1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,120 Speaker 2: Terminal and the Bloomberg Business app. The Amanda Lineum of 10 00:00:37,120 --> 00:00:40,920 Speaker 2: black Rock Right in the following we expect episodes of macrovolatility. 11 00:00:41,240 --> 00:00:43,600 Speaker 2: We remain attuned to the opportunity cast of being too 12 00:00:43,640 --> 00:00:47,640 Speaker 2: defensive and under risked in this environment. Amanda joins us 13 00:00:47,640 --> 00:00:49,240 Speaker 2: now for more Amandaican Monic morning. 14 00:00:49,280 --> 00:00:49,960 Speaker 3: Thank you for having me. 15 00:00:50,040 --> 00:00:50,720 Speaker 4: Great to see you. 16 00:00:50,760 --> 00:00:53,319 Speaker 2: The risk of being too defensive with stocks at all 17 00:00:53,320 --> 00:00:55,800 Speaker 2: time highs and credit spreads near the ties for the year, 18 00:00:56,200 --> 00:00:57,000 Speaker 2: explain please. 19 00:00:57,240 --> 00:00:59,320 Speaker 5: So I think in a time like this where there's 20 00:00:59,320 --> 00:01:01,880 Speaker 5: a lot of uncertain often the reflex from investors is 21 00:01:01,880 --> 00:01:04,319 Speaker 5: to just generically move up in quality. And we've been 22 00:01:04,319 --> 00:01:07,880 Speaker 5: pushing back against that and basically saying that there's there's 23 00:01:07,920 --> 00:01:11,000 Speaker 5: a case for selectively moving down in credit quality. If 24 00:01:11,000 --> 00:01:13,720 Speaker 5: you look, for example, high yield total returns have outperformed 25 00:01:13,720 --> 00:01:17,399 Speaker 5: investment grade. Here today subsets of high yield, including double 26 00:01:17,440 --> 00:01:19,880 Speaker 5: b's have outperformed triple bees. So I think what the 27 00:01:19,920 --> 00:01:23,800 Speaker 5: market is telling you is that, yes, we're expecting volatility, 28 00:01:23,920 --> 00:01:26,959 Speaker 5: there's residual uncertainty, but if you focus on kind of 29 00:01:27,000 --> 00:01:30,440 Speaker 5: back to basics credit work, companies are navigating this and 30 00:01:30,600 --> 00:01:33,399 Speaker 5: we are paying incredibly close attention to the micro level 31 00:01:33,440 --> 00:01:36,040 Speaker 5: commentary of companies in this environment. And I think what 32 00:01:36,080 --> 00:01:39,360 Speaker 5: the market is actually seizing on is companies guiding towards 33 00:01:39,400 --> 00:01:42,319 Speaker 5: twenty twenty six and twenty twenty seven, outlining all of 34 00:01:42,360 --> 00:01:45,320 Speaker 5: the operational levers that they can pull to navigate this uncertainty. 35 00:01:45,360 --> 00:01:47,480 Speaker 5: And I think that's what's giving some comfort. Now. Is 36 00:01:47,480 --> 00:01:50,200 Speaker 5: there a lot of scope for spread tightening? No, But 37 00:01:50,320 --> 00:01:53,720 Speaker 5: our income are all in yields and corporate credits still attractive. Yes, 38 00:01:53,720 --> 00:01:56,080 Speaker 5: And I think that's really what we're emphasizing. 39 00:01:56,160 --> 00:01:58,040 Speaker 6: That's exactly what I wanted to ask you, the idea 40 00:01:58,080 --> 00:02:00,840 Speaker 6: that spreads are near all time tights onield bonds. You're 41 00:02:00,880 --> 00:02:04,400 Speaker 6: not getting compensated in addition to treasuries that much at 42 00:02:04,400 --> 00:02:05,760 Speaker 6: all relative to history. 43 00:02:05,760 --> 00:02:06,800 Speaker 1: Why doesn't that worry you? 44 00:02:07,040 --> 00:02:11,840 Speaker 5: Well, there is some market segmentation there, so the trade 45 00:02:11,880 --> 00:02:14,760 Speaker 5: off between treasuries. Yes, the spreads are tight, but back 46 00:02:15,040 --> 00:02:18,200 Speaker 5: in Link twenty twenty four, we've characterized that as warranted resilience. 47 00:02:18,520 --> 00:02:22,280 Speaker 5: So those spread levels, there are a host of reasons macro, fundamental, technical, 48 00:02:22,280 --> 00:02:25,160 Speaker 5: why those spreads can remain in that tight range. I 49 00:02:25,160 --> 00:02:28,240 Speaker 5: think from our perspective, when we talk to investors, they're 50 00:02:28,240 --> 00:02:30,800 Speaker 5: looking to deploy capital into corporate credit, and so what 51 00:02:30,800 --> 00:02:33,160 Speaker 5: we're really saying is, if you're buying corporate credit, buy 52 00:02:33,200 --> 00:02:35,800 Speaker 5: it for the income, the carry, the yield, not for 53 00:02:35,880 --> 00:02:38,440 Speaker 5: the potential total return boost from tighter spreads. And I 54 00:02:38,440 --> 00:02:40,080 Speaker 5: think really the point we're just trying to make is 55 00:02:40,200 --> 00:02:43,120 Speaker 5: if you're waiting for sustained selloff in credit spreads, we 56 00:02:43,200 --> 00:02:45,360 Speaker 5: view the bar for that is pretty high. 57 00:02:45,600 --> 00:02:48,800 Speaker 6: So it's pretty remarkable that not only is it not 58 00:02:48,919 --> 00:02:52,360 Speaker 6: April second, but here we are with yet another trade 59 00:02:52,400 --> 00:02:55,519 Speaker 6: war brewing and escalate to de escalate, And not only 60 00:02:55,639 --> 00:02:59,079 Speaker 6: are people not getting bearish, we've got David costen Over 61 00:02:59,080 --> 00:03:01,320 Speaker 6: at Gold miss ax up creating as SMP forecast, you 62 00:03:01,360 --> 00:03:03,359 Speaker 6: could an upgrade over a Bank of America, And here 63 00:03:03,400 --> 00:03:05,880 Speaker 6: you are in the credit space at Black CROC saying 64 00:03:06,080 --> 00:03:08,360 Speaker 6: there's a risk we're not getting risky enough, and then 65 00:03:08,480 --> 00:03:10,200 Speaker 6: essentially that's what we have to go. Are we just 66 00:03:10,280 --> 00:03:13,600 Speaker 6: discounting the policy uncertainty entirely? Has that sort of been 67 00:03:13,639 --> 00:03:14,680 Speaker 6: stripped out of the picture. 68 00:03:14,800 --> 00:03:15,800 Speaker 4: We're not discounting it. 69 00:03:15,919 --> 00:03:18,080 Speaker 5: The title of our third quarter outlook, for example, was 70 00:03:18,120 --> 00:03:21,600 Speaker 5: two sided Risks. So we're absolutely recognizing that there's still 71 00:03:21,600 --> 00:03:23,560 Speaker 5: a lot of uncertainty. There are still a lot of 72 00:03:23,760 --> 00:03:26,360 Speaker 5: potholes that we need to navigate in this environment. What 73 00:03:26,360 --> 00:03:30,119 Speaker 5: we're saying, however, is that the economy has shown relative 74 00:03:30,200 --> 00:03:33,080 Speaker 5: resilience and so taking a complete risk off posture, in 75 00:03:33,120 --> 00:03:34,119 Speaker 5: our view, isn't. 76 00:03:33,919 --> 00:03:34,560 Speaker 4: The way to go. 77 00:03:34,680 --> 00:03:37,440 Speaker 5: In fact, again going back to the lower rated pockets 78 00:03:37,440 --> 00:03:40,200 Speaker 5: of the corporate credit market, they've outperformed. It kind of 79 00:03:40,200 --> 00:03:42,200 Speaker 5: reminds me of in the early stages of the FEDS 80 00:03:42,280 --> 00:03:45,280 Speaker 5: rate hiking cycle, when rates were being hiked significantly and 81 00:03:45,320 --> 00:03:47,640 Speaker 5: there was an expectation in Europe in the US that 82 00:03:47,640 --> 00:03:50,040 Speaker 5: it would lead to an imminent recession. The economy surprised 83 00:03:50,080 --> 00:03:51,800 Speaker 5: to the upside. I feel like that's a little bit 84 00:03:51,800 --> 00:03:54,160 Speaker 5: what's happening in the corporate sector is that it's actually 85 00:03:54,160 --> 00:03:56,080 Speaker 5: turning out that corporates have a lot of levers to 86 00:03:56,120 --> 00:03:58,920 Speaker 5: pull to navigate this. Some are within product mix, some 87 00:03:59,000 --> 00:04:03,000 Speaker 5: are vendor relationship, inventory purchases, and so they're actually navigating this, 88 00:04:03,040 --> 00:04:05,440 Speaker 5: and I think the bottoms up credit work is signaling 89 00:04:05,480 --> 00:04:07,320 Speaker 5: that there is a little bit more resilience, I think 90 00:04:07,360 --> 00:04:10,160 Speaker 5: than many expected. That does not mean, however, that we 91 00:04:10,800 --> 00:04:14,160 Speaker 5: are expecting a more challenging growth inflation mix inflation mix, 92 00:04:14,200 --> 00:04:16,200 Speaker 5: so that doesn't mean that we aren't expecting some softening 93 00:04:16,279 --> 00:04:17,040 Speaker 5: in the data from here. 94 00:04:17,080 --> 00:04:18,800 Speaker 3: We were able to get to this point because we 95 00:04:18,839 --> 00:04:21,800 Speaker 3: saw reversals from this administration when the market pushed back 96 00:04:21,880 --> 00:04:23,520 Speaker 3: on some of their policy proposals. 97 00:04:23,760 --> 00:04:25,960 Speaker 5: I think we got to this point because companies have 98 00:04:26,080 --> 00:04:29,400 Speaker 5: been a little bit more forthcoming about the options that 99 00:04:29,440 --> 00:04:31,360 Speaker 5: they have at their disposal. And so when you look 100 00:04:31,360 --> 00:04:34,360 Speaker 5: at retail earnings, for example, over the last month, some 101 00:04:34,440 --> 00:04:37,160 Speaker 5: of these retail companies have actually guided towards they can 102 00:04:37,160 --> 00:04:39,880 Speaker 5: actually offset the full cost of pariffs starting in twenty 103 00:04:39,920 --> 00:04:42,240 Speaker 5: twenty six. Yes, there may be some near term volatility 104 00:04:42,240 --> 00:04:44,360 Speaker 5: and some near term headwind but I think those sort 105 00:04:44,400 --> 00:04:47,440 Speaker 5: of concrete details are what's giving investors the comfort to 106 00:04:47,520 --> 00:04:49,440 Speaker 5: actually do the bottoms up credit work. That doesn't mean 107 00:04:49,480 --> 00:04:51,400 Speaker 5: that all these companies are created equal. There will be 108 00:04:51,440 --> 00:04:53,720 Speaker 5: some winners and losers in this, but I do think 109 00:04:53,880 --> 00:04:56,599 Speaker 5: it's hard to ignore when companies actually present that full 110 00:04:56,600 --> 00:04:57,599 Speaker 5: suite of lovers. 111 00:04:57,480 --> 00:04:59,440 Speaker 4: Do an each cham in pounds account. 112 00:05:00,240 --> 00:05:04,000 Speaker 5: I think I think that's probably more of a boon 113 00:05:04,080 --> 00:05:06,640 Speaker 5: for the equity market, frankly than the credit market. I 114 00:05:06,720 --> 00:05:09,760 Speaker 5: think actually, if rates stayed in this regime, that's a 115 00:05:09,760 --> 00:05:12,240 Speaker 5: pretty supportive technical for corporate credit in terms of all 116 00:05:12,279 --> 00:05:15,960 Speaker 5: in yields. There's been some increase in default rates, but 117 00:05:16,120 --> 00:05:19,120 Speaker 5: by and large companies have incorporated that higher borrowing cost, 118 00:05:19,160 --> 00:05:21,680 Speaker 5: so I don't think it's a prerequisite for continued resilience 119 00:05:21,680 --> 00:05:23,640 Speaker 5: in corporate credit. I think maybe the equity market might 120 00:05:23,680 --> 00:05:24,240 Speaker 5: be disappointed. 121 00:05:24,279 --> 00:05:26,800 Speaker 4: We can live with rights in the falls on FED funds. 122 00:05:26,920 --> 00:05:31,160 Speaker 5: Yes, I mean you've seen some floating rate borrowers default, 123 00:05:31,160 --> 00:05:33,880 Speaker 5: but those are largely repeat defaulters, so by definition that 124 00:05:33,880 --> 00:05:36,640 Speaker 5: should have been priced into the market. I think ideally 125 00:05:36,720 --> 00:05:38,880 Speaker 5: it would be nice to have some additional normalization cuts. 126 00:05:38,920 --> 00:05:41,400 Speaker 5: But you know our view, we're not expecting easing, so 127 00:05:41,680 --> 00:05:43,280 Speaker 5: I think that's really the base case for us. 128 00:05:43,360 --> 00:05:46,080 Speaker 6: What you just said there was fascinating that any kind 129 00:05:46,120 --> 00:05:48,760 Speaker 6: of rate cuts would help the equity market more than 130 00:05:48,800 --> 00:05:52,320 Speaker 6: the credit market. Is the credit market now clipping the 131 00:05:52,360 --> 00:05:55,480 Speaker 6: coupon all in yield story period full stop? And if 132 00:05:55,560 --> 00:05:58,680 Speaker 6: rates go down that will be challenging in terms of 133 00:05:59,120 --> 00:06:02,719 Speaker 6: justifying why you should purchase credit at these spreads. 134 00:06:02,839 --> 00:06:07,040 Speaker 5: I think psychologically there is some hesitation for investors if 135 00:06:07,040 --> 00:06:09,120 Speaker 5: we would see, for example, high yield all in yields 136 00:06:09,120 --> 00:06:11,560 Speaker 5: below seven percent, right, that kind of gets some attention. 137 00:06:12,560 --> 00:06:15,080 Speaker 5: I think it's I do think that it's more of 138 00:06:15,520 --> 00:06:17,960 Speaker 5: a why are you mind credit for Kerrie for income 139 00:06:18,000 --> 00:06:20,240 Speaker 5: frey yield, not for the total return boost from tighter 140 00:06:20,279 --> 00:06:22,560 Speaker 5: spreads or lower rates that's historically been the driver of 141 00:06:22,560 --> 00:06:25,320 Speaker 5: total returns. Not our real view in this cycle. For sure, 142 00:06:25,320 --> 00:06:28,480 Speaker 5: it would help fixtrate long duration product, but I think 143 00:06:28,520 --> 00:06:30,640 Speaker 5: if you look at the fact pattern of inflation above 144 00:06:30,680 --> 00:06:34,640 Speaker 5: target growth, holding in still residual uncertainty. The commentary from 145 00:06:34,680 --> 00:06:37,080 Speaker 5: the FED, we're not expecting the first rate cut until 146 00:06:37,320 --> 00:06:40,920 Speaker 5: the fourth quarter, so really that's kind of our base case. 147 00:06:40,960 --> 00:06:43,000 Speaker 2: We heard that again early this out. I'm Minderalana a 148 00:06:43,040 --> 00:06:44,080 Speaker 2: black croc. Appreciate it. 149 00:06:44,080 --> 00:06:44,480 Speaker 4: Thank you. 150 00:06:54,440 --> 00:06:56,920 Speaker 2: Let's build on that conversanction with Rob Casey of Sakenem 151 00:06:56,920 --> 00:06:59,440 Speaker 2: looking at Taris and ranks in the following. Consensus currently 152 00:06:59,520 --> 00:07:02,719 Speaker 2: is the July ninth will simply become August one. However, 153 00:07:03,080 --> 00:07:05,680 Speaker 2: we would suggest being cautious around this view and standing 154 00:07:05,680 --> 00:07:09,400 Speaker 2: on God for taras snampback sooner than then, Robed John, 155 00:07:09,440 --> 00:07:11,720 Speaker 2: Just now for more ro Good morning morning. You said it. 156 00:07:11,760 --> 00:07:13,640 Speaker 2: A lot of people are failing good. We can just 157 00:07:13,680 --> 00:07:16,120 Speaker 2: look through all of this. Leaser explained it perfectly. Why 158 00:07:16,120 --> 00:07:17,840 Speaker 2: do you think there is a risk of actually follow 159 00:07:17,880 --> 00:07:18,280 Speaker 2: through here? 160 00:07:18,520 --> 00:07:20,840 Speaker 7: I think there's a risk of follow through a because 161 00:07:20,880 --> 00:07:23,240 Speaker 7: President Trump has not gotten the concessions that he wants 162 00:07:23,640 --> 00:07:26,600 Speaker 7: in private negotiations or in you know, public negotiations with 163 00:07:26,680 --> 00:07:30,880 Speaker 7: posting these letters, and he is potentially running out of room. Right, 164 00:07:31,040 --> 00:07:33,920 Speaker 7: we may get a court decision on AIPA this fall. 165 00:07:34,360 --> 00:07:37,080 Speaker 7: Trump is essentially has the opportunity to negotiate between now 166 00:07:37,120 --> 00:07:39,760 Speaker 7: and then. So they're telling us they're getting closer, right, 167 00:07:39,800 --> 00:07:41,760 Speaker 7: and maybe we get a bunch of deals over the 168 00:07:41,760 --> 00:07:42,640 Speaker 7: course of the next week. 169 00:07:43,240 --> 00:07:44,960 Speaker 4: Or you know today. 170 00:07:45,160 --> 00:07:47,280 Speaker 7: If not, I think they probably want to push their 171 00:07:47,320 --> 00:07:50,400 Speaker 7: advantage before you know, caving or taking a step back. 172 00:07:50,560 --> 00:07:53,480 Speaker 2: What's the decidive factor that dictates the shape of those deals. 173 00:07:53,520 --> 00:07:56,880 Speaker 2: What's the difference between becoming the UK or Vietnam or Japan? 174 00:07:56,920 --> 00:07:57,640 Speaker 2: What's the difference? 175 00:07:57,920 --> 00:08:00,480 Speaker 7: I think that, I mean that that's clearly an open question. 176 00:08:00,800 --> 00:08:03,040 Speaker 7: What we've seen in the UK deal, the Vietnam deal 177 00:08:03,040 --> 00:08:06,400 Speaker 7: among others is I mean, frankly, they're not very detailed. 178 00:08:06,440 --> 00:08:08,960 Speaker 7: So I think that the deciding factor is the you know, 179 00:08:09,000 --> 00:08:11,040 Speaker 7: the leader on the other side of the table is 180 00:08:11,040 --> 00:08:14,119 Speaker 7: willing to accept what President Trump wants in broad terms, 181 00:08:14,120 --> 00:08:17,160 Speaker 7: in vague terms, and maybe maybe they're able to sell 182 00:08:17,200 --> 00:08:19,760 Speaker 7: it to their domestic constituency and then Trump is able 183 00:08:19,760 --> 00:08:21,560 Speaker 7: to come back to us and say we made a 184 00:08:21,600 --> 00:08:23,200 Speaker 7: good deal. But that's not to say that these are 185 00:08:23,320 --> 00:08:25,200 Speaker 7: even the trade deals that are struck. They're still not 186 00:08:25,280 --> 00:08:26,120 Speaker 7: very detailed. 187 00:08:26,160 --> 00:08:28,560 Speaker 3: When you talk about concessions the administration is looking for 188 00:08:28,560 --> 00:08:31,160 Speaker 3: and they haven't received them yet, what exactly. 189 00:08:31,160 --> 00:08:34,440 Speaker 7: Well, I mean, across the board, I think they're really two. 190 00:08:34,960 --> 00:08:37,280 Speaker 7: Trump wants to be able to message that he's bringing 191 00:08:37,320 --> 00:08:41,520 Speaker 7: down tariff levels on US goods being exported elsewhere. He 192 00:08:41,559 --> 00:08:44,840 Speaker 7: wants to message that he's decreasing the trade deficit with individuals. 193 00:08:45,000 --> 00:08:47,640 Speaker 7: I think that is probably the one with individual countries. 194 00:08:48,120 --> 00:08:50,120 Speaker 7: That's probably the one that's going to get the most 195 00:08:50,160 --> 00:08:52,840 Speaker 7: play from President Trump so far, because even when he's announcing, 196 00:08:53,080 --> 00:08:55,559 Speaker 7: you know, twenty five percent on Japan, twenty five percent 197 00:08:55,600 --> 00:08:59,360 Speaker 7: on Korea, he's saying, these tariffs are not enough to 198 00:08:59,400 --> 00:09:01,400 Speaker 7: rectify the trade deficits. So we still focused on the 199 00:09:01,400 --> 00:09:03,840 Speaker 7: trade deficit. He still sees it as a problem even 200 00:09:03,840 --> 00:09:04,760 Speaker 7: at these higher levels. 201 00:09:04,880 --> 00:09:07,480 Speaker 3: When you look at things like the United Kingdom, Vietnam, 202 00:09:07,600 --> 00:09:09,760 Speaker 3: even the slew of deals we saw in his Middle 203 00:09:09,800 --> 00:09:12,600 Speaker 3: East trip, what happened to all of them? What is 204 00:09:12,640 --> 00:09:15,600 Speaker 3: the process that's now happening behind the scenes within the 205 00:09:15,640 --> 00:09:20,400 Speaker 3: administration to actually make sure the deals of the details 206 00:09:20,440 --> 00:09:21,400 Speaker 3: of the deals get done. 207 00:09:21,400 --> 00:09:22,480 Speaker 1: Who's working on that? 208 00:09:22,720 --> 00:09:25,080 Speaker 7: Well, I think it's behind the scenes, Amory for a reason. Right, 209 00:09:25,240 --> 00:09:27,000 Speaker 7: we're not one hundred percent sure. 210 00:09:27,040 --> 00:09:28,240 Speaker 1: Do they even have the staff. 211 00:09:28,440 --> 00:09:31,640 Speaker 7: Well, that's why I was going to say, ninety days ago, 212 00:09:31,720 --> 00:09:33,880 Speaker 7: we heard ninety deals in ninety days, right, and that 213 00:09:33,960 --> 00:09:37,520 Speaker 7: sounded impossible then, and clearly it was impossible, right, Not 214 00:09:37,600 --> 00:09:40,360 Speaker 7: every country that has tariffs to be applied, you know 215 00:09:40,440 --> 00:09:42,880 Speaker 7: today or August first, not every country has even had 216 00:09:42,880 --> 00:09:45,040 Speaker 7: FaceTime with the president's administration. And so if you're a 217 00:09:45,040 --> 00:09:48,480 Speaker 7: country is saying, we haven't even had the chance to 218 00:09:48,559 --> 00:09:51,440 Speaker 7: negotiate and now we're getting these tariffs slapped on at 219 00:09:51,440 --> 00:09:53,040 Speaker 7: the higher level, Like what are you supposed to do 220 00:09:53,120 --> 00:09:54,480 Speaker 7: with that? So I think it's clear that there is 221 00:09:54,520 --> 00:09:57,120 Speaker 7: not the bandwidth maybe that they had expected, because these 222 00:09:57,160 --> 00:09:59,480 Speaker 7: deals aren't quite as easy as as Trump best and 223 00:09:59,520 --> 00:10:00,160 Speaker 7: among others. 224 00:10:00,080 --> 00:10:01,959 Speaker 6: Hoped, there might not be the bandwidth. There's also a 225 00:10:02,000 --> 00:10:04,200 Speaker 6: question about the framework and what kind of framework they're 226 00:10:04,280 --> 00:10:07,920 Speaker 6: using to really understand what to extract from different trading partners. 227 00:10:07,920 --> 00:10:11,080 Speaker 6: It's buy more rice, buy our chickens. 228 00:10:11,080 --> 00:10:12,920 Speaker 1: Talk about car exports. 229 00:10:12,920 --> 00:10:15,079 Speaker 6: I mean, there's this question of raising the ANTI and 230 00:10:15,160 --> 00:10:17,720 Speaker 6: using it as sort of a national security tool as 231 00:10:17,760 --> 00:10:20,680 Speaker 6: well as a trade tool. Have we got any clarity 232 00:10:20,720 --> 00:10:22,000 Speaker 6: around what the framework looks like. 233 00:10:22,960 --> 00:10:23,840 Speaker 4: Not a lot of clarity. 234 00:10:24,200 --> 00:10:26,120 Speaker 7: I think one thing that we can see from both 235 00:10:26,120 --> 00:10:28,199 Speaker 7: the UK and Vietnam is that President Trump wants to 236 00:10:28,240 --> 00:10:29,800 Speaker 7: come back to the US and message that we are 237 00:10:29,840 --> 00:10:32,800 Speaker 7: able to send more goods elsewhere, right and that's broadly 238 00:10:32,840 --> 00:10:35,480 Speaker 7: speaking so far, I would say mostly focused on the 239 00:10:35,760 --> 00:10:38,840 Speaker 7: US farm AAG industry. We also want to be able 240 00:10:38,840 --> 00:10:41,760 Speaker 7: to sell more cars elsewhere, you know, export, build up 241 00:10:41,800 --> 00:10:44,280 Speaker 7: manufacturing capacity in the US. I don't think we can 242 00:10:44,280 --> 00:10:47,800 Speaker 7: forget about a general goal of building up manufacturing capacity 243 00:10:47,800 --> 00:10:49,920 Speaker 7: in the US. Each individual deal may not get us 244 00:10:49,960 --> 00:10:52,520 Speaker 7: that much closer, but I think that's the overall trend, 245 00:10:52,559 --> 00:10:53,960 Speaker 7: at least the President Trump is hoping for. 246 00:10:54,080 --> 00:10:56,000 Speaker 6: The goal is also to raise revenue, and this is 247 00:10:56,040 --> 00:10:58,080 Speaker 6: sort of a key component with the One Big Beautiful Bill. 248 00:10:58,120 --> 00:11:02,000 Speaker 6: And we did see the revenue surge to a record 249 00:11:02,000 --> 00:11:04,920 Speaker 6: twenty four billion dollars in May. How much is that 250 00:11:04,960 --> 00:11:06,760 Speaker 6: sort of a sticking point at this point? They kind 251 00:11:06,760 --> 00:11:08,400 Speaker 6: of have to keep rates high totally. 252 00:11:08,559 --> 00:11:11,000 Speaker 7: I think it's a major priority. Obviously. Obviously we don't 253 00:11:11,000 --> 00:11:12,880 Speaker 7: really hear that from the White House, right because if 254 00:11:12,880 --> 00:11:15,040 Speaker 7: we're talking about tariff revenue, then we also have to 255 00:11:15,040 --> 00:11:17,200 Speaker 7: be talking about who's paying that revenue, right, And a 256 00:11:17,200 --> 00:11:18,560 Speaker 7: lot of times, not all the time, but a lot 257 00:11:18,600 --> 00:11:21,079 Speaker 7: of times it's the American consumer. But the truth of 258 00:11:21,120 --> 00:11:23,680 Speaker 7: the matter is, on the back of One Big Beautiful Bill, right, 259 00:11:23,760 --> 00:11:25,800 Speaker 7: we are still in a deficit crisis, and so we 260 00:11:25,880 --> 00:11:27,959 Speaker 7: have to find money somewhere. We didn't find it in 261 00:11:28,040 --> 00:11:30,440 Speaker 7: higher taxes. We didn't find it in you know, reverting 262 00:11:30,480 --> 00:11:34,000 Speaker 7: to pre Trump tax cut levels. We're going to have 263 00:11:34,040 --> 00:11:35,840 Speaker 7: to find it elsewhere. And I just have to say, 264 00:11:35,880 --> 00:11:38,280 Speaker 7: you know, there is revenue to be had with tariffs, 265 00:11:38,320 --> 00:11:40,920 Speaker 7: of course, but there is I think a broader point 266 00:11:40,960 --> 00:11:42,840 Speaker 7: to make from now until August first, and that is, 267 00:11:43,080 --> 00:11:44,600 Speaker 7: if we don't have the one hundred and forty five 268 00:11:44,600 --> 00:11:47,200 Speaker 7: percent on China right then we really are looking at 269 00:11:47,240 --> 00:11:49,160 Speaker 7: only a marginal I don't want to call it marginal. 270 00:11:49,160 --> 00:11:51,040 Speaker 7: It's more than marginal. But we're not looking at a 271 00:11:51,120 --> 00:11:53,800 Speaker 7: drastic increase in tariff levels, which means we're not looking 272 00:11:53,840 --> 00:11:56,320 Speaker 7: at a drastic increase in revenue levels as well. 273 00:11:56,480 --> 00:11:58,160 Speaker 2: Did you mean to call it a crisis or was 274 00:11:58,200 --> 00:12:01,240 Speaker 2: that a slip Because it's early. We just passed a 275 00:12:01,320 --> 00:12:03,080 Speaker 2: multi trinion dollar bill. It's har to call it a 276 00:12:03,080 --> 00:12:05,520 Speaker 2: crisis down in Washington. What makes it a crisis? 277 00:12:05,679 --> 00:12:09,240 Speaker 7: Well, the deficit may not be in crisis right because 278 00:12:09,280 --> 00:12:11,240 Speaker 7: we've run wide deficits for quite. 279 00:12:11,040 --> 00:12:12,720 Speaker 4: A long time and we're all still standing. 280 00:12:13,000 --> 00:12:14,839 Speaker 7: But the truth of the matter is, I don't think 281 00:12:14,880 --> 00:12:19,720 Speaker 7: Republicans have a solution to the deficit, what they call 282 00:12:19,800 --> 00:12:23,920 Speaker 7: a deficit crisis. Trump came into Washington describing the necessity 283 00:12:23,960 --> 00:12:26,120 Speaker 7: of bringing the deficit down. Of course, we can all 284 00:12:26,160 --> 00:12:27,959 Speaker 7: sit here and say that Democrats have failed to. 285 00:12:27,880 --> 00:12:29,120 Speaker 4: Do it over the previous four years. 286 00:12:29,240 --> 00:12:31,480 Speaker 7: But it's pretty clear that Republicans are going to fail 287 00:12:31,520 --> 00:12:32,920 Speaker 7: to do it, at least in this Congress, and I 288 00:12:32,920 --> 00:12:34,959 Speaker 7: think very likely over the course of Trump's term. 289 00:12:35,000 --> 00:12:38,280 Speaker 2: They're certainly not behaving as if it's a crisis in Washington. 290 00:12:38,080 --> 00:12:41,679 Speaker 6: And they just passed a bill that is definite deficit expansionary. 291 00:12:42,080 --> 00:12:44,839 Speaker 6: The US is going to be selling a net more 292 00:12:44,880 --> 00:12:48,000 Speaker 6: than two hundred and twenty billion dollars net over the 293 00:12:48,000 --> 00:12:51,240 Speaker 6: next five weeks alone. This really raises a question, you again, 294 00:12:51,440 --> 00:12:54,080 Speaker 6: where are the bond vigilantes? Are they just pegging their 295 00:12:54,120 --> 00:12:55,880 Speaker 6: hopes and dreams and the fact that the Treasury is 296 00:12:55,920 --> 00:12:57,240 Speaker 6: going to sell it all in T bills? 297 00:12:57,440 --> 00:12:59,400 Speaker 2: I guess so it's not in the bond market this morning, 298 00:12:59,480 --> 00:13:02,240 Speaker 2: full notty some thirties at the moment, yozah Magli high 299 00:13:02,280 --> 00:13:04,640 Speaker 2: by four or five basis points on a session. Robert's 300 00:13:04,640 --> 00:13:06,520 Speaker 2: going to see you, Thank you, sir, rob Case they 301 00:13:06,559 --> 00:13:18,199 Speaker 2: have signal we've got some extra time joining us not 302 00:13:18,280 --> 00:13:20,960 Speaker 2: to discuss Santa Pianki of Alico, Sarah, welcome back to 303 00:13:21,000 --> 00:13:23,480 Speaker 2: the program. How is the Administration of House Sun tried 304 00:13:23,520 --> 00:13:25,840 Speaker 2: pound that's going to use that extra three weeks? 305 00:13:27,360 --> 00:13:29,920 Speaker 8: Well, I think that you guys are right to say 306 00:13:29,960 --> 00:13:32,839 Speaker 8: that what the White House is trying to do here 307 00:13:32,920 --> 00:13:37,120 Speaker 8: is to signal countries where they are frustrated. Although South 308 00:13:37,200 --> 00:13:40,160 Speaker 8: Korea and Japan early on were places where the White 309 00:13:40,160 --> 00:13:43,080 Speaker 8: House was hopeful for a deal, they've really gotten stuck 310 00:13:43,120 --> 00:13:47,080 Speaker 8: in the conversations around sectoral tariffs, or particularly around. 311 00:13:46,920 --> 00:13:49,080 Speaker 9: Tariffs on auto's steal. 312 00:13:49,240 --> 00:13:56,040 Speaker 8: Some of the largest imports from those countries, the assion countries, Cambodia, Indonesia. 313 00:13:56,080 --> 00:13:59,200 Speaker 8: I think they're trying to follow more the model that 314 00:13:59,280 --> 00:14:03,280 Speaker 8: we saw briefly outlined around Vietnam. So I think we're 315 00:14:03,280 --> 00:14:07,400 Speaker 8: doing some signal sending. The administration has, I think, always 316 00:14:07,440 --> 00:14:11,480 Speaker 8: been very very optimistic about how many trade deals or 317 00:14:11,520 --> 00:14:12,800 Speaker 8: even frameworks one. 318 00:14:12,640 --> 00:14:14,040 Speaker 9: Can cut in a period of time. 319 00:14:14,200 --> 00:14:17,200 Speaker 8: So I really just viewed yesterday this first set of 320 00:14:17,280 --> 00:14:21,280 Speaker 8: letters as an indication of where at this moment, the 321 00:14:21,320 --> 00:14:24,960 Speaker 8: White House believes things are not on the path they want. 322 00:14:24,800 --> 00:14:27,000 Speaker 3: To see how powerful is the signal though, and the 323 00:14:27,000 --> 00:14:31,160 Speaker 3: President says it's firm, but not one hundred percent firm. 324 00:14:31,600 --> 00:14:34,680 Speaker 8: Yeah, well, I think you know, there are certainly some 325 00:14:35,120 --> 00:14:36,920 Speaker 8: in the markets who are just going to shrug this 326 00:14:37,080 --> 00:14:42,560 Speaker 8: off because we have seen delays, we have seen this 327 00:14:42,720 --> 00:14:44,640 Speaker 8: kind of kind of high. 328 00:14:44,920 --> 00:14:46,240 Speaker 9: Top talk before. 329 00:14:47,240 --> 00:14:51,480 Speaker 8: I think what we would remind investors and other stakeholders 330 00:14:51,560 --> 00:14:55,480 Speaker 8: is that right now we do see the directional terif 331 00:14:55,600 --> 00:14:59,360 Speaker 8: rate in the next coming weeks going up. We're seeing 332 00:14:59,400 --> 00:15:04,640 Speaker 8: countries like Vietnam like ending up at higher than this 333 00:15:04,720 --> 00:15:07,120 Speaker 8: sort of ten percent baseline we've been at, and we 334 00:15:07,200 --> 00:15:10,600 Speaker 8: have more sectoral tariffs. So some of this is just 335 00:15:10,680 --> 00:15:13,600 Speaker 8: Trump negotiating that we've watched for a long time. 336 00:15:14,280 --> 00:15:18,120 Speaker 9: But I think also we're at really high terrriforates right now. 337 00:15:18,120 --> 00:15:22,320 Speaker 8: We're already at about fifteen percent, and again in our lines, 338 00:15:22,520 --> 00:15:24,120 Speaker 8: the next signal points upward. 339 00:15:24,400 --> 00:15:26,600 Speaker 2: Sarah, do you have a decent understanding of what has 340 00:15:26,640 --> 00:15:30,080 Speaker 2: been demanded by trade partners? Has the White House articulated that, 341 00:15:30,600 --> 00:15:32,080 Speaker 2: do they know what they need to do to get 342 00:15:32,080 --> 00:15:33,720 Speaker 2: the tariff that's been put in a letter in the 343 00:15:33,760 --> 00:15:36,280 Speaker 2: last twenty four hours to get that tariff lower? 344 00:15:38,280 --> 00:15:41,160 Speaker 8: I think it really depends on the partner. I think 345 00:15:41,240 --> 00:15:45,840 Speaker 8: certainly countries like Japan and Korea understand where the sticking 346 00:15:45,880 --> 00:15:49,160 Speaker 8: points are, even though they don't like it. They just 347 00:15:49,320 --> 00:15:53,280 Speaker 8: really particularly they've got their own politics. For example, in Korea, 348 00:15:53,280 --> 00:15:57,040 Speaker 8: it's a very new government. Japan has an election coming up. 349 00:15:57,480 --> 00:16:02,720 Speaker 8: They need relief on phoos really, so I think they understand. 350 00:16:02,920 --> 00:16:05,400 Speaker 8: I think they're the bid ask is just at this 351 00:16:05,560 --> 00:16:09,560 Speaker 8: part too far apart other countries. I know there is 352 00:16:09,880 --> 00:16:14,080 Speaker 8: a bandwidth challenges given how many countries are negotiating, So 353 00:16:14,520 --> 00:16:18,960 Speaker 8: a country like a Cambodia maybe having trouble getting all 354 00:16:19,040 --> 00:16:24,000 Speaker 8: the airtime. They need to sort this out. So I 355 00:16:24,000 --> 00:16:27,560 Speaker 8: think it really depends on the partner. Interestingly, you know 356 00:16:27,680 --> 00:16:31,600 Speaker 8: EU that it's been traditionally very sticky, difficult trading partner. 357 00:16:32,120 --> 00:16:36,040 Speaker 8: For the Trump administration, they seem on track. So this 358 00:16:36,200 --> 00:16:38,720 Speaker 8: is just kind of, you know, a snapshot of where 359 00:16:38,760 --> 00:16:40,160 Speaker 8: we are in this inning. 360 00:16:40,440 --> 00:16:42,280 Speaker 6: Sarah, what do we mean but when we talk about 361 00:16:42,320 --> 00:16:45,040 Speaker 6: getting deals, because it seems like the details of these 362 00:16:45,080 --> 00:16:48,520 Speaker 6: deals are actually very foggy, It takes a long time. 363 00:16:48,560 --> 00:16:51,400 Speaker 6: You've been intimately involved in crafting some of these deals. 364 00:16:51,760 --> 00:16:52,920 Speaker 1: How realistic is it. 365 00:16:52,880 --> 00:16:55,080 Speaker 6: That they could be more than a framework anytime in 366 00:16:55,120 --> 00:16:59,440 Speaker 6: the next few months, given just what goes into some 367 00:16:59,520 --> 00:17:01,960 Speaker 6: of these new negotiations. 368 00:17:02,080 --> 00:17:04,480 Speaker 8: Well, these are very very high level, as you point out. 369 00:17:04,720 --> 00:17:08,320 Speaker 8: For example, on Vietnam, one of the touted deals by 370 00:17:08,359 --> 00:17:12,720 Speaker 8: the Trump administration, we haven't even really seen paper. And 371 00:17:13,840 --> 00:17:16,640 Speaker 8: one of the big questions for Vietnam is they got 372 00:17:16,640 --> 00:17:20,320 Speaker 8: a bifurcated terra fright, they got twenty percent and then 373 00:17:20,400 --> 00:17:24,959 Speaker 8: forty percent on transshipment. Transhipment can mean lots of different 374 00:17:24,960 --> 00:17:27,280 Speaker 8: things and can have lots of different implications. So these 375 00:17:27,359 --> 00:17:31,240 Speaker 8: are extremely high level. And look, you have trade irritants 376 00:17:31,240 --> 00:17:35,359 Speaker 8: with trading partners because there are a sensitive political and 377 00:17:35,480 --> 00:17:38,560 Speaker 8: economic issues and they take a long time to work through. 378 00:17:38,640 --> 00:17:42,040 Speaker 8: So the notion that we were ever going to get, 379 00:17:42,640 --> 00:17:46,280 Speaker 8: you know, ninety deals in ninety days was certainly thought 380 00:17:46,280 --> 00:17:49,200 Speaker 8: of somebody who hasn't spent a lot of time negotiating trade. 381 00:17:49,240 --> 00:17:51,159 Speaker 3: Well, now it's one hundred and thirteen days, and I 382 00:17:51,160 --> 00:17:52,639 Speaker 3: think a lot of people are questioning whether or not 383 00:17:52,680 --> 00:17:55,120 Speaker 3: you can even get a dozen of deals done by then. 384 00:17:55,359 --> 00:17:58,399 Speaker 3: When can we expect the sectoral tariffs to actually be announced? 385 00:18:00,160 --> 00:18:02,840 Speaker 8: Interesting, some of them are rumored to be coming any 386 00:18:02,920 --> 00:18:03,480 Speaker 8: day now. 387 00:18:03,800 --> 00:18:06,240 Speaker 9: Copper is supposedly close lumber. 388 00:18:06,720 --> 00:18:09,719 Speaker 8: I think the biggest ones that we're watching are on 389 00:18:09,840 --> 00:18:14,720 Speaker 8: SEMIS and the pharmaceutical industry. Those are very large sectors 390 00:18:14,760 --> 00:18:19,880 Speaker 8: of the economy and very important from particularly on semis 391 00:18:19,920 --> 00:18:24,880 Speaker 8: an inflationary perspective. About where the administration goes, I think 392 00:18:24,920 --> 00:18:27,720 Speaker 8: there's still a lot for the administration to sort out. 393 00:18:27,840 --> 00:18:30,800 Speaker 8: But the way we have seen this president operate in 394 00:18:30,880 --> 00:18:34,560 Speaker 8: sectoral tariffs so far is he comes out with twenty 395 00:18:34,560 --> 00:18:40,080 Speaker 8: five percent, pretty broad, and then negotiates from there. So far, 396 00:18:40,200 --> 00:18:43,399 Speaker 8: they have been stickier in those negotiations. That's why the 397 00:18:43,480 --> 00:18:48,720 Speaker 8: Koreas and Japan's are so frustrated. But in terms of 398 00:18:48,760 --> 00:18:51,120 Speaker 8: when he wants to throw this in the mix, sort 399 00:18:51,160 --> 00:18:53,960 Speaker 8: of unclear, except I will say this president is feeling 400 00:18:54,000 --> 00:18:57,080 Speaker 8: pretty good coming off some impressive legislative wins and foreign 401 00:18:57,160 --> 00:18:59,879 Speaker 8: policy wins. He may feel like right now is that 402 00:19:00,080 --> 00:19:02,640 Speaker 8: time he has the bandwidth to put these forwards. 403 00:19:02,640 --> 00:19:04,359 Speaker 3: So do you think he'll be more aggressive and let 404 00:19:04,400 --> 00:19:05,439 Speaker 3: a lot of this drag on. 405 00:19:07,359 --> 00:19:13,399 Speaker 8: I think he is feeling bullish and more aggressive, you know, 406 00:19:13,520 --> 00:19:16,520 Speaker 8: And at the same time, the market, you know, isn't 407 00:19:16,560 --> 00:19:21,000 Speaker 8: necessarily always buying all of it, so that probably also 408 00:19:22,880 --> 00:19:28,200 Speaker 8: tilts in the direction of wanting him to go even further. 409 00:19:28,400 --> 00:19:32,480 Speaker 8: But again, of course there's a lot of back and forth. 410 00:19:32,920 --> 00:19:36,000 Speaker 8: I don't believe, for example, that Japan or Korea will 411 00:19:36,119 --> 00:19:40,160 Speaker 8: end up ultimately with a twenty five percent a reciprocal tariff. 412 00:19:40,240 --> 00:19:41,680 Speaker 9: That's all part of the process. 413 00:19:41,760 --> 00:19:45,760 Speaker 8: But directionally, again, we think we're on an upward move. 414 00:19:45,800 --> 00:19:47,760 Speaker 8: And yeah, I do think he's feeling pretty good, and 415 00:19:48,400 --> 00:19:52,360 Speaker 8: generally that leads presidents to be a bit more bullish. 416 00:19:53,560 --> 00:20:05,480 Speaker 2: Sarah, thank you one of the biggest bulls on this 417 00:20:05,560 --> 00:20:07,600 Speaker 2: stock for quite a while on the street, I'll confess. 418 00:20:07,640 --> 00:20:09,879 Speaker 2: CEO Kathy Wood, Kathy, thanks for making time for us 419 00:20:09,920 --> 00:20:12,480 Speaker 2: this morning. Let's just talk about what Dan I've said 420 00:20:12,520 --> 00:20:15,040 Speaker 2: to us yesterday that he believes Elon Musk is crossing 421 00:20:15,040 --> 00:20:17,080 Speaker 2: a line and that the board needs to step in. 422 00:20:17,440 --> 00:20:18,200 Speaker 4: Do you share that for you? 423 00:20:19,640 --> 00:20:21,639 Speaker 10: Well, I have to tell you we've been dealing with 424 00:20:22,440 --> 00:20:26,280 Speaker 10: controversy around Elon Musk in one form or another since 425 00:20:26,440 --> 00:20:29,080 Speaker 10: we first bought the stock when the company was founded 426 00:20:29,160 --> 00:20:32,479 Speaker 10: in twenty fourteen, and we owned Tesla in It's one 427 00:20:32,520 --> 00:20:36,480 Speaker 10: of the top holdings in three of our ETF so 428 00:20:36,720 --> 00:20:40,959 Speaker 10: arkk W and Q. So we are watching this like 429 00:20:40,960 --> 00:20:43,920 Speaker 10: a hawk, no question about it. But with the experience 430 00:20:44,119 --> 00:20:48,040 Speaker 10: over the last eleven years, we turn around today and 431 00:20:48,160 --> 00:20:53,480 Speaker 10: see Tesla really not an EV manufacturer anymore. Moving into 432 00:20:53,520 --> 00:20:57,159 Speaker 10: the robotaxi age, we believe successfully and we believe it 433 00:20:57,200 --> 00:21:00,600 Speaker 10: will scale much better than most of it's can competitors. 434 00:21:01,119 --> 00:21:05,879 Speaker 10: We see SpaceX really only ninety percent of all of 435 00:21:05,920 --> 00:21:12,040 Speaker 10: the satellites out there neurally transforming lives of paralyzed people, 436 00:21:12,119 --> 00:21:16,439 Speaker 10: people with als, and probably most surprising of all, XAI. 437 00:21:16,600 --> 00:21:20,320 Speaker 10: Now we own all of those again in our venture fund, 438 00:21:20,400 --> 00:21:26,399 Speaker 10: following them very carefully. XAI is on some benchmarks. It 439 00:21:26,680 --> 00:21:30,880 Speaker 10: hit a point that three pro hit in June, it. 440 00:21:30,880 --> 00:21:32,199 Speaker 1: Hit it in February. 441 00:21:32,320 --> 00:21:35,960 Speaker 10: So you know, we are very focused on barriers to 442 00:21:36,160 --> 00:21:41,199 Speaker 10: entry technology moats and we believe that the moats that 443 00:21:41,960 --> 00:21:45,000 Speaker 10: Elon has built, and obviously this is not just Elon. 444 00:21:45,200 --> 00:21:49,520 Speaker 10: He's attracting the best and the brightest to help solve 445 00:21:49,600 --> 00:21:53,800 Speaker 10: some of the world's biggest problems. So again we do 446 00:21:54,960 --> 00:21:58,720 Speaker 10: trust the board and the board's instincts here and. 447 00:22:00,240 --> 00:22:01,480 Speaker 1: We stay out of politics. 448 00:22:01,520 --> 00:22:03,800 Speaker 2: Well, we'd love your opinion on the current situation, just 449 00:22:03,840 --> 00:22:07,199 Speaker 2: on Testa specifically. You mentioned some phenomenal companies doing some 450 00:22:07,600 --> 00:22:10,600 Speaker 2: incredible things for Tesla, though, do you believe that Elon 451 00:22:11,000 --> 00:22:14,119 Speaker 2: can pursue his political ambitions at the same time pursuing 452 00:22:14,480 --> 00:22:16,360 Speaker 2: the best interest of Tensla shareholders. 453 00:22:17,880 --> 00:22:21,400 Speaker 10: One of the announcements Elon made recently is that he 454 00:22:21,720 --> 00:22:25,920 Speaker 10: is going to oversee sales in the US and in Europe. 455 00:22:26,200 --> 00:22:30,120 Speaker 10: And when he puts his mind on something, he usually 456 00:22:30,160 --> 00:22:35,000 Speaker 10: gets the job done. So I think he's much less 457 00:22:35,040 --> 00:22:38,760 Speaker 10: distracted now than he was, let's say, in the White 458 00:22:38,800 --> 00:22:40,040 Speaker 10: House twenty four to seven. 459 00:22:40,600 --> 00:22:42,640 Speaker 6: At what point do you see sort of the political 460 00:22:43,040 --> 00:22:46,199 Speaker 6: landscape shifting though, not just for Tesla but for the 461 00:22:46,320 --> 00:22:48,640 Speaker 6: haves and the have nots in some of the big 462 00:22:48,680 --> 00:22:51,240 Speaker 6: tech space. I know you've had a complicated relationship, say 463 00:22:51,480 --> 00:22:55,359 Speaker 6: with Apple, which seems uniquely pegged by some of these tariffs. 464 00:22:55,640 --> 00:22:57,480 Speaker 1: Is there anything that you could see that. 465 00:22:57,480 --> 00:22:59,760 Speaker 6: Would make you like that stock again or do you 466 00:22:59,760 --> 00:23:01,679 Speaker 6: think that really it is going to fall out of 467 00:23:01,800 --> 00:23:02,720 Speaker 6: magnificent seven. 468 00:23:04,240 --> 00:23:06,840 Speaker 10: Yes, we've been watching Apple for a long time with 469 00:23:07,040 --> 00:23:10,800 Speaker 10: an AI lens, and that started, I'm going to say 470 00:23:10,800 --> 00:23:15,040 Speaker 10: about seven years ago when it was becoming serious about 471 00:23:15,240 --> 00:23:19,400 Speaker 10: autonomous vehicles. If you think about the ultimate mobile device, 472 00:23:19,480 --> 00:23:21,080 Speaker 10: it's an autonomous vehicle, and. 473 00:23:21,000 --> 00:23:26,520 Speaker 1: That should have been Apples to win. And what we've seen. 474 00:23:26,320 --> 00:23:30,359 Speaker 10: There is one turnover of management teams after another, and 475 00:23:30,440 --> 00:23:35,159 Speaker 10: it's all autonomous driving. Is an AI project, is the 476 00:23:35,240 --> 00:23:40,120 Speaker 10: largest AI project on Earth, we believe, and so losing 477 00:23:40,440 --> 00:23:43,359 Speaker 10: the talent that it has, and as I understand it 478 00:23:43,480 --> 00:23:48,800 Speaker 10: lost another one today to Mark Zuckerberg's top fifty. So 479 00:23:50,040 --> 00:23:52,360 Speaker 10: they've had a lot of trouble in this regard and 480 00:23:52,880 --> 00:23:54,600 Speaker 10: I think the burden of proof is on them. 481 00:23:54,960 --> 00:23:56,960 Speaker 6: Do you think that it is time to follow the talent, 482 00:23:57,280 --> 00:23:58,879 Speaker 6: that this is going to work the gamble that you're 483 00:23:58,920 --> 00:24:01,199 Speaker 6: seeing over at Meta and that that's the path of 484 00:24:01,240 --> 00:24:03,720 Speaker 6: travel for the other big tech companies that are going 485 00:24:03,760 --> 00:24:05,920 Speaker 6: to just eat some of the companies from the inside out, 486 00:24:05,960 --> 00:24:07,800 Speaker 6: take the talent unnecessarily by the company. 487 00:24:08,920 --> 00:24:10,600 Speaker 1: You know, it's a very good question. 488 00:24:10,720 --> 00:24:13,919 Speaker 10: We're trying to figure out if what Mark Zuckerberg is 489 00:24:13,960 --> 00:24:17,240 Speaker 10: doing today is much like he did when he was 490 00:24:17,320 --> 00:24:22,440 Speaker 10: pivoting hard to the metaverse, which proved because he thought 491 00:24:22,480 --> 00:24:23,800 Speaker 10: that was the. 492 00:24:23,600 --> 00:24:28,320 Speaker 1: Next big thing, and that was incorrect. 493 00:24:29,280 --> 00:24:32,560 Speaker 10: AI is the next big thing, no question about it, 494 00:24:33,359 --> 00:24:35,960 Speaker 10: and you do have to have the right DNA and 495 00:24:36,000 --> 00:24:38,080 Speaker 10: you have to move fast and break things, as he 496 00:24:38,160 --> 00:24:42,080 Speaker 10: would say. So you know, it'll be interesting to see 497 00:24:42,080 --> 00:24:46,720 Speaker 10: if he's able to turn his open source strategy. And 498 00:24:47,080 --> 00:24:50,280 Speaker 10: we've admired that quite a bit in terms of generative 499 00:24:50,280 --> 00:24:55,760 Speaker 10: AI into a leader again or as we were observing it, 500 00:24:56,880 --> 00:25:00,840 Speaker 10: Apple's LAMA three at the time was improving at a 501 00:25:00,880 --> 00:25:06,000 Speaker 10: faster rate than some of OpenAI's models, and that was 502 00:25:06,000 --> 00:25:07,480 Speaker 10: true of open source generally. 503 00:25:07,600 --> 00:25:10,639 Speaker 1: And then that has stopped. So, yes, you had to 504 00:25:10,720 --> 00:25:14,800 Speaker 1: do something. Is this the right thing? Why did that stop? 505 00:25:15,040 --> 00:25:16,359 Speaker 4: I don't know, Kathy. 506 00:25:16,400 --> 00:25:18,320 Speaker 2: Next time you're with us, we'll have a longer conversation 507 00:25:18,760 --> 00:25:21,760 Speaker 2: to leaders, incredible men doing incredible things. 508 00:25:21,840 --> 00:25:23,440 Speaker 4: I convest CEO Kathy Worth. 509 00:25:24,200 --> 00:25:27,760 Speaker 2: This is the Bloomberg Survenllance podcast, bringing you the best 510 00:25:27,760 --> 00:25:31,080 Speaker 2: in markets, economics, an geopolitics. You can watch the show 511 00:25:31,160 --> 00:25:34,080 Speaker 2: live on Bloomberg TV weekday mornings from six am to 512 00:25:34,240 --> 00:25:38,000 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 513 00:25:38,119 --> 00:25:40,359 Speaker 2: or anywhere else you listen, and as always on the 514 00:25:40,359 --> 00:25:42,800 Speaker 2: Bloomberg Terminal and the Bloomberg Business app.