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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: The latest news from China is the Chinese government reportedly

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Speaker 2: considering the suspending its one hundred and twenty five percent

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Speaker 2: tariff on some US imports like medical equipment, industrial chemicals

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Speaker 2: like ethane.

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Speaker 3: So is this the.

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Speaker 2: First step towards actually coming up with some kind of deal.

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Speaker 2: Shawn don and Is, Bloomberg News senior economics writer joins

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Speaker 2: us now Sean is it.

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Speaker 4: I think what we're seeing here is some of the

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Speaker 4: same things that we've seen from the Trump administration so far,

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Speaker 4: and that is giving exceptions to the tariffs on imports

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Speaker 4: for kind of key things that the economy needs.

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Speaker 3: Right.

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Speaker 4: These are key inputs that Chinese people, are, Chinese companies

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Speaker 4: rely on from overseas. I see this not so much

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Speaker 4: as a as an accommodation aimed at Trump or at

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Speaker 4: the US terraffs, or at setting the state for negotiations,

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Speaker 4: more kind of shoring up the domestic constituencies and kind

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Speaker 4: of getting ready potentially for a more protracted trade war.

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Speaker 5: Sean, is this the type of news cycle we should

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Speaker 5: get customed to, which is country by country by country,

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Speaker 5: bilateral back and forth, press conferences, tweets about what we

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Speaker 5: might do, what we may not do. Is that how

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Speaker 5: we're going to go or is there going to be

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Speaker 5: something more I don't know, unified pronounced.

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Speaker 4: Look, I think for now we are really in this

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Speaker 4: kind of land of trying to figure out what's coming

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Speaker 4: down the pike, right, and that is in terms of

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Speaker 4: the impact of tariffs, and you see that in kind

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Speaker 4: of corporate earnings, people talking about a future impact right

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Speaker 4: as opposed to what has happened in quarters past. It's

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Speaker 4: all about the outlook ahead. And I think the same

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Speaker 4: apply to the economy. Now we'll get next week the

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Speaker 4: first take on US GDP numbers. That will give us

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Speaker 4: some indication of what happened in the first quarter, but

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Speaker 4: that really takes us, you know, through the end of March,

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Speaker 4: and that's before these these worst tariffs or the higher

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Speaker 4: tariffs that President Trump unveiled on April tecond come into play, right,

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Speaker 4: and we're only going to see those effects filtering through

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Speaker 4: the economy in the months to come. So in the meantime,

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Speaker 4: we get lots of kind of dueling narratives, if you will,

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Speaker 4: on what's coming up and whether we're getting closer to

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Speaker 4: our deal or not.

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Speaker 2: Here's a really basic question for you. Are China and

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Speaker 2: US administrators actually talking to each other about trade?

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Speaker 3: Well?

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Speaker 4: Look, I mean that's the huge question, and we don't

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Speaker 4: know the answer to that, right because it depends on

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Speaker 4: which side you believe. The US says they're talking, the

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Speaker 4: Chinese say they're not. And meanwhile, you know, we have

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Speaker 4: these tariffs that remain in place with a few exceptions.

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Speaker 4: We've also, you know, heard from the President again this

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Speaker 4: morning that you know, maybe a deal with Japan is close.

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Speaker 4: We've heard more cautious noises out of the Japanese side.

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Speaker 4: We had heard that perhaps a deal with India was

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Speaker 4: close this week. Well, what we got instead was an

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Speaker 4: announcement of a kind of framework for talks, right for

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Speaker 4: for negotiations. You know, I thought the most instructive comment

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Speaker 4: of the week came from Scott Bessant, the Treasury Secretary,

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Speaker 4: at this closed door JP Morgan meeting on Monday, where

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Speaker 4: which really caused the markets to pop when he started

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Speaker 4: talking about the need for a de escalation. But the

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Speaker 4: other thing he said there was that it's going to

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Speaker 4: be a long slog, and that's the word that he

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Speaker 4: used to a deal. It could take two to three

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Speaker 4: years to reach a deal between the US and China.

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Speaker 5: All Right, Sean, Let's say I'm China or Japan or

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Speaker 5: France or whomever, and I want to strike a deal.

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Speaker 5: Who do I call? Do I call Howard Ludnik, Secretary Commerce?

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Speaker 5: Do I call mister Benett? Do I call the President?

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Speaker 5: Who do I call?

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Speaker 3: Look?

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Speaker 4: I think at this point you try to call everyone,

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Speaker 4: but maybe the answer is you don't call anyone because

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Speaker 4: you just wait. And I think we've seen this week,

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Speaker 4: really how the markets are affecting the decision making in

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Speaker 4: Washington and inside the Trump administration, and how the US

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Speaker 4: in some ways may be negotiating with itself before it

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Speaker 4: really sits down and negotiates with the rest of the world.

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Speaker 2: All right, thanks so much, Tommy, really appreciate it, Sean

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Speaker 2: donn and he covers trade and economics right here on

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Speaker 2: Bloomberg Television.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us Live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 5: University of Michigan senment data came out better than expected.

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Speaker 5: Just looking at the headline number, fifty two point two

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Speaker 5: versus fifty point five was the consensus inflation. One year inflation,

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Speaker 5: which ticked up significantly last period, came in a little

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Speaker 5: bit better and expect it's six point five percent versus

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Speaker 5: the expectation of six point eight percent. So let's break

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Speaker 5: all this down with Joanne Shoe, Surveys of Consumers Director

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Speaker 5: at the University of Michigan. Johann talk to us about

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Speaker 5: this data here we got this morning.

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Speaker 6: Well, things came in a little bit better than what

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Speaker 6: we might have expected based on what we saw two

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Speaker 6: weeks ago. It's still a pretty negative read altogether. Consumers

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Speaker 6: are not feeling confident at all about labor markets, about

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Speaker 6: business conditions, or their personal finances, and that's something that

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Speaker 6: that definitely does not bode well for their spending going forward.

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Speaker 2: Why though, like, what are the biggest reasons for that?

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Speaker 2: And even though it's still a not great reading, it's

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Speaker 2: still a little bit better. So what accounts for that.

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Speaker 6: The number one thing on people's minds when it comes

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Speaker 6: to the economy is tariffs. So consumers did see a

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Speaker 6: little bit of relief after April nine, when a lot

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Speaker 6: of the reciprocal tariff announcements were paused temporarily, and we

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Speaker 6: saw inflation expectations come down just a touch after that happened.

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Speaker 6: But overall, consumers are still expecting inflation to come surging back,

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Speaker 6: They're expecting business conditions to weaken, and most critically, they

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Speaker 6: have downgraded their own income growth. Again, this is in

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Speaker 6: large part because of the volatility and tariff policy. Consumers

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Speaker 6: seem pretty convinced they're going to be high, but on

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Speaker 6: top of that, they see policy going left and right

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Speaker 6: and they're not really and they're aware that businesses will

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Speaker 6: struggle to plan, and so will consumers.

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Speaker 5: Do we have any sense as to spending at the

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Speaker 5: consumer level.

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Speaker 6: Join, consumers are telling us that they're really bracing for

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Speaker 6: a downturn in the economy, and you know, buying conditions

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Speaker 6: for big ticket items are really poor. It's sort of

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Speaker 6: a combination, though, of people who believe that if you

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Speaker 6: were to buy something literally right now you might be

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Speaker 6: able to avoid the price height that comes from tarffs,

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Speaker 6: along with people who realize that it takes more than

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Speaker 6: one day to make these big ticket purchases, and they're

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Speaker 6: really concerned it's too late.

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Speaker 2: On the flip side before let you go. The inflation

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Speaker 2: expectation numbers, though came down. I appreciate they're still elevated,

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Speaker 2: but at least with the five to tenure that stayed steady.

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Speaker 2: How sticky do you think that inflation where he is?

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Speaker 6: I think as long as tariff policies remains unresolved, things

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Speaker 6: will will still be hairy with inflation expectations. The consumers

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Speaker 6: are attuned and are highly aware of the major developments

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Speaker 6: in terariff policy. They're not necessarily watching day by day.

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Speaker 6: But the April second announcement, the April ninth announcement, those

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Speaker 6: were things that we clearly saw people reacting to in

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Speaker 6: the data.

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Speaker 2: All right, Joanne, thanks so much. We really appreciate the

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Speaker 2: instant breakdown, that instant analysis on the data. Joanne Schue

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Speaker 2: joining US University of Michigan Surveys of Consumers Director.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us Live

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Speaker 1: weekdays at ten a m. Eastern on Apple Coarclay and

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Speaker 1: Android Auto with the blue Berg Business app. Listen on

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Speaker 1: demand wherever you get your podcasts, or watch us live

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Speaker 1: on YouTube.

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Speaker 2: Staying on big tech, take a look at Google. Batstock

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Speaker 2: is up by about two and a half percent off

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Speaker 2: the highs of the overall trading session if we count

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Speaker 2: a pre market trading. But the net net here is

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Speaker 2: the first quarter results beat expectations. You had continued strength

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Speaker 2: in that search advertising business, plus YouTube also continue to

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Speaker 2: crush it despite estimates. A teeny tiny bit light there,

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Speaker 2: I Dan, I have global head of technology research at

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Speaker 2: Webush Securities. It joins us now, Dan broadstroke rate the

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Speaker 2: quarter for Alphabet.

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Speaker 3: I'd rate it an A.

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Speaker 7: I mean, especially in terms of cap backs, when you

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Speaker 7: saw in terms of cloud spend, I think advertising relative

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Speaker 7: to the uncertainty, I mean, this was I think a

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Speaker 7: robust quarter across their book. There's still obviously anti trost

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Speaker 7: and concerns and obviously powerful concertainty, but I think it's

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Speaker 7: actually a good sort of sign going into the rest

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Speaker 7: of big tech next.

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Speaker 5: Week, Dan, how do you think about the threat to

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Speaker 5: Google's core search business from AI?

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Speaker 7: Now, look, there's definitely a threat, and I ironically that

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Speaker 7: threat actually is actually a support Froma's anti monopoly right

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Speaker 7: in terms of some of the anti trust. But to me,

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Speaker 7: it's a threat. But look at the advertising. I mean

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Speaker 7: the reality is like I'm not saying it's not a

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Speaker 7: long term headwind, but they're also going to benefit when

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Speaker 7: it comes to AI significantly on the cloud and Google,

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Speaker 7: as we've seen again and again, they're going to be

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Speaker 7: able to pivot.

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Speaker 3: And that's I just.

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Speaker 7: Don't view it as a massive threat like maybe some

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Speaker 7: others would view it.

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Speaker 2: Well, let's go to the cloud then, so it's AWS,

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Speaker 2: Microsoft and then Google. How quickly is Google catching up?

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Speaker 3: They're narrowing the gap.

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Speaker 7: I mean, look, Microsoft is their backyard right when it

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Speaker 7: comes to core enterprise core cloud. So Microsoft continues to

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Speaker 7: have just a I think of just the iron cloud grit.

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Speaker 7: You've seen success from AWS, but what Google, what Curiam's

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Speaker 7: done there, It's been a massive success story in terms of.

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Speaker 3: As it's played out.

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Speaker 7: I think that's important because that to me is gonna

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Speaker 7: be a big part.

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Speaker 3: You think some of the parts.

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Speaker 7: I mean, that's how you get an incremand we have

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Speaker 7: two hundred dollars press target like thirty for eight hours upside.

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Speaker 7: I think more and more as the cloud story plays out.

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Speaker 5: Hey, Dan, we saw that President Trump. He's kind of

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Speaker 5: made some comments about towards some of the European regulators

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Speaker 5: about maybe stepping back some of the regulation of artificial

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Speaker 5: intelligence AI. How important is that.

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Speaker 7: Well, Paul, I mean, and we've talked about before, right,

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Speaker 7: I think it's all part of this broad negotiation because

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Speaker 7: big tech has had a bullseye on their back from

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Speaker 7: Brussels an EU for years, right, I mean, fines for

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Speaker 7: big tech rooms aget a cup of coffee when it

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Speaker 7: comes to what's happened in.

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Speaker 3: Europe the AI. Look there.

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Speaker 7: I mean, this is a hard line stands, and I

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Speaker 7: think it's actually all part of even the broader tariff

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Speaker 7: negotiations in terms of them softening the stands. And that's look,

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Speaker 7: and that's something big tech has obviously been a huge

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Speaker 7: advocate for because they essentially Europe's like off almost off touch.

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Speaker 3: You can't even go into that market right now.

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Speaker 2: Fair enough, before we go to next week, what we're

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Speaker 2: going to expect, let's just kiss on Tesla here. So

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Speaker 2: your note earlier in the week before earnings, the code

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Speaker 2: red note caused a flurry in selling in the stock.

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Speaker 2: Do you still feel like it's a code red after

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Speaker 2: earnings or maybe change the color?

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Speaker 7: No, I mean I think we and the read it

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Speaker 7: was a code red because Musk had to make the

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Speaker 7: choice cock struck midnight Doge or Tesla cheers Tesla, and

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Speaker 7: I believe despite I'll say one two days a week,

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Speaker 7: it's the beginning of the end for Musket Doge. I

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Speaker 7: think in the Trump White House at such an important

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Speaker 7: time for Tesla in terms of autonomous in terms of

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Speaker 7: the lower cause vehicle, terms of robotics testing needs.

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Speaker 3: It's weed or back.

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Speaker 7: And that's why I think it's gonna be viewed historically.

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Speaker 7: It's probably the most important conference called Musk has ever had.

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Speaker 5: Talk to us about Apple. We're gonna hear from them

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Speaker 5: in just a few.

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Speaker 2: Days here, Dan, That's gonna be so fun.

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Speaker 5: That is what's the what's the call on Apple? What

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Speaker 5: are you gonna be looking for? What's the street looking for?

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Speaker 3: Look?

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Speaker 7: I think the quarter itself almost takes a back seat,

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Speaker 7: because you know, that's everyone's focused on just giving the

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Speaker 7: uncertain like how is Apple going to navigate this?

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Speaker 3: And to some extent like I'd be surprised if.

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Speaker 7: They actually gave guidance, or maybe they'd give guidance with

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Speaker 7: a huge caveat, because the reality is, especially when it

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Speaker 7: comes like the two thirty two TIFFs, in terms of that,

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Speaker 7: and you need to come out. You know, they're basically

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Speaker 7: going through logistics nightmare terms of chaos, the demands or

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Speaker 7: the longer term demands.

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Speaker 3: So the reason to own Apple, that doesn't change. But

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Speaker 3: in terms I think many.

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Speaker 7: On the street, they're basically going to toss out the

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Speaker 7: June quarter. I mean their focus is basically Junes them

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Speaker 7: all again. Yeah, and now you look to see what

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Speaker 7: happens ultimately come out of the White House from the

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Speaker 7: negotiation perspective.

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Speaker 2: So two questions on that. One, what we hear about

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Speaker 2: shifting supply chains quickly? There was an article out today

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Speaker 2: about getting a lot of sourcing from India, and too,

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Speaker 2: do we get any insight potentially into how much a

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Speaker 2: new iPhone with tariffs will cost?

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Speaker 7: Now they're going to I mean this is going to

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Speaker 7: be they're going to keep that very very close and

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Speaker 7: they're not going to discuss because because the reality right now,

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Speaker 7: they got to be careful, right because they are in

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Speaker 7: the eye of the.

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Speaker 3: Storm, just like gens in a video.

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Speaker 7: And that's why they they're ultimately beholden to what happens

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Speaker 7: in negotiations. But it's it's why it's so important. We've

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Speaker 7: talked about despite all the articles, and the reality is

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Speaker 7: it would take them years to even move ten percent

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Speaker 7: of the supply chain. So that's the reality that Cook

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Speaker 7: an Apple or seeing. But that's why the you know,

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Speaker 7: this call is going to be important to kind of

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Speaker 7: leigh out the scenarios at least how they're going through it.

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Speaker 5: In your broader world of technology, Dan, are there any

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Speaker 5: areas that are safer havens to be at given all

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Speaker 5: this global uncertainty?

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Speaker 7: Yeah, I mean we talked about it, you know, and no, yes,

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Speaker 7: I think like the safety blanket area is software. And

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Speaker 7: that's why the hyperscalers I think you saw from Goole,

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Speaker 7: I think that, I'll say the same thing from Microsoft.

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Speaker 7: You look at names like a Oracle, I think IBM,

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Speaker 7: despite that sell off, is a safe haven. Then themes

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Speaker 7: like Palanteer, like AI driven memes, that's some of the

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Speaker 7: high priority. And I tell you by it for the

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Speaker 7: first time in three weeks, some positive smart checks just

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Speaker 7: showing like Rock soild cap X not moving.

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Speaker 3: No one wants to lose their place in.

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Speaker 2: Line, okay, but to the to the solid cap X

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Speaker 2: is it shifting within that? So you don't want to

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Speaker 2: lose your place online?

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Speaker 7: I get that.

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Speaker 2: But at the margin, are we seeing any money flow

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Speaker 2: from say, enterprise to AI or out of AI and

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Speaker 2: the enterprise or some shifting on the margin there?

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Speaker 3: Yeah, I think you.

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Speaker 7: I mean, I think from a priority perspective, like within

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Speaker 7: IT departments, there's so much kind of freezing uncertainty. If

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Speaker 7: you're AI, you're you're with the cool kids. If you're not,

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Speaker 7: it's tough to get things approved. So I think that's

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Speaker 7: if you're on an AI focused project, that that's a

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Speaker 7: lot of stuff that's getting green with despite so much uncertainty.

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Speaker 5: Dan, thank you so much. Appreciate that as always, Dan ives,

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Speaker 5: oh real quick, then good first round for your Penn

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Speaker 5: State football players.

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Speaker 7: But I'm wearing my look, abdual Carter, I think it's

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Speaker 7: going to change the Giants along with Dart. You got

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Speaker 7: two penn Stators right top fifteen. You know, a huge,

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Speaker 7: huge day for Giants and pen Stators.

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Speaker 5: Yep, absolutely, so we appreciate that, Dan, huge, huge, Penn

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Speaker 5: State fan of Penn State grad there, so I want

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Speaker 5: to give the heads up again to Penn State football

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Speaker 5: players taken in the first round of the draft. Once

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Speaker 5: of Mike, you're a giant, So that's a good thing. Dan,

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Speaker 5: I've Schlobe ahead of Technology Research, Web Bush Securities. Let's

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Speaker 5: be honest. He peaked at Penn State, but he's kind

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Speaker 5: of doing the best he can.

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Speaker 2: He's doing all right, here's just okay, he's doing okay.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto

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Speaker 1: with the Bloomberg Business app. Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 2: All right, let's get to another stock on the move,

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Speaker 2: and that's Apple. The reporting is that potentially it's going

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Speaker 2: to move some iPhone manufacturing to India on a rograna

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Speaker 2: Bloomberg Intelligence and your technology analyst joins us, Now, how

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Speaker 2: much stock should I put in this headline on a rug?

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Speaker 8: I mean, it is a very big deal for them

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Speaker 8: to double the production of Apple in India. This is

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Speaker 8: mostly assembly, but you know, frankly speaking, it's gone from

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Speaker 8: nowhere to just about twenty percent by the end of

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Speaker 8: for this year, so I mean last year. It's just

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Speaker 8: a big number frankly, and it was surprising to us

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Speaker 8: at this point, I'd sell.

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Speaker 5: What's surprising to me is you actually shaved You found

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Speaker 5: your razor and he shaved off his beard. So I

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Speaker 5: am all in favor of that, correct, Yeah, so anx so.

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Speaker 5: In reality, though, how do you and how does the

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Speaker 5: street think about Apple's ability to I don't know, reduced

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Speaker 5: to some degree. It's kind of reliance on China as

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Speaker 5: an end market, as a as a source in its

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Speaker 5: supply chain. How does the streak get comfortable with that?

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Speaker 1: See?

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Speaker 8: On the other hand, I do want them to stay

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Speaker 8: in China because that is their biggest growth market. That

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Speaker 8: that's the market where they have the most phones out

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Speaker 8: there right now. One of I don't think people understand

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Speaker 8: that they have more iPhones as an install base in

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Speaker 8: China than they have anywhere else in the world, and

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Speaker 8: yet their market share in that area is only twenty percent.

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Speaker 8: So for me, that's a very important end market. D

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Speaker 8: couple is not going to help Apple's growth story, but.

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Speaker 2: Does it help Okay, it doesn't help its growth story,

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Speaker 2: but does it help it manage tariff and margin pressures

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Speaker 2: over the next few decades, though, yes it does.

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Speaker 8: But at the same time, Apple is a company where

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Speaker 8: it has navigated the Chinese politics very well, probably better

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Speaker 8: than anybody else out there. Now, if they decide to say, Okay,

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Speaker 8: we're going to take a lot of this capacity and

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Speaker 8: move it outside, I do not know what kind of

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Speaker 8: backlash there's going to be by the Chinese government or

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Speaker 8: the Chinese consumer. Now that's we will still find out

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Speaker 8: what that happens. But you know, for me, it's an

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Speaker 8: important piece of the growth story. Roughly seventeen to twenty

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Speaker 8: percent of their revenue comes from China, and as I said,

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Speaker 8: it's a massively underpenetrated market for them. The US market

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Speaker 8: fairly saturated frankly all.

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Speaker 5: Right, So anrag in a world that is kind of

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Speaker 5: reeling from trade uncertainty, global trade uncertainty emanating from all

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Speaker 5: the tariff talk is replaced in technology to hide.

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Speaker 3: That's a very good question.

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Speaker 8: When you look at a direct impact, Apple is the

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Speaker 8: one with the highest direct impact. There are other companies

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Speaker 8: that really have no major exposure to China. I'm going

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Speaker 8: to bring up Microsoft as one of those names.

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Speaker 3: And this is where I think they will show.

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Speaker 8: I think the street over the next one to two

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Speaker 8: years that their growth rate will continue irrespective of what's

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Speaker 8: happening to the macro because of all the investments that

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Speaker 8: they are putting in GENNI. I think that story is

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Speaker 8: still not fully understood by the street just because all

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Speaker 8: the investments they are making. People are only considering capax.

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Speaker 8: But I think they're going to go ahead and take

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Speaker 8: more market share in cloud just because of all these investments.

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Speaker 2: Before I let you go. We got Google this week,

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Speaker 2: we got Texas Instruments next week, do get Apple. What

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Speaker 2: themes are emerging for you in some of these tech earnings, I.

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Speaker 8: Think the capital expenditure and what's going to happen, and

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Speaker 8: that is going to be one important thing. The second

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Speaker 8: thing I think, at least for now, things are not

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Speaker 8: as bad as we expected then to be. You know,

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Speaker 8: when you look at results from SAP service now you

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Speaker 8: know things things are not that bad. But having said that,

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Speaker 8: I think we have not seen the biggest brunt of

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Speaker 8: the slowdown coming in that probably motive is a second

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Speaker 8: half story. When Microsoft reports, the most important thing for

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Speaker 8: us is what's going to happen to that capital expenditures,

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Speaker 8: and I think that's the theme to follow, all.

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Speaker 5: Right, Hona Agrana, thank you so much. We appreciate that.

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Speaker 5: On Agrana, he does the technology thing for Bloomberg. Intelligency's

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Speaker 5: spaced out there in Chicago, which is most people don't

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Speaker 5: know is a burgeoning tech hub, and Anorog's blazing the

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Speaker 5: trail out there in Chicago certainly, So anyway we're going

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Speaker 5: to get here from Apple next week. That's gonna be

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Speaker 5: fascinating because you think about it. Of all the companies

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Speaker 5: out there that you know have exposure one way or

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Speaker 5: the other to China, the one that jumps out of

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Speaker 5: me is always as Apple because a twenty percent of

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Speaker 5: the revenue comes from Apple, and is Hono noted it

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Speaker 5: is the growth market or the leading growth both market

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Speaker 5: for Apple or one of them, and it's just an

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Speaker 5: integral part of their supply Chainnel. I mean, you think

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Speaker 5: China and making stuff, you think the iPhone, you know,

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Speaker 5: Fox con and all that kind of stuff.

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Speaker 2: So well, I mean, but also what are you saying

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Speaker 2: it's not just about making it, it's not selling it. Yep,

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Speaker 2: And that is a huge question mark there as well.

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Speaker 1: This is The Bloomberg Intelligence Podcast, available on Apple, Spotify,

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