WEBVTT - Trump Eyes Chips Act Funds for Intel Stake 0:00:00.080 --> 0:00:13.200 Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is a 0:00:13.200 --> 0:00:16.960 live from Coast to Coast with Caroline Hyde and New 0:00:17.040 --> 0:00:19.480 York and Ed Ludlow in Fendrances Go. 0:00:23.600 --> 0:00:25.000 This is Bloomberg Tech. 0:00:25.079 --> 0:00:28.760 Coming up, the Trump administration is eyeing CHIPSAC funds for 0:00:28.840 --> 0:00:30.360 a steak in Intel. 0:00:30.080 --> 0:00:33.640 Plus applied materials plunges due to growing trade concerns between 0:00:33.640 --> 0:00:34.560 the US and China. 0:00:35.920 --> 0:00:38.879 And an in depth interview with Open AI chairman and 0:00:39.000 --> 0:00:42.920 Sierra CEO Brett Taylor that's later in the hour. 0:00:43.640 --> 0:00:44.919 We go straight to. 0:00:44.920 --> 0:00:48.600 The top story, Bloomberg reporting the White House is considering 0:00:48.640 --> 0:00:51.760 tapping US CHIPSAC funds in an effort to take a 0:00:51.840 --> 0:00:55.840 steak in American chip maker Intel. That's according to sources. 0:00:56.120 --> 0:00:59.160 For more, Bloomberg's Joe Doe joins us Joe, what's the 0:00:59.160 --> 0:00:59.800 new information? 0:01:00.080 --> 0:01:00.800 Reporting today? 0:01:02.200 --> 0:01:02.360 Right? 0:01:02.400 --> 0:01:05.840 A follow on from yesterday's scoop from Bloomberg that it 0:01:05.880 --> 0:01:09.399 looks like the funding that the White House is looking 0:01:09.480 --> 0:01:12.520 at using would come from chips Act money. Of course, 0:01:12.560 --> 0:01:15.280 everybody might remember that from the law pass during the 0:01:15.280 --> 0:01:18.600 Biden administration. We've understood that some of that money has 0:01:19.160 --> 0:01:23.640 laid dormant and could be potentially used for this potential 0:01:23.720 --> 0:01:28.080 equity stake that the administration was looking at and Intel. 0:01:28.360 --> 0:01:31.119 Fascinating because we understood there was almost eight billion dollars 0:01:31.200 --> 0:01:34.160 coming Intel's way pre agreed, maybe even eleven billion dollars 0:01:34.160 --> 0:01:36.200 and loans. We don't know the intricacies of how much 0:01:36.280 --> 0:01:38.800 money and what equity state that would be equivalent to. 0:01:39.400 --> 0:01:43.440 But Joe remind us why the US government is doing this, 0:01:43.680 --> 0:01:44.720 We're even eyeing it. 0:01:46.440 --> 0:01:49.440 The way to look at so much of this Intel 0:01:49.520 --> 0:01:52.200 is one. Of course, this hasn't happened, but we do 0:01:52.280 --> 0:01:54.760 have one that has happened, which was the MP Materials, 0:01:55.000 --> 0:01:56.920 rare earth company that very few people have heard of, 0:01:57.160 --> 0:01:59.880 but just got a four hundred million dollar preferred EQ 0:02:00.200 --> 0:02:04.400 stake investment from the Defense Department. It is all built 0:02:04.400 --> 0:02:08.400 around this idea of national security. What does the Trump administration, 0:02:08.480 --> 0:02:12.840 the White House view as central to national security efforts, 0:02:13.080 --> 0:02:18.799 in particular related to its race against China. You have 0:02:18.840 --> 0:02:21.959 a rare earth company, potentially a chips company. Earlier this week, 0:02:22.000 --> 0:02:25.160 had we had the announcement that in Nvidia and AMD 0:02:25.320 --> 0:02:27.960 would be giving fifteen percent of their revenues generated out 0:02:28.000 --> 0:02:31.880 of China to the federal government, this is all built 0:02:31.919 --> 0:02:35.040 around this kind of new idea that Trump. 0:02:34.800 --> 0:02:39.240 Is trying to make work. Joe some basics. 0:02:39.280 --> 0:02:43.600 Intel has not commented directly on our reporting. They've issued 0:02:43.639 --> 0:02:45.359 this statement. We're going to put it on the screen 0:02:45.440 --> 0:02:49.320 now and generally right this is the point that what 0:02:49.360 --> 0:02:51.920 the administration is trying to do is achieve onshoring of 0:02:52.160 --> 0:02:55.079 manufacturing of chips in this country. Intel kind of wants 0:02:55.160 --> 0:02:57.880 to do the same thing. There is more reporting that 0:02:57.919 --> 0:03:00.400 you did that a lot of this literally relates to 0:03:00.480 --> 0:03:03.720 the meeting this week between Bhutan and the President. 0:03:03.760 --> 0:03:07.120 What have sources teld us We understand that this is 0:03:07.160 --> 0:03:09.959 the idea. This idea did come up in that meeting. 0:03:11.000 --> 0:03:14.120 I think the point that we draw from this, and 0:03:14.120 --> 0:03:17.080 I was just saying this earlier, is we have an 0:03:17.080 --> 0:03:21.320 administration a president I'm not an administration, a president directly 0:03:21.560 --> 0:03:24.560 who's willing to just have a bilateral talk or negotiation 0:03:24.720 --> 0:03:27.800 with any CEO he can bring into the White House 0:03:28.560 --> 0:03:31.160 that he finds, you know, central to some of the 0:03:31.240 --> 0:03:36.160 most important themes. 0:03:33.400 --> 0:03:35.120 In his second term. 0:03:35.600 --> 0:03:39.400 So obviously, as the Intel chief come in and as 0:03:39.720 --> 0:03:42.840 you've pointed out ed, you know, we don't have a 0:03:42.880 --> 0:03:45.920 full confirm here that this is happening. These things remain fluid. 0:03:45.960 --> 0:03:48.520 We've seen this in so many different issues with the 0:03:48.560 --> 0:03:50.520 White House. A lot of it is just hey, what 0:03:50.560 --> 0:03:54.280 about this? What about that? But in particular related to this, 0:03:54.960 --> 0:03:56.920 the Intel chief does show up to the White House 0:03:56.920 --> 0:03:59.400 and has this conversation with the President, and this apparently 0:03:59.480 --> 0:04:00.920 is where this idea whispurred. 0:04:01.360 --> 0:04:06.600 Bloomberg's Jodo fascinating reporting. Scoops keep coming. We thank you. Look, 0:04:06.680 --> 0:04:08.920 let's dive into the Intel side of the equation. Why 0:04:08.960 --> 0:04:11.920 they do it? Jordan Klein, Zooho Securities Managing director joins 0:04:12.000 --> 0:04:14.320 us now who put I don't knowe this morning discussing 0:04:14.320 --> 0:04:17.360 the implications of a possible government stake and Jordan, you're 0:04:17.480 --> 0:04:22.080 questioning it, asking how does the US government help Intel 0:04:22.120 --> 0:04:25.240 fixes leading edge node when it's not a money issue? 0:04:25.320 --> 0:04:26.720 They have no customers and. 0:04:26.680 --> 0:04:29.960 There is a good reason for that. Jordan, extrapolate on that. 0:04:31.839 --> 0:04:35.440 Yeah, I mean, Intel, in my opinion, has two main issues. 0:04:36.480 --> 0:04:39.599 One is on the technology side, where their leading edge 0:04:39.600 --> 0:04:43.760 foundry business has struggled to execute at these more advanced 0:04:43.800 --> 0:04:47.120 nodes and they've lost you know, a lot of potential 0:04:47.160 --> 0:04:51.320 business and share to TSM, who's executed flawlessly. And the 0:04:51.360 --> 0:04:53.680 second big issue is, you know, and this is kind 0:04:53.720 --> 0:04:55.279 of the chicken in the egg, is that they don't 0:04:55.320 --> 0:04:59.159 have any external non Intel customers to move you know, 0:04:59.320 --> 0:05:03.240 volume and bi business into these fabs on this new 0:05:03.360 --> 0:05:06.120 leading edge. So you kind of need the former, meaning 0:05:06.160 --> 0:05:08.400 you need to be a leader improved to customers you 0:05:08.440 --> 0:05:12.240 can execute at these advanced nodes for these you know, 0:05:12.320 --> 0:05:14.080 AI and leading edge chips. 0:05:14.080 --> 0:05:16.279 And then secondly then you need to win the business. 0:05:16.400 --> 0:05:18.920 And until they get both of those, I think they're 0:05:18.960 --> 0:05:20.080 going to continue to struggle. 0:05:20.320 --> 0:05:24.000 And the Bhutan really said that articulated it in the 0:05:24.040 --> 0:05:25.919 earnings saying we are not going to have this, build 0:05:25.960 --> 0:05:29.400 it and they will come. Mentality, they've got to say. 0:05:29.240 --> 0:05:30.839 That they're coming before we build it. 0:05:30.880 --> 0:05:34.640 In the fourteen a leading cutting edge nodes for example Jordan, 0:05:35.279 --> 0:05:38.920 is government control or at a smaller equity stake going 0:05:38.960 --> 0:05:40.719 to secure that demand. 0:05:42.680 --> 0:05:46.040 Well, on the surface, it's not because the customers are 0:05:46.080 --> 0:05:49.640 going to ultimately decide is Intel a company I can 0:05:49.680 --> 0:05:53.480 depend and count on for my most advanced you know 0:05:54.120 --> 0:05:56.960 products that I have to get to the market. Why 0:05:56.960 --> 0:06:00.840 would I leave TSM who's proven to me year after 0:06:00.920 --> 0:06:04.040 year that they can execute on the plan. I think 0:06:04.240 --> 0:06:06.640 the goal here is that Trump puts some money in 0:06:06.920 --> 0:06:10.360 or gets the government to invest, and then uses that 0:06:10.560 --> 0:06:14.920 to get Intel to accelerate the process of building out 0:06:14.920 --> 0:06:18.159 these new fabs in Ohio, and then he can go 0:06:18.240 --> 0:06:23.880 to these customers like Broadcom, Qualcom, Apple and Nvidia and say, oh, 0:06:23.960 --> 0:06:27.240 now they have the capability and you need to move 0:06:27.320 --> 0:06:31.000 more of your orders and production to a domestic, leading 0:06:31.440 --> 0:06:32.640 edge company like Intel. 0:06:34.240 --> 0:06:37.120 Jordan, I really want the desk analysts take and experience. 0:06:37.160 --> 0:06:39.920 We broke the story yesterday about the stake, We broke 0:06:39.960 --> 0:06:44.000 the story this morning about using chips Act funds. What 0:06:44.200 --> 0:06:47.320 was the byside saying to you about how they interpreted 0:06:47.360 --> 0:06:47.880 that news. 0:06:49.680 --> 0:06:52.560 Yeah, that's kind of the key question, and I think 0:06:52.600 --> 0:06:55.760 it's it's I haven't heard a ton of questions as 0:06:55.800 --> 0:06:59.040 to Okay, what next does this mean I go out 0:06:59.080 --> 0:07:03.279 and buy Intel. Ultimately, if you look at semiconductors that 0:07:03.320 --> 0:07:05.599 have led much of the market this year, I think 0:07:05.680 --> 0:07:09.360 Intel has been the laggered due to their weak fundamentals 0:07:09.400 --> 0:07:13.160 and a lot of people who need shorts to offset longs, 0:07:13.200 --> 0:07:15.440 like in video, Broadcon TSM. 0:07:15.280 --> 0:07:17.000 Have used Intel as that short. 0:07:17.520 --> 0:07:20.840 Now today the news about a stake and what this 0:07:20.920 --> 0:07:23.360 could mean I think gets people nervous. You know, maybe 0:07:23.440 --> 0:07:25.160 Intel's going to go on a run. I should cover 0:07:25.240 --> 0:07:28.840 my short But outside of that, I do not hear 0:07:29.160 --> 0:07:32.080 you know, big mutual funds, the traditional guys who would 0:07:32.080 --> 0:07:34.520 come in take a big steak and think this company 0:07:34.560 --> 0:07:37.160 is going to turn it around, you know, acting on 0:07:37.200 --> 0:07:40.680 this and these headlines. One because it's premature, but two, 0:07:40.720 --> 0:07:42.640 I think they're coming to the same conclusion that I 0:07:42.720 --> 0:07:45.000 just talked about, is that how does government money or 0:07:45.000 --> 0:07:48.040 an equity stake, you know, really bring them the customers 0:07:48.480 --> 0:07:50.800 or fixed their internal technology problems? 0:07:50.800 --> 0:07:51.920 And that's unknown. 0:07:54.120 --> 0:07:58.040 Jensen Wogen Nvidia have demonstrated the proximity to the President 0:07:58.160 --> 0:08:00.160 has allowed them to move fast as I'm thinking King 0:08:00.200 --> 0:08:03.600 Prince be actually about exports to the Gulf, a good 0:08:03.640 --> 0:08:06.040 relationship between the President and lit Bhutan. 0:08:06.360 --> 0:08:12.800 Is there an unlock for Intel in that, Well, you know. 0:08:12.880 --> 0:08:15.800 I don't know what the I think ultimately, here's what 0:08:15.840 --> 0:08:17.560 I would Here's the way I see it is that 0:08:17.720 --> 0:08:22.440 I don't think Trump likes the fact that the you know, largest, 0:08:22.720 --> 0:08:26.600 you know, oldest and most established kind of US foundry 0:08:26.640 --> 0:08:30.440 logic company and Intel is on its heels struggling, losing 0:08:30.480 --> 0:08:33.840 share to these foreign players in Asia like TSM. 0:08:33.920 --> 0:08:35.079 I think it's a bad look. 0:08:35.600 --> 0:08:38.520 Obviously, he wants the US, you know, to be great 0:08:38.559 --> 0:08:42.720 again and that you know, we so much depends on semiconductors. 0:08:43.120 --> 0:08:47.360 So I think the fact that they're firing people, reducing costs, 0:08:47.720 --> 0:08:51.520 struggling is just a bad look under his watch. And 0:08:51.640 --> 0:08:54.880 all this Chipsacked money was allocated and they got the 0:08:54.880 --> 0:08:55.439 most of it. 0:08:55.840 --> 0:08:57.600 So I think basically he's saying. 0:08:57.400 --> 0:08:59.560 I want some return for this, and you know, I 0:08:59.600 --> 0:09:03.240 want to try to help this, you know, semiconductor business 0:09:03.240 --> 0:09:06.160 domestically improve, and that's got to start with you somehow. 0:09:06.480 --> 0:09:08.359 So I think he's just putting pressure. 0:09:08.040 --> 0:09:11.640 On them, and I don't know what other alternative Intel has, 0:09:11.640 --> 0:09:15.200 they can't really push back, and ultimately they'll probably take 0:09:15.240 --> 0:09:18.200 what money the government wants to invest and try to 0:09:18.320 --> 0:09:20.720 strengthen the relationship going forward. 0:09:21.160 --> 0:09:24.439 Jordan, what's so interesting is then we heard on Air 0:09:24.480 --> 0:09:25.960 Force one, and we're going to discuss it more in 0:09:26.000 --> 0:09:26.600 the show later. 0:09:26.920 --> 0:09:27.840 A potential threat of. 0:09:27.840 --> 0:09:31.880 Two hundred to three hundred percent tariffs on semiconductors coming 0:09:31.880 --> 0:09:32.480 into the US. 0:09:32.600 --> 0:09:33.559 But there are huge. 0:09:33.320 --> 0:09:36.000 Carve outs that we understand being written here that if 0:09:36.040 --> 0:09:38.559 you're investing a lot in America, you don't face that. 0:09:38.640 --> 0:09:41.600 So that seems that TSMC and Samsung that are building 0:09:41.640 --> 0:09:44.720 in America aren't affected. Is he going to allow these 0:09:44.720 --> 0:09:47.880 big Asian chip giants to continue to build in America 0:09:47.920 --> 0:09:49.200 and get these sorts of carve outs. 0:09:51.280 --> 0:09:54.120 I don't know what other alternative they really have. 0:09:54.480 --> 0:09:57.400 I mean, the US is in the government, and the 0:09:57.440 --> 0:10:01.080 administration's kind of in a tough spot here. They need 0:10:01.120 --> 0:10:04.280 to project, like, you know, a strategy of trying to 0:10:04.520 --> 0:10:09.640 get you know, more domestic US semiconductor capacity. But if 0:10:09.679 --> 0:10:12.640 you get too tough and put too high of a tariff, 0:10:13.800 --> 0:10:19.160 that that really puts the US consumer and our strategic technology, 0:10:19.320 --> 0:10:22.320 whether it's defense or AI, at a major disadvantage. And 0:10:22.360 --> 0:10:24.880 the reason that is is because the US doesn't have 0:10:24.920 --> 0:10:27.320 an alternative. It's not like, you know, we can just 0:10:27.760 --> 0:10:30.920 shift to all this domestic capacity. It's going to take 0:10:31.000 --> 0:10:34.520 a lot of time and money to basically get that. 0:10:34.800 --> 0:10:38.640 And right now that's basically TSM and a lot of 0:10:38.679 --> 0:10:41.800 Samsung and some of Intel. So I think that's why 0:10:41.840 --> 0:10:44.680 they get the carve outs is to buy time and 0:10:44.720 --> 0:10:48.760 then ultimately that time runs out, and then Trump's going 0:10:48.840 --> 0:10:51.040 to say, well, if we have the capacity here and 0:10:51.160 --> 0:10:54.000 Intel is, you know, on a better footing and track, 0:10:54.320 --> 0:10:57.880 then we want you to push that those orders in 0:10:57.920 --> 0:11:00.840 that money towards Intel and away from Ta Simon Samsung, 0:11:00.840 --> 0:11:02.720 and that's where he could start to then use the 0:11:02.760 --> 0:11:06.600 tariffs to basically push that business towards Intel. 0:11:07.360 --> 0:11:10.520 Really thoughtful and a great note. Jordan Klein of Mizuho, 0:11:10.800 --> 0:11:12.079 Thanks for bringing you expertise. 0:11:17.920 --> 0:11:20.600 Shares of Applied Materials tumbling. 0:11:20.360 --> 0:11:23.000 Worst day since March twenty twenty after the company presented 0:11:23.240 --> 0:11:26.720 a disappointing sales forecast for the fiscal fourth quarter said 0:11:26.720 --> 0:11:29.360 it's seeing less demand from China more. Let's bring in 0:11:29.360 --> 0:11:32.360 Bloomberg's Brodie Ford. What's so interesting is Land Research came 0:11:32.360 --> 0:11:35.199 out a week or so ago and look pretty buoyant 0:11:35.240 --> 0:11:38.440 about future growth and revenue. Very different for this chip 0:11:38.440 --> 0:11:40.360 equipment company. 0:11:40.559 --> 0:11:43.200 You are pointing out the debate that is waging and 0:11:43.240 --> 0:11:46.120 all the sales side reports in my inbox right now, right, 0:11:46.160 --> 0:11:48.800 I mean on the call last night, the narrative from 0:11:48.840 --> 0:11:52.120 the company was that China demand is worst and some 0:11:52.200 --> 0:11:54.920 of our largest customer mergers that are holding off due 0:11:54.960 --> 0:11:58.400 to kind of just general economic uncertainty, tariffs and all that. 0:11:59.160 --> 0:12:00.480 But there's also a head here. 0:12:00.640 --> 0:12:03.920 As you said, some of the peers have done relatively well. 0:12:04.080 --> 0:12:08.880 So is applied losing share here? Or is this truly 0:12:09.080 --> 0:12:12.719 just a macroeconomic it's hitting everybody the same way kind 0:12:12.760 --> 0:12:13.400 of issue. 0:12:14.440 --> 0:12:17.080 They try to explain away those two categories of customer. 0:12:17.160 --> 0:12:20.360 Right in China, loads of chip makers have gone through 0:12:20.360 --> 0:12:24.520 a refresh of their equipment, but the larger customers they're 0:12:24.520 --> 0:12:26.720 talking about is largely TSMC and Samsung. 0:12:27.160 --> 0:12:29.040 And this is a tariff's issue. What is it? 0:12:30.480 --> 0:12:30.720 Right? 0:12:30.920 --> 0:12:33.840 I think tariffs is the big word we heard, but 0:12:33.920 --> 0:12:36.679 I think also, I mean, we have an administration right 0:12:36.720 --> 0:12:40.200 now that's negotiating trade deals. I mean, we saw the 0:12:40.240 --> 0:12:43.719 Intel news this morning. There's just a lot of economic 0:12:43.800 --> 0:12:46.400 uncertainty right now, right, I mean, some of the data 0:12:46.480 --> 0:12:49.440 coming out people are questioning. And so the narrative we 0:12:49.520 --> 0:12:51.560 heard on the call, and I heard in a conversation 0:12:51.720 --> 0:12:55.359 with the CEO is that companies are holding off purchases. 0:12:55.400 --> 0:12:57.760 They're not sure exactly what the economic picture of it 0:12:57.840 --> 0:13:00.240 is like in six months, and so why do you 0:13:00.280 --> 0:13:02.560 want to make a multi billion dollar commitment right now? 0:13:02.559 --> 0:13:04.480 How much to hit the brakes for a little while. 0:13:04.800 --> 0:13:07.560 And Brodie, we put this in the deeper context as 0:13:07.559 --> 0:13:09.720 you just hinted at with Intel. This is at a 0:13:09.760 --> 0:13:12.200 time where we want more manufacturing the United States, according 0:13:12.200 --> 0:13:14.760 to the administration, and Apply Materials. 0:13:14.360 --> 0:13:14.920 Is part of that. 0:13:15.240 --> 0:13:17.440 They've got what eighty percent of the revenue. 0:13:17.080 --> 0:13:17.720 Coming from abroad. 0:13:17.720 --> 0:13:20.520 But is that going to shift more to America? 0:13:20.679 --> 0:13:23.319 That is the song they're singing, right, I mean they 0:13:23.360 --> 0:13:26.960 say that we are involved with you know, Apple's initiatives 0:13:26.960 --> 0:13:31.800 and Samsungs. The actual dollars committed at this point to 0:13:32.000 --> 0:13:34.960 me don't look incredible, right. I mean, a lot of 0:13:34.960 --> 0:13:38.199 companies are talking about multi billions invested in the US, 0:13:38.240 --> 0:13:40.760 and Apply to talking about hundreds of millions, and so 0:13:41.280 --> 0:13:44.000 I don't think the expectation is that revenue shift to 0:13:44.040 --> 0:13:47.160 the US in a meaningful way right now. But it's 0:13:47.200 --> 0:13:49.520 an interesting part of the narrative. I mean, how much 0:13:49.600 --> 0:13:54.080 can the administration push the industry to, you know, reshore 0:13:54.200 --> 0:13:56.960 more of this demanding capacity? 0:13:57.200 --> 0:14:01.040 Then, thanks Brady Ford, thank you very much. Meanwhile, President 0:14:01.040 --> 0:14:03.520 Trump is en route to Alaska for a high stakes 0:14:03.559 --> 0:14:06.120 meeting with Russian President Vladimir Putin. 0:14:06.280 --> 0:14:07.880 During the flight on air Force one. 0:14:08.040 --> 0:14:11.040 He addressed the state of tariffs on chip makers, saying 0:14:11.080 --> 0:14:13.440 it could rise to as much as three hundred percent. 0:14:13.520 --> 0:14:14.000 Listen to this. 0:14:14.880 --> 0:14:17.320 They're all coming in because they want to beat the 0:14:17.400 --> 0:14:20.240 tariffs because if they open here, they don't have to 0:14:20.240 --> 0:14:22.520 pay tariffs. If they don't open here, they have to 0:14:22.560 --> 0:14:26.520 make in some cases two hundred percent, three hundred percent. 0:14:27.400 --> 0:14:29.760 I haven't even said some of the tariffs yet till 0:14:29.880 --> 0:14:34.520 sent Semiconductors will be setting sometime next week week. 0:14:34.560 --> 0:14:38.920 Care for for more on the tariff implications on chips 0:14:38.920 --> 0:14:43.320 and the broader technology sector. Martin Norton Empower Chief Investment Strategists. Actually, 0:14:43.320 --> 0:14:46.000 of all the reporting out there, this is the President 0:14:46.160 --> 0:14:49.160 speaking on the record saying up to three hundred percent 0:14:49.200 --> 0:14:52.160 tariffs on chips coming into America. I haven't even said 0:14:52.200 --> 0:14:55.960 the tariffs yet. This is the point policy keeps changing. 0:14:56.680 --> 0:14:58.880 As a strategist, how do you interpret it? 0:15:00.080 --> 0:15:02.120 Well, I mean, I think there's a few things that 0:15:02.160 --> 0:15:03.120 we have to look at. 0:15:03.160 --> 0:15:03.560 First. 0:15:03.640 --> 0:15:05.800 We have to look at the breadth of the tariffs 0:15:05.800 --> 0:15:08.440 that we've seen and the way the market has reacted 0:15:08.520 --> 0:15:12.480 as tariffs have become part of the daily conversation. At first, 0:15:12.560 --> 0:15:15.000 you know, April second, this was something that the market 0:15:15.200 --> 0:15:16.360 felt was a disaster. 0:15:17.000 --> 0:15:17.840 But as we've. 0:15:17.800 --> 0:15:21.320 Rolled forward, we've seen little effect on corporate earnings, we've seen. 0:15:21.160 --> 0:15:22.760 Little effect on economic data. 0:15:23.040 --> 0:15:26.040 And I think there's this kind of benign neglect of 0:15:26.480 --> 0:15:29.800 tariffs as a concern for the market, which I think 0:15:29.840 --> 0:15:33.840 embolden's President Trump to continue to push forward bigger and 0:15:33.840 --> 0:15:36.360 bigger numbers when we're looking at triple digits. Of course, 0:15:36.400 --> 0:15:39.280 when we're talking about tariffs, that's a pretty astonishing thing. 0:15:39.400 --> 0:15:42.880 I really like how your last guest with Jordan really 0:15:43.280 --> 0:15:46.720 kind of talked about the very long term emphasis here. 0:15:47.040 --> 0:15:50.200 Building manufacturing here in the US is a long term thing. 0:15:50.760 --> 0:15:53.760 Forcing companies or encouraging companies to buy US as a 0:15:53.800 --> 0:15:56.400 long term thing, and I think these tariffs are part 0:15:56.400 --> 0:15:56.960 of that game. 0:15:58.160 --> 0:16:02.480 So if the endgame is bring Chit manufacturing back to America, 0:16:03.080 --> 0:16:06.880 you agree with Jordan that it will work or you disagree. 0:16:07.080 --> 0:16:08.960 Well, I think there has to be a long term 0:16:09.000 --> 0:16:12.480 commitment on the part of the administration and the folks 0:16:12.560 --> 0:16:15.000 in Washington to keep those tariffs in place. I think 0:16:15.080 --> 0:16:17.600 that's in question whether that's something that we're going to 0:16:17.640 --> 0:16:20.320 see over the period of several years, because that's what 0:16:20.360 --> 0:16:24.200 it would take several years to bring manufacturing back to 0:16:24.480 --> 0:16:26.920 the United States or to the United States in the 0:16:26.920 --> 0:16:27.480 first place. 0:16:27.880 --> 0:16:29.440 So I think there's still. 0:16:29.200 --> 0:16:31.680 An open question as to how effective it will be 0:16:32.200 --> 0:16:35.200 and how long term that commitment will be, and how. 0:16:35.040 --> 0:16:38.640 Long until you see it rewarding companies like an Applied Materials, 0:16:38.680 --> 0:16:40.640 which right here right now is having its worst days. 0:16:40.640 --> 0:16:43.480 It's March twenty twenty and rated all of its games 0:16:43.480 --> 0:16:45.760 for the year Marta. How do you decide who are 0:16:45.800 --> 0:16:47.520 the winners longer term in this environment? 0:16:48.120 --> 0:16:50.880 I think the winners is one of the bigger questions 0:16:50.880 --> 0:16:52.680 that we're looking at, especially when you start to look 0:16:52.720 --> 0:16:55.760 at it in the context of artificial intelligence. When we're 0:16:55.760 --> 0:16:58.440 taking a look at corporate earnings long term, of course 0:16:58.520 --> 0:17:02.040 we're concerned about the that deglobalization will have on those 0:17:02.040 --> 0:17:04.640 corporate earnings. And yet when we look at the estimates 0:17:04.680 --> 0:17:09.400 that artificial intelligence can add to corporate earnings to profit margins, 0:17:09.480 --> 0:17:12.200 it more than offsets it. The question is who those 0:17:12.240 --> 0:17:15.520 winners are, And what we've seen in past periods of 0:17:15.520 --> 0:17:18.199 innovation is that the early winners are not necessarily the 0:17:18.240 --> 0:17:21.800 long term the enduring winners. And there's also questions as 0:17:21.840 --> 0:17:25.440 to how different industries respond. You know, first folks thought 0:17:25.600 --> 0:17:27.800 with software is the next leg of this story, but 0:17:27.840 --> 0:17:30.560 that doesn't necessarily need to be the case. If some 0:17:30.640 --> 0:17:33.080 of these big tech companies can capture some of the 0:17:33.080 --> 0:17:34.800 developments there, it's not necessarily going. 0:17:34.760 --> 0:17:36.280 To be the small cap companies that win. 0:17:36.640 --> 0:17:38.960 So when I'm looking at this and I'm thinking about 0:17:39.000 --> 0:17:41.080 how do you play this, I think it's more of 0:17:41.119 --> 0:17:43.480 a broad based question than it is trying to find 0:17:43.520 --> 0:17:44.920 and pick those narrow winners. 0:17:45.680 --> 0:17:52.040 So you take tech thinking to other industry groups, that's right, Yes, 0:17:52.080 --> 0:17:52.760 absolutely so. 0:17:52.920 --> 0:17:56.160 For example, if you're taking a look at where can 0:17:56.160 --> 0:17:59.440 you apply AI? Where can you apply some of these narratives. 0:18:00.119 --> 0:18:03.639 The areas that we've heard talked about regularly is healthcare 0:18:03.680 --> 0:18:07.399 and applying artificial intelligence to research and development. That's a 0:18:07.440 --> 0:18:10.080 long term play, and of course there's tons of headwinds 0:18:10.119 --> 0:18:13.479 against healthcare, pharma and the like, and when we think 0:18:13.520 --> 0:18:16.680 about those headwinds, those are opening up pretty attractive valuations 0:18:16.960 --> 0:18:20.200 while there's also this positive long term narrative that's there. 0:18:20.440 --> 0:18:22.119 So I do think that we can look at some 0:18:22.200 --> 0:18:24.760 of these other areas, particularly those that are a bit cheaper. 0:18:24.800 --> 0:18:27.359 There's not many of them. There's a few as areas 0:18:27.400 --> 0:18:29.520 of long term beneficiaries of AI. 0:18:31.040 --> 0:18:31.359 Marta. 0:18:31.400 --> 0:18:33.640 It's funny for me, but it's been a week where 0:18:33.720 --> 0:18:38.480 economic data has impacted technology markets, right, PPI and I 0:18:38.520 --> 0:18:40.359 grew up in the Bloomberg school of why do we 0:18:40.359 --> 0:18:43.600 care about the FED? Because higher rates discount the present 0:18:43.680 --> 0:18:46.199 value of future cash flows. And I just wondered if 0:18:46.240 --> 0:18:49.679 you'd react to that statement, please well listen. 0:18:49.760 --> 0:18:51.880 I mean, I do think when we think. 0:18:51.640 --> 0:18:55.240 About economic data and we think about technology, there are 0:18:55.280 --> 0:18:58.520 these secular growth themes that can really push back against 0:18:58.600 --> 0:19:03.000 any headwind that economic data poses for technology, And of 0:19:03.040 --> 0:19:05.000 course there are other areas of the market that are 0:19:05.000 --> 0:19:05.720 more sensitive. 0:19:05.960 --> 0:19:07.800 When I think about the economic. 0:19:07.320 --> 0:19:10.920 Data that we're seeing come through, all that comes out 0:19:10.960 --> 0:19:13.280 is this idea of mixed signals, and people can kind 0:19:13.280 --> 0:19:15.480 of project whatever view they want on the market and 0:19:15.520 --> 0:19:18.720 find or on the economy and find evidence to support 0:19:18.720 --> 0:19:22.359 that view. I think at this point what matters more 0:19:22.480 --> 0:19:25.360 are the secular themes rather than some of these economic 0:19:25.440 --> 0:19:27.080 data points that are trickling in. 0:19:27.440 --> 0:19:29.960 Briefly matter It's also been a week of record hizing 0:19:30.000 --> 0:19:31.240 crypto IPOs. 0:19:31.880 --> 0:19:33.640 How many questions you get on that? 0:19:34.680 --> 0:19:36.360 Well, it does come up more and more. 0:19:36.400 --> 0:19:38.240 I think one of the things that people are looking 0:19:38.240 --> 0:19:40.240 at when they see the record highs in crypto, or 0:19:40.240 --> 0:19:43.080 when they're looking at IPOs, or in fact the kind 0:19:43.080 --> 0:19:45.560 of resurgence of the mean theme is what does this 0:19:45.680 --> 0:19:48.040 mean in terms of the speculative froth in the market. 0:19:48.240 --> 0:19:50.199 I don't think we're at all time peaks there, but 0:19:50.280 --> 0:19:53.560 there is this measure of complacency that's been baked in, 0:19:53.600 --> 0:19:55.720 this kind of sense that nothing can go wrong, and 0:19:55.760 --> 0:19:58.480 of course that's reflected in valuations. So I do think 0:19:58.520 --> 0:20:00.639 when we're looking at those kind of signals, it's important 0:20:00.680 --> 0:20:03.720 to remember that things are a bit priced for perfection 0:20:03.800 --> 0:20:06.160 and we could see some volatility in the nearest term. 0:20:06.320 --> 0:20:09.600 Martin Norton, we so appreciate having you on today of Empower. 0:20:09.720 --> 0:20:11.479 Have great weekend. 0:20:16.600 --> 0:20:19.160