WEBVTT - China May Exempt Some US Goods From Tariffs as Costs Rise 0:00:02.720 --> 0:00:10.520 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.560 --> 0:00:14.520 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.560 --> 0:00:17.840 Eastern on Apple, Cocklay and Android Auto with the Bloomberg 0:00:17.880 --> 0:00:21.000 Business App. Listen on demand wherever you get your podcasts, 0:00:21.320 --> 0:00:23.040 or watch us live on YouTube. 0:00:23.680 --> 0:00:26.360 The latest news from China is the Chinese government reportedly 0:00:26.400 --> 0:00:28.720 considering the suspending its one hundred and twenty five percent 0:00:28.760 --> 0:00:32.760 tariff on some US imports like medical equipment, industrial chemicals 0:00:32.800 --> 0:00:33.559 like ethane. 0:00:33.640 --> 0:00:34.600 So is this the. 0:00:34.440 --> 0:00:38.240 First step towards actually coming up with some kind of deal. 0:00:38.320 --> 0:00:41.280 Shawn don and Is, Bloomberg News senior economics writer joins 0:00:41.320 --> 0:00:42.440 us now Sean is it. 0:00:43.880 --> 0:00:45.600 I think what we're seeing here is some of the 0:00:45.600 --> 0:00:48.040 same things that we've seen from the Trump administration so far, 0:00:48.120 --> 0:00:53.720 and that is giving exceptions to the tariffs on imports 0:00:53.760 --> 0:00:56.840 for kind of key things that the economy needs. 0:00:56.920 --> 0:00:57.120 Right. 0:00:57.160 --> 0:01:00.840 These are key inputs that Chinese people, are, Chinese companies 0:01:00.880 --> 0:01:04.120 rely on from overseas. I see this not so much 0:01:04.319 --> 0:01:09.199 as a as an accommodation aimed at Trump or at 0:01:09.240 --> 0:01:12.040 the US terraffs, or at setting the state for negotiations, 0:01:12.040 --> 0:01:16.280 more kind of shoring up the domestic constituencies and kind 0:01:16.280 --> 0:01:19.880 of getting ready potentially for a more protracted trade war. 0:01:20.920 --> 0:01:22.920 Sean, is this the type of news cycle we should 0:01:22.920 --> 0:01:27.400 get customed to, which is country by country by country, 0:01:27.840 --> 0:01:31.560 bilateral back and forth, press conferences, tweets about what we 0:01:31.680 --> 0:01:34.720 might do, what we may not do. Is that how 0:01:34.720 --> 0:01:36.640 we're going to go or is there going to be 0:01:36.680 --> 0:01:39.600 something more I don't know, unified pronounced. 0:01:40.520 --> 0:01:43.080 Look, I think for now we are really in this 0:01:43.200 --> 0:01:45.040 kind of land of trying to figure out what's coming 0:01:45.080 --> 0:01:48.080 down the pike, right, and that is in terms of 0:01:48.120 --> 0:01:50.320 the impact of tariffs, and you see that in kind 0:01:50.360 --> 0:01:53.800 of corporate earnings, people talking about a future impact right 0:01:54.160 --> 0:01:57.280 as opposed to what has happened in quarters past. It's 0:01:57.320 --> 0:01:59.560 all about the outlook ahead. And I think the same 0:01:59.600 --> 0:02:01.880 apply to the economy. Now we'll get next week the 0:02:01.920 --> 0:02:05.960 first take on US GDP numbers. That will give us 0:02:05.960 --> 0:02:09.880 some indication of what happened in the first quarter, but 0:02:09.960 --> 0:02:12.120 that really takes us, you know, through the end of March, 0:02:12.160 --> 0:02:15.040 and that's before these these worst tariffs or the higher 0:02:15.080 --> 0:02:20.880 tariffs that President Trump unveiled on April tecond come into play, right, 0:02:20.919 --> 0:02:23.560 and we're only going to see those effects filtering through 0:02:23.600 --> 0:02:26.720 the economy in the months to come. So in the meantime, 0:02:26.840 --> 0:02:31.160 we get lots of kind of dueling narratives, if you will, 0:02:31.280 --> 0:02:34.320 on what's coming up and whether we're getting closer to 0:02:34.360 --> 0:02:34.960 our deal or not. 0:02:35.120 --> 0:02:38.120 Here's a really basic question for you. Are China and 0:02:38.280 --> 0:02:42.040 US administrators actually talking to each other about trade? 0:02:42.840 --> 0:02:43.000 Well? 0:02:43.000 --> 0:02:44.839 Look, I mean that's the huge question, and we don't 0:02:44.880 --> 0:02:46.840 know the answer to that, right because it depends on 0:02:46.840 --> 0:02:49.880 which side you believe. The US says they're talking, the 0:02:50.000 --> 0:02:53.640 Chinese say they're not. And meanwhile, you know, we have 0:02:53.720 --> 0:02:56.919 these tariffs that remain in place with a few exceptions. 0:02:57.040 --> 0:02:59.480 We've also, you know, heard from the President again this 0:02:59.600 --> 0:03:02.480 morning that you know, maybe a deal with Japan is close. 0:03:02.520 --> 0:03:05.600 We've heard more cautious noises out of the Japanese side. 0:03:05.680 --> 0:03:08.520 We had heard that perhaps a deal with India was 0:03:08.560 --> 0:03:12.040 close this week. Well, what we got instead was an 0:03:12.080 --> 0:03:15.560 announcement of a kind of framework for talks, right for 0:03:16.040 --> 0:03:20.040 for negotiations. You know, I thought the most instructive comment 0:03:20.080 --> 0:03:24.280 of the week came from Scott Bessant, the Treasury Secretary, 0:03:24.320 --> 0:03:28.760 at this closed door JP Morgan meeting on Monday, where 0:03:28.840 --> 0:03:31.400 which really caused the markets to pop when he started 0:03:31.639 --> 0:03:34.160 talking about the need for a de escalation. But the 0:03:34.200 --> 0:03:36.880 other thing he said there was that it's going to 0:03:36.880 --> 0:03:38.920 be a long slog, and that's the word that he 0:03:39.040 --> 0:03:41.400 used to a deal. It could take two to three 0:03:41.480 --> 0:03:44.160 years to reach a deal between the US and China. 0:03:44.440 --> 0:03:46.880 All Right, Sean, Let's say I'm China or Japan or 0:03:46.920 --> 0:03:50.040 France or whomever, and I want to strike a deal. 0:03:50.560 --> 0:03:54.440 Who do I call? Do I call Howard Ludnik, Secretary Commerce? 0:03:54.480 --> 0:03:57.960 Do I call mister Benett? Do I call the President? 0:03:58.200 --> 0:03:58.800 Who do I call? 0:04:00.000 --> 0:04:00.200 Look? 0:04:00.200 --> 0:04:02.080 I think at this point you try to call everyone, 0:04:02.160 --> 0:04:07.200 but maybe the answer is you don't call anyone because 0:04:07.280 --> 0:04:09.760 you just wait. And I think we've seen this week, 0:04:09.880 --> 0:04:15.120 really how the markets are affecting the decision making in 0:04:16.440 --> 0:04:20.599 Washington and inside the Trump administration, and how the US 0:04:20.640 --> 0:04:23.279 in some ways may be negotiating with itself before it 0:04:23.320 --> 0:04:25.520 really sits down and negotiates with the rest of the world. 0:04:26.440 --> 0:04:28.360 All right, thanks so much, Tommy, really appreciate it, Sean 0:04:28.360 --> 0:04:31.080 donn and he covers trade and economics right here on 0:04:31.320 --> 0:04:32.479 Bloomberg Television. 0:04:34.160 --> 0:04:37.840 You're listening to the Bloomberg Intelligence Podcast. Catch us Live 0:04:37.920 --> 0:04:41.039 weekdays at ten am Eastern on Apple, Cocklay and Android 0:04:41.040 --> 0:04:44.320 Auto with the Bloomberg Business app. Listen on demand wherever 0:04:44.400 --> 0:04:47.960 you get your podcasts, or watch us live on YouTube. 0:04:48.560 --> 0:04:51.480 University of Michigan senment data came out better than expected. 0:04:51.560 --> 0:04:53.920 Just looking at the headline number, fifty two point two 0:04:54.000 --> 0:04:58.239 versus fifty point five was the consensus inflation. One year inflation, 0:04:58.320 --> 0:05:01.560 which ticked up significantly last period, came in a little 0:05:01.560 --> 0:05:03.880 bit better and expect it's six point five percent versus 0:05:03.960 --> 0:05:06.920 the expectation of six point eight percent. So let's break 0:05:06.920 --> 0:05:11.359 all this down with Joanne Shoe, Surveys of Consumers Director 0:05:11.520 --> 0:05:14.560 at the University of Michigan. Johann talk to us about 0:05:14.600 --> 0:05:16.000 this data here we got this morning. 0:05:17.200 --> 0:05:18.960 Well, things came in a little bit better than what 0:05:19.000 --> 0:05:20.840 we might have expected based on what we saw two 0:05:20.880 --> 0:05:25.400 weeks ago. It's still a pretty negative read altogether. Consumers 0:05:25.440 --> 0:05:28.640 are not feeling confident at all about labor markets, about 0:05:28.680 --> 0:05:32.880 business conditions, or their personal finances, and that's something that 0:05:32.880 --> 0:05:36.600 that definitely does not bode well for their spending going forward. 0:05:37.400 --> 0:05:40.400 Why though, like, what are the biggest reasons for that? 0:05:40.880 --> 0:05:43.080 And even though it's still a not great reading, it's 0:05:43.120 --> 0:05:46.000 still a little bit better. So what accounts for that. 0:05:47.240 --> 0:05:49.200 The number one thing on people's minds when it comes 0:05:49.200 --> 0:05:52.320 to the economy is tariffs. So consumers did see a 0:05:52.320 --> 0:05:55.400 little bit of relief after April nine, when a lot 0:05:55.480 --> 0:06:00.800 of the reciprocal tariff announcements were paused temporarily, and we 0:06:00.839 --> 0:06:04.719 saw inflation expectations come down just a touch after that happened. 0:06:04.720 --> 0:06:08.680 But overall, consumers are still expecting inflation to come surging back, 0:06:09.120 --> 0:06:13.360 They're expecting business conditions to weaken, and most critically, they 0:06:13.400 --> 0:06:16.960 have downgraded their own income growth. Again, this is in 0:06:17.080 --> 0:06:20.800 large part because of the volatility and tariff policy. Consumers 0:06:21.520 --> 0:06:23.320 seem pretty convinced they're going to be high, but on 0:06:23.360 --> 0:06:26.080 top of that, they see policy going left and right 0:06:26.279 --> 0:06:28.640 and they're not really and they're aware that businesses will 0:06:28.640 --> 0:06:31.200 struggle to plan, and so will consumers. 0:06:31.920 --> 0:06:34.640 Do we have any sense as to spending at the 0:06:34.680 --> 0:06:35.600 consumer level. 0:06:35.680 --> 0:06:40.560 Join, consumers are telling us that they're really bracing for 0:06:40.600 --> 0:06:44.640 a downturn in the economy, and you know, buying conditions 0:06:44.640 --> 0:06:47.760 for big ticket items are really poor. It's sort of 0:06:47.800 --> 0:06:51.640 a combination, though, of people who believe that if you 0:06:51.720 --> 0:06:54.320 were to buy something literally right now you might be 0:06:54.400 --> 0:06:58.159 able to avoid the price height that comes from tarffs, 0:06:59.279 --> 0:07:02.000 along with people who realize that it takes more than 0:07:02.040 --> 0:07:04.159 one day to make these big ticket purchases, and they're 0:07:04.160 --> 0:07:05.560 really concerned it's too late. 0:07:05.640 --> 0:07:07.359 On the flip side before let you go. The inflation 0:07:07.480 --> 0:07:10.880 expectation numbers, though came down. I appreciate they're still elevated, 0:07:11.600 --> 0:07:14.440 but at least with the five to tenure that stayed steady. 0:07:14.840 --> 0:07:17.240 How sticky do you think that inflation where he is? 0:07:18.680 --> 0:07:23.600 I think as long as tariff policies remains unresolved, things 0:07:23.720 --> 0:07:30.280 will will still be hairy with inflation expectations. The consumers 0:07:29.280 --> 0:07:34.640 are attuned and are highly aware of the major developments 0:07:34.640 --> 0:07:37.320 in terariff policy. They're not necessarily watching day by day. 0:07:37.400 --> 0:07:40.440 But the April second announcement, the April ninth announcement, those 0:07:40.440 --> 0:07:42.720 were things that we clearly saw people reacting to in 0:07:42.760 --> 0:07:43.160 the data. 0:07:44.000 --> 0:07:46.160 All right, Joanne, thanks so much. We really appreciate the 0:07:46.200 --> 0:07:49.920 instant breakdown, that instant analysis on the data. Joanne Schue 0:07:50.040 --> 0:07:53.560 joining US University of Michigan Surveys of Consumers Director. 0:07:55.320 --> 0:07:59.000 You're listening to the Bloomberg Intelligence podcast. Catch us Live 0:07:59.080 --> 0:08:01.760 weekdays at ten a m. Eastern on Apple Coarclay and 0:08:01.760 --> 0:08:04.640 Android Auto with the blue Berg Business app. Listen on 0:08:04.680 --> 0:08:07.960 demand wherever you get your podcasts, or watch us live 0:08:08.040 --> 0:08:08.680 on YouTube. 0:08:09.200 --> 0:08:11.480 Staying on big tech, take a look at Google. Batstock 0:08:11.600 --> 0:08:13.800 is up by about two and a half percent off 0:08:13.800 --> 0:08:16.800 the highs of the overall trading session if we count 0:08:16.960 --> 0:08:19.480 a pre market trading. But the net net here is 0:08:19.520 --> 0:08:23.080 the first quarter results beat expectations. You had continued strength 0:08:23.320 --> 0:08:26.960 in that search advertising business, plus YouTube also continue to 0:08:26.960 --> 0:08:30.400 crush it despite estimates. A teeny tiny bit light there, 0:08:30.520 --> 0:08:32.760 I Dan, I have global head of technology research at 0:08:32.760 --> 0:08:36.880 Webush Securities. It joins us now, Dan broadstroke rate the 0:08:36.960 --> 0:08:38.280 quarter for Alphabet. 0:08:40.240 --> 0:08:41.040 I'd rate it an A. 0:08:42.040 --> 0:08:45.720 I mean, especially in terms of cap backs, when you 0:08:45.760 --> 0:08:51.160 saw in terms of cloud spend, I think advertising relative 0:08:51.200 --> 0:08:53.680 to the uncertainty, I mean, this was I think a 0:08:53.760 --> 0:08:56.720 robust quarter across their book. There's still obviously anti trost 0:08:56.800 --> 0:09:00.439 and concerns and obviously powerful concertainty, but I think it's 0:09:00.480 --> 0:09:03.520 actually a good sort of sign going into the rest 0:09:03.559 --> 0:09:04.600 of big tech next. 0:09:04.440 --> 0:09:06.920 Week, Dan, how do you think about the threat to 0:09:07.520 --> 0:09:09.280 Google's core search business from AI? 0:09:11.000 --> 0:09:14.760 Now, look, there's definitely a threat, and I ironically that 0:09:14.880 --> 0:09:19.760 threat actually is actually a support Froma's anti monopoly right 0:09:19.800 --> 0:09:22.600 in terms of some of the anti trust. But to me, 0:09:23.559 --> 0:09:25.960 it's a threat. But look at the advertising. I mean 0:09:26.000 --> 0:09:28.319 the reality is like I'm not saying it's not a 0:09:28.360 --> 0:09:33.520 long term headwind, but they're also going to benefit when 0:09:33.559 --> 0:09:37.120 it comes to AI significantly on the cloud and Google, 0:09:37.160 --> 0:09:39.040 as we've seen again and again, they're going to be 0:09:39.120 --> 0:09:39.920 able to pivot. 0:09:39.960 --> 0:09:40.600 And that's I just. 0:09:40.559 --> 0:09:43.920 Don't view it as a massive threat like maybe some 0:09:44.000 --> 0:09:45.040 others would view it. 0:09:45.440 --> 0:09:47.760 Well, let's go to the cloud then, so it's AWS, 0:09:47.800 --> 0:09:50.240 Microsoft and then Google. How quickly is Google catching up? 0:09:51.640 --> 0:09:52.720 They're narrowing the gap. 0:09:52.760 --> 0:09:55.280 I mean, look, Microsoft is their backyard right when it 0:09:55.280 --> 0:09:59.240 comes to core enterprise core cloud. So Microsoft continues to 0:09:59.280 --> 0:10:02.280 have just a I think of just the iron cloud grit. 0:10:03.400 --> 0:10:07.599 You've seen success from AWS, but what Google, what Curiam's 0:10:07.640 --> 0:10:11.320 done there, It's been a massive success story in terms of. 0:10:11.200 --> 0:10:12.160 As it's played out. 0:10:12.280 --> 0:10:17.080 I think that's important because that to me is gonna 0:10:17.080 --> 0:10:17.559 be a big part. 0:10:17.720 --> 0:10:18.880 You think some of the parts. 0:10:18.880 --> 0:10:20.400 I mean, that's how you get an incremand we have 0:10:20.440 --> 0:10:23.960 two hundred dollars press target like thirty for eight hours upside. 0:10:24.040 --> 0:10:26.520 I think more and more as the cloud story plays out. 0:10:27.720 --> 0:10:31.320 Hey, Dan, we saw that President Trump. He's kind of 0:10:31.400 --> 0:10:34.640 made some comments about towards some of the European regulators 0:10:34.679 --> 0:10:37.680 about maybe stepping back some of the regulation of artificial 0:10:37.720 --> 0:10:41.280 intelligence AI. How important is that. 0:10:42.800 --> 0:10:45.679 Well, Paul, I mean, and we've talked about before, right, 0:10:45.720 --> 0:10:49.120 I think it's all part of this broad negotiation because 0:10:49.520 --> 0:10:52.240 big tech has had a bullseye on their back from 0:10:52.280 --> 0:10:55.840 Brussels an EU for years, right, I mean, fines for 0:10:55.960 --> 0:10:58.360 big tech rooms aget a cup of coffee when it 0:10:58.360 --> 0:10:59.240 comes to what's happened in. 0:10:59.160 --> 0:11:01.959 Europe the AI. Look there. 0:11:02.679 --> 0:11:05.120 I mean, this is a hard line stands, and I 0:11:05.120 --> 0:11:07.920 think it's actually all part of even the broader tariff 0:11:08.040 --> 0:11:12.960 negotiations in terms of them softening the stands. And that's look, 0:11:13.000 --> 0:11:15.240 and that's something big tech has obviously been a huge 0:11:15.280 --> 0:11:20.880 advocate for because they essentially Europe's like off almost off touch. 0:11:21.120 --> 0:11:23.439 You can't even go into that market right now. 0:11:24.160 --> 0:11:26.520 Fair enough, before we go to next week, what we're 0:11:26.520 --> 0:11:29.040 going to expect, let's just kiss on Tesla here. So 0:11:29.600 --> 0:11:32.880 your note earlier in the week before earnings, the code 0:11:32.880 --> 0:11:35.760 red note caused a flurry in selling in the stock. 0:11:36.000 --> 0:11:37.440 Do you still feel like it's a code red after 0:11:37.480 --> 0:11:38.760 earnings or maybe change the color? 0:11:39.440 --> 0:11:41.480 No, I mean I think we and the read it 0:11:41.520 --> 0:11:44.360 was a code red because Musk had to make the 0:11:44.440 --> 0:11:49.320 choice cock struck midnight Doge or Tesla cheers Tesla, and 0:11:49.400 --> 0:11:51.520 I believe despite I'll say one two days a week, 0:11:51.559 --> 0:11:53.679 it's the beginning of the end for Musket Doge. I 0:11:53.720 --> 0:11:57.280 think in the Trump White House at such an important 0:11:57.320 --> 0:12:00.439 time for Tesla in terms of autonomous in terms of 0:12:00.480 --> 0:12:04.040 the lower cause vehicle, terms of robotics testing needs. 0:12:04.040 --> 0:12:05.120 It's weed or back. 0:12:05.200 --> 0:12:09.200 And that's why I think it's gonna be viewed historically. 0:12:09.240 --> 0:12:12.240 It's probably the most important conference called Musk has ever had. 0:12:13.640 --> 0:12:15.320 Talk to us about Apple. We're gonna hear from them 0:12:15.360 --> 0:12:16.640 in just a few. 0:12:16.520 --> 0:12:18.840 Days here, Dan, That's gonna be so fun. 0:12:18.960 --> 0:12:21.400 That is what's the what's the call on Apple? What 0:12:21.400 --> 0:12:23.000 are you gonna be looking for? What's the street looking for? 0:12:24.400 --> 0:12:24.600 Look? 0:12:24.640 --> 0:12:27.720 I think the quarter itself almost takes a back seat, 0:12:27.840 --> 0:12:31.559 because you know, that's everyone's focused on just giving the 0:12:31.640 --> 0:12:34.800 uncertain like how is Apple going to navigate this? 0:12:35.400 --> 0:12:38.040 And to some extent like I'd be surprised if. 0:12:38.000 --> 0:12:41.240 They actually gave guidance, or maybe they'd give guidance with 0:12:41.280 --> 0:12:44.960 a huge caveat, because the reality is, especially when it 0:12:44.960 --> 0:12:48.040 comes like the two thirty two TIFFs, in terms of that, 0:12:48.080 --> 0:12:50.960 and you need to come out. You know, they're basically 0:12:50.960 --> 0:12:55.360 going through logistics nightmare terms of chaos, the demands or 0:12:55.480 --> 0:12:56.680 the longer term demands. 0:12:56.679 --> 0:12:59.600 So the reason to own Apple, that doesn't change. But 0:12:59.640 --> 0:13:01.240 in terms I think many. 0:13:01.080 --> 0:13:03.199 On the street, they're basically going to toss out the 0:13:03.320 --> 0:13:05.920 June quarter. I mean their focus is basically Junes them 0:13:05.960 --> 0:13:09.080 all again. Yeah, and now you look to see what 0:13:09.120 --> 0:13:10.800 happens ultimately come out of the White House from the 0:13:10.800 --> 0:13:12.000 negotiation perspective. 0:13:12.320 --> 0:13:15.160 So two questions on that. One, what we hear about 0:13:15.160 --> 0:13:17.960 shifting supply chains quickly? There was an article out today 0:13:18.000 --> 0:13:20.720 about getting a lot of sourcing from India, and too, 0:13:20.760 --> 0:13:24.360 do we get any insight potentially into how much a 0:13:24.400 --> 0:13:26.120 new iPhone with tariffs will cost? 0:13:27.440 --> 0:13:29.199 Now they're going to I mean this is going to 0:13:29.280 --> 0:13:32.800 be they're going to keep that very very close and 0:13:33.040 --> 0:13:35.760 they're not going to discuss because because the reality right now, 0:13:35.920 --> 0:13:38.880 they got to be careful, right because they are in 0:13:38.960 --> 0:13:39.680 the eye of the. 0:13:39.600 --> 0:13:42.200 Storm, just like gens in a video. 0:13:43.000 --> 0:13:46.640 And that's why they they're ultimately beholden to what happens 0:13:46.640 --> 0:13:49.880 in negotiations. But it's it's why it's so important. We've 0:13:49.920 --> 0:13:54.360 talked about despite all the articles, and the reality is 0:13:54.400 --> 0:13:56.720 it would take them years to even move ten percent 0:13:56.720 --> 0:14:00.920 of the supply chain. So that's the reality that Cook 0:14:01.280 --> 0:14:04.600 an Apple or seeing. But that's why the you know, 0:14:05.120 --> 0:14:08.240 this call is going to be important to kind of 0:14:08.280 --> 0:14:12.200 leigh out the scenarios at least how they're going through it. 0:14:13.160 --> 0:14:16.680 In your broader world of technology, Dan, are there any 0:14:16.720 --> 0:14:19.680 areas that are safer havens to be at given all 0:14:19.760 --> 0:14:21.600 this global uncertainty? 0:14:22.360 --> 0:14:25.000 Yeah, I mean we talked about it, you know, and no, yes, 0:14:25.160 --> 0:14:29.280 I think like the safety blanket area is software. And 0:14:29.320 --> 0:14:31.440 that's why the hyperscalers I think you saw from Goole, 0:14:31.480 --> 0:14:33.880 I think that, I'll say the same thing from Microsoft. 0:14:34.320 --> 0:14:36.600 You look at names like a Oracle, I think IBM, 0:14:36.680 --> 0:14:39.080 despite that sell off, is a safe haven. Then themes 0:14:39.120 --> 0:14:42.360 like Palanteer, like AI driven memes, that's some of the 0:14:42.440 --> 0:14:44.640 high priority. And I tell you by it for the 0:14:44.640 --> 0:14:48.080 first time in three weeks, some positive smart checks just 0:14:48.120 --> 0:14:51.400 showing like Rock soild cap X not moving. 0:14:51.920 --> 0:14:53.600 No one wants to lose their place in. 0:14:53.640 --> 0:14:56.560 Line, okay, but to the to the solid cap X 0:14:57.320 --> 0:14:58.960 is it shifting within that? So you don't want to 0:14:59.000 --> 0:14:59.600 lose your place online? 0:14:59.640 --> 0:14:59.960 I get that. 0:15:00.200 --> 0:15:02.240 But at the margin, are we seeing any money flow 0:15:02.600 --> 0:15:05.720 from say, enterprise to AI or out of AI and 0:15:05.720 --> 0:15:08.120 the enterprise or some shifting on the margin there? 0:15:08.880 --> 0:15:09.560 Yeah, I think you. 0:15:09.760 --> 0:15:13.080 I mean, I think from a priority perspective, like within 0:15:13.200 --> 0:15:17.840 IT departments, there's so much kind of freezing uncertainty. If 0:15:17.840 --> 0:15:22.120 you're AI, you're you're with the cool kids. If you're not, 0:15:22.480 --> 0:15:25.480 it's tough to get things approved. So I think that's 0:15:25.760 --> 0:15:29.000 if you're on an AI focused project, that that's a 0:15:29.040 --> 0:15:33.080 lot of stuff that's getting green with despite so much uncertainty. 0:15:35.240 --> 0:15:38.040 Dan, thank you so much. Appreciate that as always, Dan ives, 0:15:38.040 --> 0:15:40.800 oh real quick, then good first round for your Penn 0:15:40.840 --> 0:15:42.000 State football players. 0:15:43.320 --> 0:15:46.120 But I'm wearing my look, abdual Carter, I think it's 0:15:46.120 --> 0:15:49.160 going to change the Giants along with Dart. You got 0:15:49.160 --> 0:15:52.480 two penn Stators right top fifteen. You know, a huge, 0:15:52.800 --> 0:15:54.880 huge day for Giants and pen Stators. 0:15:55.040 --> 0:15:58.440 Yep, absolutely, so we appreciate that, Dan, huge, huge, Penn 0:15:58.480 --> 0:16:00.600 State fan of Penn State grad there, so I want 0:16:00.600 --> 0:16:03.240 to give the heads up again to Penn State football 0:16:03.240 --> 0:16:05.760 players taken in the first round of the draft. Once 0:16:05.800 --> 0:16:08.240 of Mike, you're a giant, So that's a good thing. Dan, 0:16:08.280 --> 0:16:11.640 I've Schlobe ahead of Technology Research, Web Bush Securities. Let's 0:16:11.680 --> 0:16:14.480 be honest. He peaked at Penn State, but he's kind 0:16:14.480 --> 0:16:15.360 of doing the best he can. 0:16:15.400 --> 0:16:17.320 He's doing all right, here's just okay, he's doing okay. 0:16:19.000 --> 0:16:22.680 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:16:22.760 --> 0:16:26.120 weekdays at ten am Eastern on Applecarplay and Android Auto 0:16:26.240 --> 0:16:29.320 with the Bloomberg Business app. Listen on demand wherever you 0:16:29.360 --> 0:16:32.320 get your podcasts, or watch us live on YouTube. 0:16:32.800 --> 0:16:34.720 All right, let's get to another stock on the move, 0:16:34.760 --> 0:16:37.120 and that's Apple. The reporting is that potentially it's going 0:16:37.160 --> 0:16:40.040 to move some iPhone manufacturing to India on a rograna 0:16:40.040 --> 0:16:43.200 Bloomberg Intelligence and your technology analyst joins us, Now, how 0:16:43.280 --> 0:16:45.880 much stock should I put in this headline on a rug? 0:16:47.480 --> 0:16:49.600 I mean, it is a very big deal for them 0:16:49.600 --> 0:16:53.560 to double the production of Apple in India. This is 0:16:53.640 --> 0:16:56.600 mostly assembly, but you know, frankly speaking, it's gone from 0:16:56.640 --> 0:16:59.880 nowhere to just about twenty percent by the end of 0:17:00.080 --> 0:17:03.480 for this year, so I mean last year. It's just 0:17:03.520 --> 0:17:06.320 a big number frankly, and it was surprising to us 0:17:06.160 --> 0:17:07.760 at this point, I'd sell. 0:17:07.680 --> 0:17:10.040 What's surprising to me is you actually shaved You found 0:17:10.040 --> 0:17:12.560 your razor and he shaved off his beard. So I 0:17:12.600 --> 0:17:17.480 am all in favor of that, correct, Yeah, so anx so. 0:17:17.880 --> 0:17:20.600 In reality, though, how do you and how does the 0:17:20.600 --> 0:17:24.879 street think about Apple's ability to I don't know, reduced 0:17:24.880 --> 0:17:29.640 to some degree. It's kind of reliance on China as 0:17:29.640 --> 0:17:32.720 an end market, as a as a source in its 0:17:33.080 --> 0:17:35.760 supply chain. How does the streak get comfortable with that? 0:17:36.960 --> 0:17:37.160 See? 0:17:37.320 --> 0:17:39.160 On the other hand, I do want them to stay 0:17:39.160 --> 0:17:42.320 in China because that is their biggest growth market. That 0:17:42.320 --> 0:17:45.640 that's the market where they have the most phones out 0:17:45.640 --> 0:17:48.360 there right now. One of I don't think people understand 0:17:48.359 --> 0:17:50.919 that they have more iPhones as an install base in 0:17:51.000 --> 0:17:53.679 China than they have anywhere else in the world, and 0:17:53.880 --> 0:17:56.919 yet their market share in that area is only twenty percent. 0:17:57.200 --> 0:17:59.600 So for me, that's a very important end market. D 0:17:59.680 --> 0:18:03.560 couple is not going to help Apple's growth story, but. 0:18:03.560 --> 0:18:06.320 Does it help Okay, it doesn't help its growth story, 0:18:06.359 --> 0:18:09.040 but does it help it manage tariff and margin pressures 0:18:09.080 --> 0:18:12.800 over the next few decades, though, yes it does. 0:18:12.840 --> 0:18:15.720 But at the same time, Apple is a company where 0:18:15.960 --> 0:18:19.080 it has navigated the Chinese politics very well, probably better 0:18:19.119 --> 0:18:22.800 than anybody else out there. Now, if they decide to say, Okay, 0:18:22.840 --> 0:18:24.720 we're going to take a lot of this capacity and 0:18:24.760 --> 0:18:26.919 move it outside, I do not know what kind of 0:18:26.920 --> 0:18:29.520 backlash there's going to be by the Chinese government or 0:18:29.560 --> 0:18:32.520 the Chinese consumer. Now that's we will still find out 0:18:32.600 --> 0:18:35.000 what that happens. But you know, for me, it's an 0:18:35.040 --> 0:18:38.800 important piece of the growth story. Roughly seventeen to twenty 0:18:38.800 --> 0:18:41.560 percent of their revenue comes from China, and as I said, 0:18:41.600 --> 0:18:44.919 it's a massively underpenetrated market for them. The US market 0:18:45.119 --> 0:18:47.640 fairly saturated frankly all. 0:18:47.640 --> 0:18:50.679 Right, So anrag in a world that is kind of 0:18:50.720 --> 0:18:55.960 reeling from trade uncertainty, global trade uncertainty emanating from all 0:18:56.000 --> 0:18:59.760 the tariff talk is replaced in technology to hide. 0:19:01.520 --> 0:19:02.520 That's a very good question. 0:19:02.520 --> 0:19:04.679 When you look at a direct impact, Apple is the 0:19:04.680 --> 0:19:09.240 one with the highest direct impact. There are other companies 0:19:09.280 --> 0:19:11.719 that really have no major exposure to China. I'm going 0:19:11.760 --> 0:19:13.679 to bring up Microsoft as one of those names. 0:19:14.440 --> 0:19:17.800 And this is where I think they will show. 0:19:18.640 --> 0:19:20.679 I think the street over the next one to two 0:19:20.800 --> 0:19:24.560 years that their growth rate will continue irrespective of what's 0:19:24.600 --> 0:19:27.320 happening to the macro because of all the investments that 0:19:27.359 --> 0:19:30.199 they are putting in GENNI. I think that story is 0:19:30.240 --> 0:19:34.960 still not fully understood by the street just because all 0:19:35.000 --> 0:19:38.240 the investments they are making. People are only considering capax. 0:19:38.480 --> 0:19:40.640 But I think they're going to go ahead and take 0:19:40.680 --> 0:19:43.960 more market share in cloud just because of all these investments. 0:19:44.520 --> 0:19:46.680 Before I let you go. We got Google this week, 0:19:46.720 --> 0:19:51.040 we got Texas Instruments next week, do get Apple. What 0:19:51.119 --> 0:19:55.000 themes are emerging for you in some of these tech earnings, I. 0:19:55.040 --> 0:19:57.240 Think the capital expenditure and what's going to happen, and 0:19:57.320 --> 0:19:59.680 that is going to be one important thing. The second 0:19:59.720 --> 0:20:02.879 thing I think, at least for now, things are not 0:20:02.960 --> 0:20:05.159 as bad as we expected then to be. You know, 0:20:05.200 --> 0:20:08.639 when you look at results from SAP service now you 0:20:08.680 --> 0:20:11.640 know things things are not that bad. But having said that, 0:20:11.920 --> 0:20:14.000 I think we have not seen the biggest brunt of 0:20:14.040 --> 0:20:16.960 the slowdown coming in that probably motive is a second 0:20:16.960 --> 0:20:20.480 half story. When Microsoft reports, the most important thing for 0:20:20.600 --> 0:20:23.160 us is what's going to happen to that capital expenditures, 0:20:23.280 --> 0:20:26.200 and I think that's the theme to follow, all. 0:20:26.119 --> 0:20:28.600 Right, Hona Agrana, thank you so much. We appreciate that. 0:20:28.680 --> 0:20:33.000