WEBVTT - Tariff Uncertainty, AI Unease Rattle Tech Shares 0:00:02.560 --> 0:00:13.520 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive 0:00:13.520 --> 0:00:17.360 from coast to coast with Caroline Hyde in New York 0:00:17.640 --> 0:00:19.599 and Vlow in San Francisco. 0:00:22.960 --> 0:00:24.520 This is Bloomberg Tech coming up. 0:00:24.560 --> 0:00:28.320 President Trump looks to rebuild his tariff trade policy after 0:00:28.320 --> 0:00:32.240 the Supreme Court struck it down, reviving market jitters plus. 0:00:31.960 --> 0:00:35.000 Bitcoin non immune to those tariff anxieties, sliding below sixty 0:00:35.000 --> 0:00:37.400 five thousand dollars at one point for the second time 0:00:37.440 --> 0:00:38.200 this month. 0:00:38.760 --> 0:00:41.960 And today's the day for Paramount Skydines to submit its 0:00:42.040 --> 0:00:44.960 best and final offer for Warner Brothers Discovery. 0:00:45.080 --> 0:00:46.400 We'll discuss what to expect. 0:00:46.800 --> 0:00:49.920 Let's turn our attention though, to well the anxieties that 0:00:50.040 --> 0:00:51.800 beat up the nows that one hundred, to the extend 0:00:51.840 --> 0:00:53.519 that it's at session Low's as we speak, and we're 0:00:53.520 --> 0:00:56.400 currently off by one point three percent. You're seeing anxiety, 0:00:56.400 --> 0:00:58.920 whether it's AI once again playing into those software names, 0:00:58.960 --> 0:01:00.800 whether it's the tariff jit and what that means in 0:01:00.880 --> 0:01:03.520 terms of long term uncertainty for these businesses. We are 0:01:03.600 --> 0:01:06.080 pulling back on our risk on attitude, certainly in the 0:01:06.080 --> 0:01:07.959 world of crypto as well, down two point nine percent. 0:01:08.000 --> 0:01:10.720 Even his goal gets a little bit of a reprieve ed. 0:01:10.720 --> 0:01:11.880 Were you watching underneatha hin? 0:01:12.480 --> 0:01:13.679 Yeah, let's get to our top. Sorry. 0:01:13.720 --> 0:01:16.880 President Trump is looking to rebuild his trade tariff trade 0:01:16.920 --> 0:01:20.120 policy after the Supreme Court struck down his use of 0:01:20.160 --> 0:01:24.759 the International Emergency Economic Powers Act or AIPA to impose 0:01:24.800 --> 0:01:29.080 sweeping global tariffs. In response, his administration signed an executive 0:01:29.200 --> 0:01:32.679 order to impose a ten percent tariff on imports using 0:01:32.720 --> 0:01:36.080 an alternative legal authority, and over the weekend, the President 0:01:36.120 --> 0:01:38.800 announced on truth Social that he intends to raise that 0:01:38.880 --> 0:01:42.560 rate to fifteen percent or quote, a much higher tariff 0:01:42.600 --> 0:01:45.360 and worse. Let's get the latest with Bloomberg Senior Tech 0:01:45.440 --> 0:01:49.040 editor Mike Shephard. What's the state of play as of 0:01:49.120 --> 0:01:49.559 right now? 0:01:50.360 --> 0:01:54.280 Well, it is moving pretty quickly. Now. The administration's really 0:01:54.320 --> 0:01:58.000 trying to ensure that all of the trade agreements that 0:01:58.200 --> 0:02:02.120 reach with trading partners around the world over the past 0:02:02.240 --> 0:02:06.760 year don't come undone. They spent the weekend really insisting 0:02:06.840 --> 0:02:11.320 that the EU and other trade blocks and nations must 0:02:11.360 --> 0:02:14.639 abide by those agreements, and they tried to offer some 0:02:14.680 --> 0:02:18.359 assurance that the setback that was dealt to the administration 0:02:18.440 --> 0:02:22.320 on Friday was temporary and that this fifteen percent tariff 0:02:22.360 --> 0:02:25.640 we heard the President talk about on Saturday, by truth, 0:02:25.760 --> 0:02:29.240 social was really just going to be a bridge to 0:02:29.360 --> 0:02:33.440 more lasting tariffs that would be imposed eventually through other authorities. 0:02:33.639 --> 0:02:37.400 Now those authorities are going to take months to investigate 0:02:37.440 --> 0:02:40.520 and to actually execute and carry out, and that is 0:02:40.560 --> 0:02:43.239 going to add a whole lot of uncertainty for those 0:02:43.280 --> 0:02:46.679 trading partners, including the European Union, which is indicating that 0:02:46.760 --> 0:02:50.560 it's holding off on a final approval and ratification by 0:02:50.600 --> 0:02:53.600 the Parliament of the deal it struck with Trump last year, 0:02:53.840 --> 0:02:56.720 and India, which had just reached a hard fought agreement 0:02:56.760 --> 0:02:59.760 with the administration a few months ago. They are now 0:03:00.440 --> 0:03:03.320 off a meeting that was scheduled for later this week 0:03:03.560 --> 0:03:06.200 to iron out final details there. And then, of course, 0:03:06.360 --> 0:03:08.720 ed there is China. The President is going to meet 0:03:08.760 --> 0:03:11.400 the Chiesi in Ping in China a little more than 0:03:11.400 --> 0:03:13.400 a month from right now, and the question is whether 0:03:14.080 --> 0:03:17.040 Trump has lost some leverage heading into that meeting with she. 0:03:17.880 --> 0:03:20.680 And we saw President Trump with pretty fighting talk for 0:03:20.840 --> 0:03:23.400 perhaps some countries that thought they'd already cut deals or 0:03:23.400 --> 0:03:26.320 at least made some progress on inbound investment. Just take 0:03:26.320 --> 0:03:29.440 a listen to what was said regarding well Taiwan. 0:03:29.040 --> 0:03:33.600 In particular, Taiwan came in based all our chip business. 0:03:33.720 --> 0:03:38.600 They made chips thirty years longer, they made chip chip chip. 0:03:38.720 --> 0:03:43.160 And now all those companies in Taiwan are building factories 0:03:43.640 --> 0:03:46.960 in Arizona, Texas and various other places because they don't 0:03:46.960 --> 0:03:49.920 want to pay tariffs. They're all pouring into the United States. 0:03:50.080 --> 0:03:52.920 You spoke of China that, Mike, What of Taiwan. How 0:03:52.920 --> 0:03:55.120 does this impact tech in particular? 0:03:55.680 --> 0:03:58.680 Well, Caro, it's not just Taiwan. It's Japan, and it's 0:03:58.680 --> 0:04:01.880 South Korea, and it is in the European Union. As 0:04:01.920 --> 0:04:06.400 part of those trade agreements, the President had negotiated investments 0:04:06.480 --> 0:04:10.320 in the US from those trading partners. Now the question is, 0:04:10.720 --> 0:04:14.640 without the leverage of tariffs to enforce and to guarantee 0:04:14.680 --> 0:04:18.200 that those investments get made, do they follow through? And 0:04:18.640 --> 0:04:21.159 we even saw it just a few weeks ago, the 0:04:21.240 --> 0:04:24.640 confrontation that was brewing with officials in Seoul over the 0:04:24.760 --> 0:04:28.400 slow pace of ratification of the trade deal by South 0:04:28.480 --> 0:04:32.120 Korea's legislature and concerns by the US that hey, maybe 0:04:32.160 --> 0:04:35.000 there won't be enough follow through on the investment's promised 0:04:35.040 --> 0:04:38.679 here in the US. We even heard Commerce Secretary Howard 0:04:38.720 --> 0:04:41.839 Lutnik just last month at the opening of that Micron 0:04:41.920 --> 0:04:46.360 plant alluding to possibly hire tariffs on goods from those 0:04:46.400 --> 0:04:49.279 countries if they're companies. And he was alluding to the 0:04:49.320 --> 0:04:53.160 memory chip makers carrow if they didn't step up their 0:04:53.279 --> 0:04:56.320 investments here in the US, and he was referring obliquely 0:04:56.360 --> 0:04:59.359 to Samsung and sk Heinix. But you can paint that 0:04:59.480 --> 0:05:02.960 more broad lead to other possible tech investments in the US. 0:05:03.000 --> 0:05:06.240 If they don't materialize, then what does the administration here 0:05:06.320 --> 0:05:07.360 do as a consequence? 0:05:07.480 --> 0:05:09.800 And leader of s k Heinez just today pledging to 0:05:09.839 --> 0:05:13.159 boost memory chip output. Mike Shephard with all the latest 0:05:13.200 --> 0:05:15.039 on tariff's Thank you so much. Look, let's get you 0:05:15.080 --> 0:05:18.159 the wider impact at President Trump's tariff agenda. Jason Oxman 0:05:18.200 --> 0:05:21.040 joins US Information Technology Industry Council CEO. Look, what are 0:05:21.040 --> 0:05:23.919 the companies asking from you at the moment and what 0:05:23.960 --> 0:05:25.920 are you advising in terms of the uncertainty? 0:05:27.320 --> 0:05:30.280 Well, what they're asking for is certainty. And we saw 0:05:30.440 --> 0:05:33.400 over the weekend that the President very quickly moved to 0:05:33.520 --> 0:05:38.240 a separate jurisdiction for tariff legitimacy. But I think the 0:05:38.279 --> 0:05:42.000 broader question is what's the long term going to look like. Companies, 0:05:42.000 --> 0:05:45.160 as we've been discussing, need certainty in order to make 0:05:45.200 --> 0:05:48.599 investment decisions. Our trading partners are looking for certainty. The 0:05:48.680 --> 0:05:51.240 news about the suspension of the trade talks between the 0:05:51.320 --> 0:05:54.920 US and India is of concern. The EU suspending moving 0:05:54.920 --> 0:05:56.960 forward on the trade agreement between the EU and the 0:05:57.040 --> 0:06:01.520 US also of concern. We're looking for is part of 0:06:01.560 --> 0:06:03.920 a broader question of the strategy of the United States, 0:06:04.120 --> 0:06:07.120 and the Trump administration has been very focused on encouraging 0:06:07.160 --> 0:06:11.719 investment in manufacturing here, encouraging construction of data centers, encouraging 0:06:11.920 --> 0:06:14.880 export of AI technology from the United States to the 0:06:14.920 --> 0:06:15.599 rest of the world. 0:06:15.760 --> 0:06:18.000 Tariff strategy has a lot to do with that. 0:06:18.160 --> 0:06:21.000 Tariffs are good tactics and a lot of negotiation, but 0:06:21.040 --> 0:06:23.359 they're not a boarder strategy to encourage the kind of 0:06:23.400 --> 0:06:25.800 investment that we're looking for. So what the tech industry 0:06:25.839 --> 0:06:27.880 is looking for going forward is a lot more certainty. 0:06:28.200 --> 0:06:30.280 I just think of how in video is part of 0:06:30.320 --> 0:06:34.440 your Information Technology Industry Council, and how they have earnings, 0:06:34.440 --> 0:06:37.000 and how they need foreign investment to come in and 0:06:37.040 --> 0:06:39.159 help build the data centers where the GPUs are going 0:06:39.160 --> 0:06:42.200 in the United States. Jason, do you think ultimately we 0:06:42.320 --> 0:06:44.880 will come to some sort of agreement. How long can 0:06:45.000 --> 0:06:47.800 CEOs navigate in this era of uncertainty. 0:06:49.040 --> 0:06:51.719 Well, we do have to come to some level of certainty. 0:06:51.760 --> 0:06:54.440 And as you noted, foreign investment in the United States 0:06:54.520 --> 0:06:57.479 is a significant part of the manufacturing story. We've seen 0:06:57.560 --> 0:07:01.320 investment not only in semiconductor infrastructructure announced here in the 0:07:01.400 --> 0:07:05.000 US from companies around the world Taiwan, Korean, elsewhere, but 0:07:05.080 --> 0:07:08.839 we've also seen investments in large data center projects, hundreds 0:07:08.839 --> 0:07:12.080 of billions of dollars of investment coming from outside of 0:07:12.080 --> 0:07:15.320 the United States. That's very important. But equally important to 0:07:15.360 --> 0:07:17.640 that is that tariffs can be a deterrent to the 0:07:17.680 --> 0:07:21.400 necessary inputs into that infrastructure. Whether we're talking about the 0:07:21.440 --> 0:07:24.120 construction of data centers and the inputs that are necessary 0:07:24.120 --> 0:07:26.520 for the construction there, or what goes into the data 0:07:26.520 --> 0:07:29.360 centers as semiconductors and other components, or we're talking about 0:07:29.400 --> 0:07:32.200 the energy infrastructure, including upgrades that are necessary to the 0:07:32.200 --> 0:07:35.200 transmission grade and the equipment that comes from around the world. 0:07:35.200 --> 0:07:37.360 For that, that's important to make sure that tariffs don't 0:07:37.360 --> 0:07:39.800 interfere with those kind of investments. And then the flip side, 0:07:39.840 --> 0:07:41.840 of course, is anything that's made in the United States. 0:07:41.920 --> 0:07:44.240 Ninety five percent of the world's consumers don't live in 0:07:44.280 --> 0:07:46.160 the United States. It needs to be exported to the 0:07:46.200 --> 0:07:48.240 rest of the world. I just came back from India 0:07:48.320 --> 0:07:51.000 yesterday from the AI Impact Summit, and there's a lot 0:07:51.000 --> 0:07:53.760 of conversation there about how AI from the United States 0:07:53.800 --> 0:07:55.960 can be exported to the rest of the world. Tariff 0:07:56.000 --> 0:07:58.760 infrastructure can interfere with that as well. We want to 0:07:58.760 --> 0:07:59.560 make sure that works. 0:08:00.480 --> 0:08:02.360 Jason, what big piece of news this morning is the 0:08:02.400 --> 0:08:06.840 European Union basically freezing the ratification process on a deal 0:08:06.920 --> 0:08:10.400 it already reached with the United States. Just in the 0:08:10.400 --> 0:08:14.280 context of imports, the EU is twenty percent of US imports. 0:08:14.280 --> 0:08:17.840 The collective wisdom of your council, how long do you 0:08:17.920 --> 0:08:21.559 expect this uncertainty and this kind of halt to things 0:08:21.560 --> 0:08:22.920 that already were in play. 0:08:24.560 --> 0:08:26.440 Yeah, I think that's a great point ed and we 0:08:26.480 --> 0:08:29.240 saw it in India as well. They had a delegation 0:08:29.400 --> 0:08:31.520 schedule to come this week to the United States and 0:08:31.600 --> 0:08:34.880 India and the US had a great on stage moment 0:08:35.360 --> 0:08:38.360 in Delhi this week talking about moving AI forward. 0:08:39.240 --> 0:08:40.880 How long will this last? I don't know. 0:08:40.920 --> 0:08:43.360 The President announced the use of Section one twenty two 0:08:43.720 --> 0:08:46.040 that has one hundred and fifty day cap on it. Obviously, 0:08:46.120 --> 0:08:48.520 the administration is looking at what the tariff strategy is 0:08:48.559 --> 0:08:50.840 going to be going forward. I think as far as 0:08:50.920 --> 0:08:53.880 the tech industry is concerned resolving these issues both on 0:08:53.920 --> 0:08:56.280 the physical trade issues that we've been talking about, but 0:08:56.400 --> 0:09:00.079 also digital trade. The trade market between the US and 0:09:00.280 --> 0:09:03.480 the EU in digital trade is close to a trillion dollars. 0:09:03.520 --> 0:09:06.079 It's an enormously important market there too. We need that 0:09:06.200 --> 0:09:09.040 uncertainty resolved as quickly as possible so we can move 0:09:09.080 --> 0:09:11.120 forward with these trade deals, which in many cases have 0:09:11.160 --> 0:09:13.320 already been negotiated. We're just waiting for them to be signed. 0:09:14.120 --> 0:09:17.560 Jason, if you and your fellow Council members could be 0:09:17.600 --> 0:09:20.560 in a room with the President today, what's the first 0:09:20.559 --> 0:09:22.480 thing you'd ask him for or to do. 0:09:23.920 --> 0:09:27.360 Yeah, I think it's recognition that tariffs are bad for 0:09:27.440 --> 0:09:31.559 investment in the kind of things that the administration has prioritized. 0:09:31.760 --> 0:09:35.520 Look since April, since Liberation Day last year, the landscape 0:09:35.559 --> 0:09:38.959 has changed significantly for what the administration is hoping to advance. 0:09:39.080 --> 0:09:42.280 The Administration has a very clear, very sound, very direct 0:09:42.320 --> 0:09:45.920 strategy here, and that is to encourage AI adoption around 0:09:45.960 --> 0:09:49.120 the world of American AI technology, and that requires investment 0:09:49.120 --> 0:09:51.960 in manufacturing in the US, It requires investment in data 0:09:51.960 --> 0:09:55.240 centers in the US, It requires a robust semiconductor industry 0:09:55.240 --> 0:09:58.240 here in the US. And tariffs interfere with the ability 0:09:58.320 --> 0:10:02.559 of manufacturers and and digital trade to take place between 0:10:02.640 --> 0:10:04.760 here and the rest of the world. So the one 0:10:04.800 --> 0:10:07.640 ask of the administration is as they re evaluate the 0:10:07.679 --> 0:10:11.360 trade and teriff strategy, and I think this Supreme Court 0:10:11.360 --> 0:10:13.600 decision gives them an opportunity to do that. You need 0:10:13.640 --> 0:10:15.360 to look at what the broader goals are, what the 0:10:15.360 --> 0:10:18.480 broader strategy is to encourage investment in AI and the US, 0:10:18.679 --> 0:10:21.559 the adoption of AI technology around the world, and how 0:10:21.559 --> 0:10:24.200 tariffs would interfere with the ability of that to be 0:10:24.240 --> 0:10:25.400 a successful strategy. 0:10:25.880 --> 0:10:29.200 That rationale is one reason why tech stocks rose Friday, 0:10:29.240 --> 0:10:32.199 a reprieve for the supply chain in particular. Jason Oxman 0:10:32.520 --> 0:10:35.200 of the Information Technology Industry Council, thank you very much. 0:10:35.520 --> 0:10:38.080 Now coming up, all eyes are on Nvidia, which reports 0:10:38.160 --> 0:10:40.920 earnings this week. We have the big preview of what 0:10:41.080 --> 0:10:44.080 to expect with that stock now completely flat and trading 0:10:44.080 --> 0:10:46.800 water a little bit ahead of the big moment Wednesday. 0:10:46.960 --> 0:11:01.719 This is Bloomberg Tech. It's a big week. It's a 0:11:01.760 --> 0:11:04.719 big and video week, posting earnings after market Wednesday. It's 0:11:04.720 --> 0:11:07.480 a stock that's up about two percent year to date, 0:11:07.600 --> 0:11:11.200 completely flat this Monday morning, and there is a lot of, 0:11:11.440 --> 0:11:14.560 let's say not anxiety, but we're bracing for Wednesday because 0:11:14.559 --> 0:11:16.360 the story with the stock is very different to what 0:11:16.360 --> 0:11:19.760 it has been in the last two or three calendar years. 0:11:19.960 --> 0:11:22.680 We're trading at twenty four times forward earnings historically on 0:11:22.720 --> 0:11:26.360 a five year basis thirty eight times. The momentum's gone. 0:11:26.520 --> 0:11:28.840 We are kind of on pause with that salesforce down 0:11:28.880 --> 0:11:31.199 five percent. Later in the program, we're going to talk 0:11:31.200 --> 0:11:34.280 about what's happening in software right now. Again, that story 0:11:34.280 --> 0:11:36.920 carries through to earnings. They are putting AI into what 0:11:36.920 --> 0:11:39.320 they're already good at. That insulates them a bit, but 0:11:39.320 --> 0:11:41.640 they're caught up with what's having at a bigger picture 0:11:41.840 --> 0:11:42.800 look at the market. 0:11:42.600 --> 0:11:45.360 Right now current Yeah, same with Snowflake, same with Workday. 0:11:45.360 --> 0:11:47.360 We've got a lot of software earnings to digest. But 0:11:47.520 --> 0:11:50.720 and as President Trump does move to rebuild his Tarifa agenda. 0:11:50.920 --> 0:11:55.240 Investors are navigating renewed trade uncertainty during that very busy 0:11:55.240 --> 0:11:57.440 week in earnings, as you say, with then video and 0:11:57.480 --> 0:11:59.960 Salesforce and focus comen Ryinik's been writing all about this 0:12:00.480 --> 0:12:04.280 and how what are the investors you're talking to thinking 0:12:04.480 --> 0:12:07.800 about that lack luster trading oomph that we've seen in 0:12:07.960 --> 0:12:10.160 video of light The ed's so clearly spelled out. 0:12:11.320 --> 0:12:13.520 Yeah, I think it's something that's really interesting to have 0:12:13.600 --> 0:12:16.360 this sort of big macro overlay over in video that's 0:12:16.400 --> 0:12:18.640 really weighing on the entire market. I mean, we're just 0:12:18.679 --> 0:12:20.760 saying the shares are pretty much flat now. They were 0:12:20.800 --> 0:12:22.840 up as much as two percent earlier today, so just 0:12:22.880 --> 0:12:25.920 getting dragged down by all of this uncertainty with the 0:12:25.960 --> 0:12:28.480 earnings coming up, I think the thing that everybody's watching 0:12:28.520 --> 0:12:31.160 for is can they do enough to quell any of 0:12:31.200 --> 0:12:33.640 these fears and calm the market. I mean, they have 0:12:33.760 --> 0:12:35.679 lost a lot of momentum in their shares. They've been 0:12:35.679 --> 0:12:37.839 trading sideways for a long time now, but there's still 0:12:37.840 --> 0:12:39.600 the biggest stock in the S and P with the 0:12:39.640 --> 0:12:43.080 nearly eight percent waiting. So however they move around. 0:12:42.800 --> 0:12:45.520 Earnings is going to be really important, and they've lost 0:12:45.640 --> 0:12:48.040 some of the buzz. You know, they usually would be 0:12:48.080 --> 0:12:49.360 and raised and shares would gain. 0:12:49.640 --> 0:12:52.160 We haven't seen that in the last few quarters, so 0:12:52.559 --> 0:12:56.160 that reaction, the investor sentiment around this report is paramount. 0:12:57.280 --> 0:12:59.760 The stock has fallen in each of the last two 0:12:59.760 --> 0:13:03.440 postscerning sessions for Nvidia. By the way, salesforce what it's 0:13:03.480 --> 0:13:06.760 worth is down thirty four percent year to date, and 0:13:07.040 --> 0:13:09.439 I checked it and I was like, really, but it 0:13:09.480 --> 0:13:12.080 is case and point of what's happening right now in 0:13:12.160 --> 0:13:15.199 software and the impact of AI on software. 0:13:15.280 --> 0:13:16.200 What are we bracing for? 0:13:17.960 --> 0:13:20.200 I mean, this sell off has been so profound. I 0:13:20.200 --> 0:13:22.280 mean you just said salesforce down thirty four percent. I 0:13:22.320 --> 0:13:25.319 think it's about fifty percent from the most recent peak. 0:13:25.400 --> 0:13:28.280 So that's a lot of money coming out of those 0:13:28.440 --> 0:13:31.760 kinds of stocks, and you know, there's just so much 0:13:31.880 --> 0:13:34.760 anxiety around that piece of the puzzle, and it seems 0:13:34.760 --> 0:13:37.160 like investors are just not willing yet to buy the 0:13:37.240 --> 0:13:39.280 dip and say, Okay, this is the point where they've 0:13:39.280 --> 0:13:41.560 gotten cheap enough where we think there might be some 0:13:41.640 --> 0:13:44.840 compelling stuff here going forward. And I think the thing 0:13:44.880 --> 0:13:48.680 that's interesting when you're thinking about in VideA is would 0:13:48.720 --> 0:13:51.280 they be able to quell any of those fears? 0:13:51.360 --> 0:13:53.160 Right, they're kind of on the opposite side of the trade. 0:13:53.160 --> 0:13:56.840 They're not software, there are hardware, So it seems like 0:13:56.840 --> 0:13:59.800 there's not a lot of positive catalysts necessarily coming up 0:14:00.120 --> 0:14:02.640 that would sort of relieve some of the anxiety in 0:14:02.720 --> 0:14:05.760 the software trades. So you know, we're seeing a lot 0:14:05.760 --> 0:14:08.240 of selling there and just kind of waiting to see 0:14:08.280 --> 0:14:11.160 maybe what might be the next thing that gets hit 0:14:11.280 --> 0:14:13.960 from the sort of fears of software AI disruption. 0:14:15.120 --> 0:14:17.480 The most carmon Rhinicky, Thank you very much. Let's get 0:14:17.520 --> 0:14:20.880 more on tech markets with Shanty Kellerman seven am Co 0:14:21.240 --> 0:14:24.520 Chief investment Officer. You know, it wasn't that long ago 0:14:24.720 --> 0:14:27.440 where we're sat at our desks the day of video 0:14:27.440 --> 0:14:30.160 earnings and all of the literatures calling it a macro 0:14:30.280 --> 0:14:33.400 level event such as the impact of a single name 0:14:33.440 --> 0:14:36.000 on the market. Maybe we're a bit flippant then, but 0:14:36.520 --> 0:14:38.800 calm and set us up nicely right of the state 0:14:38.840 --> 0:14:42.280 of play. Is this a macro level event this Wednesday? 0:14:44.120 --> 0:14:45.760 I don't see it as that. I think it's still 0:14:45.800 --> 0:14:48.480 incredibly important given it's still largest stock in the SMP, 0:14:48.960 --> 0:14:50.960 and it does give us insight into what are the 0:14:51.080 --> 0:14:53.680 ordering patterns because you see all of that big tech 0:14:53.760 --> 0:14:56.920 investment that's gone through with the stending plans of Amazon, 0:14:57.160 --> 0:15:00.760 Meta Facebook, those are probably translated into some of the 0:15:00.840 --> 0:15:03.240 Nvidia orders and it has big impact for the chips 0:15:03.360 --> 0:15:04.320 providers as well. 0:15:04.640 --> 0:15:05.880 So it certainly matters. 0:15:05.640 --> 0:15:08.280 Quite a bit, but I think it'll take a really 0:15:08.320 --> 0:15:12.080 big beat to see the stock actually move because expectations 0:15:12.080 --> 0:15:14.040 are so high, and that's kind of similar for the 0:15:14.040 --> 0:15:17.800 whole technology sector. We have. Valuations are very high, so 0:15:17.880 --> 0:15:20.440 it's got to be earnings that's really going to drive 0:15:20.600 --> 0:15:22.480 growth in the share price because it's hard to see 0:15:22.480 --> 0:15:24.160 those valuations going much higher. 0:15:25.040 --> 0:15:26.520 In the context of software. 0:15:26.600 --> 0:15:28.720 You were in the camp and we had this discussion 0:15:28.800 --> 0:15:31.280 last week with others that the sell off we've seen 0:15:31.320 --> 0:15:34.760 AI related sell off, particularly in software, has been indiscriminate. 0:15:34.840 --> 0:15:37.920 That word comes up a lot. What's your argument on that? 0:15:39.600 --> 0:15:40.880 So I think for a. 0:15:40.840 --> 0:15:43.120 Long time we've been saying we don't know necessarily know 0:15:43.160 --> 0:15:45.560 who the AI winners and losers are, and it's kind 0:15:45.560 --> 0:15:48.640 of like investors actually decided to put their money behind that. 0:15:48.840 --> 0:15:51.000 With the recent sell off that we had and I 0:15:51.000 --> 0:15:53.680 think people have realized that they don't necessarily know who 0:15:53.720 --> 0:15:55.520 those winners are going to be and just sort of 0:15:55.760 --> 0:15:59.040 indiscriminately sold a lot of the market. I think there 0:15:59.040 --> 0:16:01.760 will be software company that can do incredibly well out 0:16:01.760 --> 0:16:05.640 of this, because AI can dramatically reduce their past to 0:16:05.720 --> 0:16:08.440 deliver programming. It can make things more efficient, you know, 0:16:08.480 --> 0:16:12.920 reduce their expenses, deliver better experience. But executing all that 0:16:13.000 --> 0:16:15.440 is really difficult, and not every software company is going 0:16:15.480 --> 0:16:16.320 to be able to do it. 0:16:16.920 --> 0:16:19.360 Will you learn much from just earnings and fundamentals this 0:16:19.440 --> 0:16:22.600 time shouting? Could that be where investors decide to try 0:16:22.600 --> 0:16:24.200 and catch upwarding nice so to speak. 0:16:25.560 --> 0:16:27.960 I think it's hard to see people changing their minds 0:16:28.000 --> 0:16:31.320 so quickly, only in the last few weeks, but the 0:16:31.480 --> 0:16:35.680 technology sector does move incredibly fast, as we've seen. You know, 0:16:35.680 --> 0:16:38.520 you can have those moments like Deepsek where things everything 0:16:38.560 --> 0:16:41.640 seems to change overnight, but usually the selloffs are quick 0:16:41.680 --> 0:16:43.760 and then it takes time to rebuild the momentum. 0:16:44.160 --> 0:16:47.320 Chandy, what is your view? What are you in rooms 0:16:47.360 --> 0:16:50.600 discussing that, yes, we are at this point where AI 0:16:50.720 --> 0:16:53.880 is going to eat software instead of software eating the world, 0:16:54.240 --> 0:16:56.840 or do you think companies will ultimately survive this shift 0:16:56.840 --> 0:16:58.120 and be able to rebuild from within. 0:17:00.000 --> 0:17:01.800 I think a lot of companies will be able to 0:17:01.840 --> 0:17:03.880 survive it. I think the big thing we're looking at 0:17:04.040 --> 0:17:07.400 is how much AI is starting to impact industries outside 0:17:07.440 --> 0:17:10.840 of technology, and that's where valuations are lower. You're starting 0:17:10.880 --> 0:17:13.560 to see it come into shopping. You're starting to see 0:17:13.560 --> 0:17:16.520 it come into the wealth industry to make it easier 0:17:16.520 --> 0:17:20.119 to comply with regulations, banking and finance certainly, and I 0:17:20.160 --> 0:17:22.720 think that's where if some of those sectors can start 0:17:22.720 --> 0:17:25.959 to demonstrate that they're using the technology well and adopting it, 0:17:26.000 --> 0:17:27.800 then they'll really be rewarded. 0:17:29.280 --> 0:17:29.840 Tariffs. 0:17:30.800 --> 0:17:33.520 It's very hard to join all of the pieces of 0:17:33.560 --> 0:17:36.440 bad news, so to speak, together, but the tech sectors 0:17:36.520 --> 0:17:38.960 view on tariff policy uncertainty right now. 0:17:40.560 --> 0:17:46.400 I think obviously lowers rates slightly on places like you know, Asia, China, 0:17:46.520 --> 0:17:49.919 which helps some of those manufacturing bases, so maybe it 0:17:49.960 --> 0:17:52.600 marginally reduces some of their costs. I think the long 0:17:52.720 --> 0:17:56.000 term trend of technology companies trying to diversify their production 0:17:56.119 --> 0:17:59.040 and having manufacturing you know in the US, in Mexico 0:17:59.160 --> 0:18:01.760 and still an age as well going to India. I 0:18:01.760 --> 0:18:04.560 don't think that's going to change because people don't think 0:18:04.640 --> 0:18:06.920 the uncertainty is going to go away, and we still 0:18:06.960 --> 0:18:09.920 will probably have an unpredictable policy environment. So you want 0:18:09.960 --> 0:18:12.520 to be able to have all of your options open. 0:18:13.840 --> 0:18:16.520 Probably it helps unbalance some of the you know, the software, 0:18:16.560 --> 0:18:20.000 the things that are producing actual physical goods. But we'll 0:18:20.000 --> 0:18:22.280 see how long this rate staves in place. You know, 0:18:22.440 --> 0:18:24.359 we could all change in one hundred and fifty days 0:18:24.440 --> 0:18:24.879 as we know. 0:18:26.160 --> 0:18:28.840 Chanty Kellerman of seven AM, it's great to have you 0:18:28.880 --> 0:18:30.959 on the show. Thank you very much. Indeed, Meanwhile, coming up, 0:18:31.000 --> 0:18:34.320 Blue Ol Capital permanently shuts the gates on one of 0:18:34.359 --> 0:18:37.440 its funds, making the private credit mark even more jittery 0:18:37.880 --> 0:18:40.480 after existing AI concerns stick with us. This is Blomberg 0:18:40.560 --> 0:19:07.320 Tech Morgan's standing investment management is looking away from AI 0:19:07.640 --> 0:19:10.600 and adding to emerging market bets that are insulated from 0:19:10.640 --> 0:19:13.639 the AI boom. Now, the firm's deputy chief investment officer 0:19:13.680 --> 0:19:16.480 says it is positioning itself for a potential pullback in 0:19:16.520 --> 0:19:20.040 the crowded tech trade following rising concerns over stretch valuations 0:19:20.320 --> 0:19:23.200 and heavy capital spending by US tech giants. 0:19:23.680 --> 0:19:27.760 Ed Blue Our Capital has permanently shut the gates on 0:19:27.920 --> 0:19:31.240 one of its funds, preventing investors from withdrawing their cash, 0:19:31.560 --> 0:19:34.240 and is selling assets to return investor capital. It's the 0:19:34.320 --> 0:19:37.439 latest sign of frenzy in a one point eight trillion 0:19:37.480 --> 0:19:41.960 dollar private credit market troubled with worry about overspending on AI. 0:19:42.080 --> 0:19:44.000 But in most private credit reporters Cilus. 0:19:43.720 --> 0:19:46.280 Brown joins us, if you look at kind of what's 0:19:46.359 --> 0:19:49.480 happened in the public markets, how some of these names 0:19:49.520 --> 0:19:52.760 and credit have traded, there is something behind that that's 0:19:52.840 --> 0:19:53.959 related to technology. 0:19:54.240 --> 0:19:57.360 Taken from there, yeah, I think it's I think it's 0:19:58.080 --> 0:20:01.800 fundamentally important in what going in private credit, I mean 0:20:02.080 --> 0:20:05.480 private credit and private equity to a certain extent as well. 0:20:06.400 --> 0:20:10.240 They kind of prided themselves on selecting certain industries that 0:20:10.280 --> 0:20:14.760 they considered to be anti cyclical, noncyclical, and that kind 0:20:14.800 --> 0:20:17.440 of that kind of shrinks the pool. And one of 0:20:17.480 --> 0:20:21.840 the kind of darlings of choice was software as a service. 0:20:21.960 --> 0:20:24.680 And so you'll find with Blue al but Blue ally 0:20:24.720 --> 0:20:29.680 is by no means an anomaly, a big concentration of 0:20:31.000 --> 0:20:34.280 exposure to software and software as a service. And I 0:20:34.359 --> 0:20:37.919 think with this kind of transformative, paradigmatic or whatever kind 0:20:37.960 --> 0:20:40.920 of big word you want to use, effect or likely 0:20:41.000 --> 0:20:44.439 effect that AI has on that industry makes it very 0:20:44.560 --> 0:20:49.080 hard for investors to judge even I mean perhaps not 0:20:49.160 --> 0:20:51.560 short term, but certain the mid term and long term 0:20:52.200 --> 0:20:54.480