a democratic
Speaker 4: thing as well. If you think about the pushback specifically
Speaker 4: against China, the pandemic revealed how much of our supply
Speaker 4: chains were overseen by China. So on of what the
Speaker 4: President is doing and his team are doing does make
Speaker 4: sense to you?
Speaker 3: What does it? Well, here's the deal.
Speaker 10: Their whole number of trade laws that the President could
Speaker 10: use to pursue our trade agenda against China. He used
Speaker 10: section three oh one of our trade law during Trump
Speaker 10: one point zero No One challenged his legal authority to
Speaker 10: use that statute. So this is coming down to his
Speaker 10: use of a statute IEPA, which basically is premised upon
Speaker 10: a national emergency and then gives the president limited power.
Speaker 10: And that's where the courts are pushing back. But from
Speaker 10: my point of view, there are other statutes that frankly
Speaker 10: could be used and are more fit for purpose than
Speaker 10: i EPA in the in the current situation.
Speaker 4: Hey, well, one of the things I do want to
Speaker 4: ask you, since we just did a big conversation and
Speaker 4: deep dive into that ruling we got, was it Friday
Speaker 4: night where President Trump's Federal Appeals court did rule that
Speaker 4: President Trump's global tiriffs were issued illegally under an emergency law.
Speaker 4: So upholding that may ruling by the Court of International Trade,
Speaker 4: it sounds like there's going to be back and forth
Speaker 4: before we finally get a resolution. But how how do
Speaker 4: you think that might ultimately end up? Will they be
Speaker 4: overturned or not likely?
Speaker 3: I don't know. Do you have a good, good thought
Speaker 3: on that?
Speaker 10: I don't, And anyone who says they do, I don't
Speaker 10: believe them. I think this will probably end up going
Speaker 10: to the Supreme Court, and none of us can predict
Speaker 10: what could happen. But the point I would make that
Speaker 10: even if the president loses and the Supreme Court votes
Speaker 10: against him again, there are other trade laws that he
Speaker 10: can use to advance his trade agenda. So yes, it
Speaker 10: would be a setback, but I don't think it would
Speaker 10: mean that he's going to give up on tariffs. I
Speaker 10: think we're living in a tariff world under Donald Trump
Speaker 10: for the next three and a half years, whether we
Speaker 10: like it or not.
Speaker 2: Do you think that it will just be for the
Speaker 2: next three and a half years and the next president,
Speaker 2: even if it's a Democrat, would actually remove these tariffs
Speaker 2: because this is a significant source of revenue for a
Speaker 2: government that likes to spend money, whether you're a Republican
Speaker 2: or a Democrat. That's what we've seen take place in
Speaker 2: the White House, and one that has now thanks to
Speaker 2: the new tax bill, has lost some serious sources of revenue.
Speaker 10: And the other point I would add is that Biden
Speaker 10: kept many of the Trump tariffs in place as well.
Speaker 10: So I think you make an excellent point that said
Speaker 10: the next president may have, you know, a different agenda
Speaker 10: in putting a lot of emphasis on trying to work
Speaker 10: more closely with our allies and partners. One of the
Speaker 10: first things they're going to ask for is a relaxation
Speaker 10: of tariffs. So I'm not sure that all of the
Speaker 10: terroifts would remain in place as is, or there could
Speaker 10: be you know, other options and other agreements reached or
Speaker 10: other steps taken which could allay some of these concerns.
Speaker 4: But it makes a tricky then for investors or just
Speaker 4: the world at larger or CEOs to make decisions when
Speaker 4: it could switch again in three four years or so on.
Speaker 3: Hey, Wendy, thank you so much.
Speaker 4: Wendy Cutler, VP of Asia Society Policy Institute, joining us
Speaker 4: from the nation's capital.
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