WEBVTT - Retail Stocks Jump After Supreme Court Strikes Down US Tariffs 0:00:02.720 --> 0:00:10.600 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.600 --> 0:00:14.560 Bloomberg Intelligence podcast. Catch us live weekdays at ten am 0:00:14.600 --> 0:00:18.520 Eastern on Applecarplay and Android Auto with the Bloomberg Business app. 0:00:18.640 --> 0:00:21.840 Listen on demand wherever you get your podcasts, or watch 0:00:21.960 --> 0:00:23.080 us live on YouTube. 0:00:24.079 --> 0:00:27.840 One of the areas that was certainly impacted by teriffs 0:00:28.400 --> 0:00:30.400 had been retail, and they import a lot of the 0:00:30.440 --> 0:00:35.040 stuff we all wear from Asia, from China, from areas 0:00:35.080 --> 0:00:37.800 of the world that are subject to teriffs. So we 0:00:37.880 --> 0:00:40.240 can get a sense of how this might change the game. 0:00:40.280 --> 0:00:44.440 Here this Supreme Court decision today, we welcome put them Goyle, 0:00:44.520 --> 0:00:47.559 she covers all the retail companies for Bloomberg Intelligence, put 0:00:47.640 --> 0:00:49.800 on what's your I guess your initial thought here from 0:00:49.960 --> 0:00:53.479 the retailer's perspective to the extent that these a lot 0:00:53.520 --> 0:00:54.840 of these terrifts are going to be rolled back. 0:00:56.160 --> 0:00:58.320 Yeah, I think. Look, it's good news for retail because 0:00:58.480 --> 0:01:00.640 at the end of their costs will go down. These 0:01:00.680 --> 0:01:04.800 tariffs caused unnecessary stress in the supply chains, caused retailers 0:01:04.840 --> 0:01:08.319 to raise prices. It lowered their margins. So all that 0:01:08.440 --> 0:01:10.920 is now set to reverse. We still don't know what 0:01:11.000 --> 0:01:13.520 the magnitude of this will eventually shape out to be. 0:01:13.560 --> 0:01:16.880 You know, there's our analysts here on the government side 0:01:16.920 --> 0:01:20.160 think that while these have been overturned, you don't know 0:01:20.200 --> 0:01:22.640 what else could be added. So I wouldn't say we 0:01:22.760 --> 0:01:26.080 go to zero. That's probably not happening. But I do 0:01:26.160 --> 0:01:30.240 think that as these tariffs get overturned and as cost 0:01:30.360 --> 0:01:33.520 drop for these retailers, we should see a pickup in 0:01:33.600 --> 0:01:36.560 margins in twenty twenty six, and also a pickup in 0:01:36.600 --> 0:01:39.680 demand because you know, the consumers for a long time, 0:01:40.000 --> 0:01:42.039 or at least over the last year, have been very 0:01:42.040 --> 0:01:45.600 concerned with inflationary pressures and just prices going up, so 0:01:45.760 --> 0:01:48.000 all that will help hopefully ease demand too. 0:01:48.680 --> 0:01:52.120 You've mentioned prices going up. Do we know of any companies, 0:01:52.120 --> 0:01:55.280 any brands that raised prices because of tariffs where they 0:01:55.320 --> 0:01:56.680 made that linked very explicit. 0:01:57.680 --> 0:02:01.200 Yes, Snike was one of the retailer that had explicitly 0:02:01.240 --> 0:02:04.560 said that it's raising prices not on everything, but on 0:02:04.640 --> 0:02:08.520 goods that were over one hundred dollars, notably over one fifty. 0:02:08.560 --> 0:02:11.800 They had taken a mid single digit price increase. So 0:02:11.919 --> 0:02:14.880 prices did go up across retail from tariffs. They didn't 0:02:14.880 --> 0:02:17.640 go up twenty thirty percent, but they did go up 0:02:17.680 --> 0:02:19.919 in the single digits, mid to high single digits. 0:02:20.400 --> 0:02:21.560 You know, the New York Fed is out with the 0:02:21.600 --> 0:02:25.120 report recently saying that about ninety percent of the tariff 0:02:25.200 --> 0:02:28.080 costs were born somewhere in the US chain, whether it 0:02:28.120 --> 0:02:31.600 was the importers, the companies themselves, consumers, maybe only ten 0:02:31.639 --> 0:02:33.200 percent by exporters. 0:02:33.280 --> 0:02:33.480 Yeah. 0:02:33.520 --> 0:02:35.120 Kevin Hasset disputes that, of course. 0:02:35.200 --> 0:02:37.880 Yeah, of course that he does. But I'll go with 0:02:37.880 --> 0:02:40.280 the New York Fed. They're pretty solid in their numbers. 0:02:40.880 --> 0:02:44.160 So from your perspective and the perspective of the retailers, Punum, 0:02:44.560 --> 0:02:46.600 how much did do you think, like the Nikes of 0:02:46.639 --> 0:02:50.280 the world kind of took in their margin versus passing 0:02:50.280 --> 0:02:51.600 along to consumers. 0:02:52.800 --> 0:02:55.200 Yeah, I would say that. I think there was a 0:02:55.360 --> 0:02:59.560 shared cost across the tariffs between the suppliers and the 0:02:59.560 --> 0:03:03.640 manufact So it wasn't ninety ten. I don't. I find 0:03:03.639 --> 0:03:05.640 that hard to believe because if that was the case, 0:03:06.120 --> 0:03:09.320 a mid single digit price increase wouldn't be enough to 0:03:09.400 --> 0:03:12.440 offset the cost pressures. It'd have to be higher. But 0:03:12.520 --> 0:03:15.880 that said, I do think that, you know, they did 0:03:16.400 --> 0:03:19.799 see their costs rise and they did try to offset it, 0:03:19.919 --> 0:03:23.640 not just through price increases, but also through efficiencies within 0:03:23.680 --> 0:03:27.040 their organization, whether it was a cross payroll, whether it's 0:03:27.040 --> 0:03:29.560 through technology. You know, we've heard a lot about these 0:03:29.600 --> 0:03:33.800 AI investments, and they've really helped improve efficiency across the organization, 0:03:34.200 --> 0:03:37.000 but we haven't seen that in the numbers. And my 0:03:37.120 --> 0:03:39.400 answer to that is it's not in the numbers because 0:03:39.440 --> 0:03:44.040 it's really just been helping offset these incremental pressures from tariffs. 0:03:45.400 --> 0:03:49.800 We've seen companies like PepsiCo moved to cut prices on 0:03:49.840 --> 0:03:51.960 some of their products, their snack products. And I'm not 0:03:52.000 --> 0:03:56.280 comparing snacks with clothing or sneakers, but if a company 0:03:56.320 --> 0:04:00.400 like Nike raised prices because of the tariffs, is there 0:04:00.680 --> 0:04:03.880 any world in which it might reduce prices or lower 0:04:03.880 --> 0:04:06.040 prices because tariffs were removed. 0:04:06.800 --> 0:04:09.640 So I think the consumer is expecting prices to go 0:04:09.720 --> 0:04:12.720 down when the tariffs are removed. The big question is 0:04:12.800 --> 0:04:14.920 if prices went up, let's say ten percent, are they 0:04:14.920 --> 0:04:18.800 going to come down ten percent? That typically doesn't happen. 0:04:18.839 --> 0:04:21.440 They don't necessarily drop to the same extent they went up. 0:04:21.480 --> 0:04:24.920 But yes, would you have some relief from the cost increases? Sure? 0:04:25.240 --> 0:04:28.520 I think retailers like Walmart that really push the pedal 0:04:28.560 --> 0:04:31.480 on price much harder in care about offering that incremental 0:04:31.560 --> 0:04:33.960 value to their customers. That's what they stand for. Those 0:04:33.960 --> 0:04:35.919 are the retailers that are probably going to push the 0:04:35.960 --> 0:04:38.880 pedal much harder on price when they get the relief 0:04:38.880 --> 0:04:39.520 from tariffs. 0:04:41.160 --> 0:04:44.400 So what's just broadly defined right now, step back a 0:04:44.440 --> 0:04:47.080 little bit, put them what's your view of the consumer 0:04:47.120 --> 0:04:49.719 here based upon kind of the results you've seen from 0:04:49.760 --> 0:04:51.480 some of the retail companies you follow. 0:04:52.720 --> 0:04:55.279 I think the consumer is stretched. I think they're under pressure, 0:04:55.279 --> 0:04:58.400 but they're making choices. They're being selective. They're shopping at 0:04:58.400 --> 0:05:01.000 retailers that offer them convenience, set off for them, speed, 0:05:01.040 --> 0:05:04.039 and that offer them something differentiated. And I think that's 0:05:04.040 --> 0:05:05.960 been the story for a little while now. I think 0:05:06.000 --> 0:05:10.159 that continues. So retailers like Amazon have been doing well 0:05:10.200 --> 0:05:14.320 because they offer both value, convenience, free shipping, and they've 0:05:14.360 --> 0:05:17.080 done well Walmart, you know, we heard from they also 0:05:17.200 --> 0:05:19.640 did well on their value proposition. So I think it's 0:05:19.760 --> 0:05:22.760 those retailers that really stand out in the crowd, or 0:05:22.920 --> 0:05:25.640 those that have a fashion element, whether it's urban outfitters, 0:05:25.680 --> 0:05:28.640 you know, with just the right assortments that's attracting these 0:05:28.680 --> 0:05:31.440 younger shoppers. They're the ones who are doing well. 0:05:33.040 --> 0:05:36.880 What does this mean for furniture companies like Wayfair? And 0:05:37.160 --> 0:05:39.400 I recognize that Wayfair doesn't make a lot of its 0:05:39.400 --> 0:05:41.839 own furniture necessarily, it's outsourced a lot of that. 0:05:42.000 --> 0:05:44.800 But have they been explicit in how. 0:05:44.720 --> 0:05:48.400 Much turffs have hurt them because most of their manufacturing 0:05:48.560 --> 0:05:50.640 is not done in the United States. I'm guessing it's 0:05:50.680 --> 0:05:51.359 done overseas. 0:05:52.400 --> 0:05:54.680 It is done overseas, But I think with Wayfair it's 0:05:54.720 --> 0:05:57.520 a little tricky because, as you said, they are a marketplace, right, 0:05:57.800 --> 0:06:00.400 So when you think about Wayfair, they have thousands of 0:06:00.400 --> 0:06:04.960 suppliers to choose from our manufacturers or sellers, and if 0:06:05.040 --> 0:06:06.840 the seller wants to make a sale, you know, they 0:06:06.880 --> 0:06:09.440 can go from one seller who may say the sofa 0:06:09.480 --> 0:06:11.599 is one thousand dollars and I have a fifty percent 0:06:11.640 --> 0:06:13.920 margin on it. But then there's seller number two who says, well, 0:06:13.960 --> 0:06:16.440 you know, I'll take a fifteen percent margin on it 0:06:16.480 --> 0:06:19.560 because I want to get the sale. So the diversity 0:06:19.760 --> 0:06:22.480 and just the choice that they have on who they 0:06:22.480 --> 0:06:25.560 bring on board to offer the compelling prices has helped 0:06:25.600 --> 0:06:28.560 them offset a lot of these terraf folds that others 0:06:28.880 --> 0:06:31.400 that are vertically integrated have to deal with directly. 0:06:32.240 --> 0:06:35.480 Put, we heard a lot of companies in re retailers, 0:06:35.600 --> 0:06:39.360 but just across the economy talk about shifting their supply 0:06:39.480 --> 0:06:42.719 chains to maybe parts of the world that are less 0:06:42.880 --> 0:06:46.520 encumbered by tariffs. Have you seen that in the retail space, 0:06:46.600 --> 0:06:50.039 like as Nike making shoes in Vietnam and not China 0:06:50.120 --> 0:06:50.839 or anything like that. 0:06:51.839 --> 0:06:55.120 Absolutely, the supply chain shift has been going on since 0:06:55.160 --> 0:06:57.840 the first round of tariffs actually, and it's only been 0:06:57.880 --> 0:07:02.000 pronounced since last year. Staff supply chains to continue to 0:07:02.040 --> 0:07:06.360 be diversified. The only difference with this ruling being overturned 0:07:06.480 --> 0:07:10.800 is the urgency has somewhat been moderated, so you don't 0:07:10.800 --> 0:07:12.920 have to be as reactive as you would have been 0:07:13.000 --> 0:07:15.200 last year. You can take your time and be more 0:07:15.240 --> 0:07:18.960 strategic about where you want to be diversified. But I 0:07:19.040 --> 0:07:22.520 don't think that just because the tariffs are overturned now 0:07:22.560 --> 0:07:25.680 everything will go back to China. I think the diversification 0:07:26.240 --> 0:07:27.520 step up is here to stay. 0:07:28.400 --> 0:07:31.520 Stay with us more from Bloomberg Intelligence coming up after this. 0:07:35.400 --> 0:07:39.080 You're listening to the Bloomberg Intelligence podcast. Catch us Live 0:07:39.160 --> 0:07:42.239 weekdays at ten am Eastern on Apple, Cocklay and Android 0:07:42.280 --> 0:07:45.560 Auto with the Bloomberg Business App. Listen on demand wherever 0:07:45.640 --> 0:07:48.760 you get your podcasts, or watch us live on YouTube. 0:07:49.520 --> 0:07:51.960 As we look through the different sectors that are impacted 0:07:52.000 --> 0:07:56.560 by this Supreme Court ruling basically determining that President Trump's 0:07:57.000 --> 0:08:01.200 tariffs under the AIPA provision are legal, Let's take a 0:08:01.240 --> 0:08:03.520 look at what this means for the auto industry. Steve 0:08:03.600 --> 0:08:07.080 Man is our global Autos and Industrials research analysts, and 0:08:07.160 --> 0:08:11.080 Steve I'm looking at the top live block that Bloomberg 0:08:11.120 --> 0:08:15.120 makes available to our clients. And one thing that many 0:08:15.240 --> 0:08:17.400 people may not realize is that the ruling does not 0:08:17.480 --> 0:08:20.840 pertain to the main US tarffs affecting the auto industry. 0:08:21.240 --> 0:08:25.040 Walk us through what is affected when it comes to 0:08:25.040 --> 0:08:26.280 auto tarifs by this ruling. 0:08:27.040 --> 0:08:30.040 Yes, Karl it. The bottom line is there's no impact 0:08:30.160 --> 0:08:34.800 on the auto industry, you know, the auto industry. The 0:08:34.920 --> 0:08:37.440 terraces on the auto industry is under the Section two 0:08:37.480 --> 0:08:41.560 thirty two of the Trade Expansion Act of nineteen sixty two, 0:08:42.240 --> 0:08:46.600 so it's not put on in place by the emergency powers. 0:08:47.000 --> 0:08:51.040 So the baseline of the twenty five percent tarraf on 0:08:51.240 --> 0:08:55.000 auto imports is still there now. Trump did renegotiate with 0:08:55.600 --> 0:08:57.880 countries like South Korea and Japan to bring it down 0:08:57.920 --> 0:09:02.520 at fifteen, but for the most part, you know, consumer 0:09:02.559 --> 0:09:06.800 will still feel the impact of these tariffs of you know, 0:09:06.880 --> 0:09:09.959 close to one thousand to three thousand dollars per vehicle 0:09:10.040 --> 0:09:12.840 on average. The other thing that I want to highlight 0:09:12.960 --> 0:09:16.840 is it's the steal and alutlum import terraff with fifty 0:09:17.200 --> 0:09:21.439 that's also not impacted by the Supreme Court ruling today, 0:09:21.760 --> 0:09:24.480 and that also has a huge impact on, you know, 0:09:24.559 --> 0:09:26.200 the cost for the automakers. 0:09:27.120 --> 0:09:29.320 So, Steve, what have you seen so far for the 0:09:29.360 --> 0:09:33.160 automakers and how they're dealing with these higher tearf levels. 0:09:33.200 --> 0:09:36.560 Are they moving production, are they changing maybe some parts 0:09:36.600 --> 0:09:38.880 of the supply chain. What have they been trying to 0:09:38.920 --> 0:09:41.520 do to mitigate the terriff costs. 0:09:41.080 --> 0:09:43.640 That's a that's a good question, Paul. I think, you know, 0:09:43.679 --> 0:09:46.199 I think the reason why Trump went with two thirty 0:09:46.240 --> 0:09:50.800 two Section two thirty two approaches is that the auto industry, 0:09:50.920 --> 0:09:56.520 given its hue manufacturing base, is critical to the economy, 0:09:56.520 --> 0:09:59.480 it's critical to national security. He does want to bring 0:09:59.559 --> 0:10:03.560 a lot of that manufacturing back into the US. And 0:10:03.600 --> 0:10:06.440 that's what we've seen with the US automaker For example, 0:10:06.559 --> 0:10:10.440 GM actually have shifted some of the Silverado production from Oshawa, 0:10:10.520 --> 0:10:16.160 Ontario back to the US. And you've seen Honda jun 0:10:16.240 --> 0:10:20.960 Day from South Korea making huge investments in the US 0:10:21.280 --> 0:10:24.800 to set up manufacturing base. So I think I think 0:10:24.880 --> 0:10:28.960 that's still a course for the administration, and I think 0:10:29.040 --> 0:10:33.080 we'll still continue to hear more probably in the you know, 0:10:33.160 --> 0:10:36.560 in the next few years, more of that restoring auto 0:10:36.640 --> 0:10:38.760 manufacturing back into the US. 0:10:41.120 --> 0:10:42.680 So how do you see this moving forward? 0:10:43.160 --> 0:10:46.000 How does a Ford, how does a GM plan for 0:10:46.040 --> 0:10:48.720 the next year, for the next four years, the next 0:10:48.760 --> 0:10:49.640 ten years. 0:10:50.120 --> 0:10:52.720 Yeah, I think they're going to have to revisit and 0:10:52.760 --> 0:10:54.559 they're still doing that, and they have done that already. 0:10:55.280 --> 0:10:58.360 Revisit the supply chain, right, I think the low hanging 0:10:58.360 --> 0:11:02.320 fruit was moving some of the auto assembly back to 0:11:02.400 --> 0:11:06.240 the US. But that's that's that's not enough. You know, 0:11:07.000 --> 0:11:10.640 if you're if you're if the supply chain is not 0:11:10.960 --> 0:11:14.240 close to where the cars are made, break costs will 0:11:14.280 --> 0:11:14.720 go up. 0:11:15.000 --> 0:11:15.200 Uh. 0:11:15.360 --> 0:11:18.600 There will continue to be potential terrorists, uh in some 0:11:18.720 --> 0:11:22.160 of the components. So you're starting to see you know, companies, 0:11:22.320 --> 0:11:25.400 especially from South Korea, automakers from South Korea and Japan 0:11:25.840 --> 0:11:29.240 actually asking the supplier to shift some of that production 0:11:29.920 --> 0:11:33.600 uh into the US, just to cut you know, some 0:11:33.679 --> 0:11:36.280 of the freight and potential tear across on the auto 0:11:36.520 --> 0:11:39.400 auto parts. So we're going to see a whole lot 0:11:39.440 --> 0:11:43.640 of changes in the supply chain, uh and UH. You know, 0:11:43.840 --> 0:11:46.040 I think one of the things that we also are 0:11:46.120 --> 0:11:49.319 keeping an eye on, uh, it's the U S m 0:11:49.440 --> 0:11:52.400 c A, the unit US Mexico kind of free trader 0:11:52.480 --> 0:11:56.640 there that's up for review this year. That's going to 0:11:56.679 --> 0:11:59.920 have a huge, a much bigger impact on the auto industry. 0:12:00.320 --> 0:12:02.200 So we'll see how that plays out. 0:12:03.280 --> 0:12:06.439 Stay with us. More from Bloomberg Intelligence coming up after this. 0:12:10.320 --> 0:12:14.040 You're listening to the Bloomberg Intelligence podcast. Catch us Live 0:12:14.120 --> 0:12:17.160 weekdays at ten am Eastern on Apple, Cocklay and Android 0:12:17.200 --> 0:12:20.520 Auto with the Bloomberg Business app. Listen on demand wherever 0:12:20.559 --> 0:12:23.680 you get your podcasts, or watch us live on YouTube. 0:12:24.160 --> 0:12:25.680 Do you want to bring in Dan Ives? 0:12:25.960 --> 0:12:29.520 Dan, of course, is the noted analyst, the global head 0:12:29.559 --> 0:12:31.840 of Technology research at web Bush Securities. 0:12:32.000 --> 0:12:32.640 To get his. 0:12:32.520 --> 0:12:35.440 Take on what we're seeing in tech and whether Dan 0:12:35.720 --> 0:12:38.040 this SCOTUS ruling is kind of just risk on for 0:12:38.120 --> 0:12:41.640 the market overall, and that means a big lift for 0:12:41.800 --> 0:12:43.960 the biggest part of the stock market, tech or whether 0:12:44.040 --> 0:12:48.280 this is specifically good news for tech companies. 0:12:48.960 --> 0:12:52.000 Yeah, this specific good news for tech companies because of 0:12:52.120 --> 0:12:55.840 the supply chain is the biggest worries at times what 0:12:56.000 --> 0:12:58.440 that could do in terms of the data center build out, 0:12:58.920 --> 0:13:02.800 AI build out ships, everything that we're seeing with China. Look, 0:13:02.800 --> 0:13:04.920 there's gonna be other ways that they're going to try 0:13:04.920 --> 0:13:07.920 to go around this two thirty two, Section three oh one. 0:13:08.400 --> 0:13:12.200 The reality is a huge good the tariff policy, and 0:13:12.240 --> 0:13:14.520 it's very bullish or tech coming out of the gates. 0:13:14.559 --> 0:13:16.160 That's going to be an official teach. 0:13:16.840 --> 0:13:18.480 So Dan, it's been you know a little more than 0:13:18.480 --> 0:13:22.640 a roughly a year that all companies have been dealing 0:13:22.679 --> 0:13:25.400 with this terror fund journey. How have the technology companies 0:13:25.440 --> 0:13:28.680 who do have a global supply chain rely a lot 0:13:28.840 --> 0:13:30.600 on parts of Asia. 0:13:30.640 --> 0:13:32.960 How have they kind of adjusted here? 0:13:33.920 --> 0:13:39.080 Look at Minnapolis, removed a latta India, others have you know, 0:13:39.240 --> 0:13:41.840 had to make significant investments in the US and all 0:13:41.920 --> 0:13:45.720 who look at different spy their supply chain. But you know, 0:13:45.720 --> 0:13:48.080 as we talked about a lot of the showing the 0:13:48.240 --> 0:13:51.000 vast majority of the supply chain and will continue to 0:13:51.040 --> 0:13:55.840 be samodnesia and where you had companies starting to look 0:13:55.840 --> 0:14:00.000 at diversification. Increased cost was just going to potentially, you know, 0:14:00.200 --> 0:14:04.200 impact the supply chain. That's off the table now and 0:14:04.240 --> 0:14:09.600 that's something Look, big tech companies, they'll say publicly behind 0:14:09.640 --> 0:14:13.880 closed doors, there are huge sense of relief right now into. 0:14:13.679 --> 0:14:18.760 This interesting you know, given that so many of the 0:14:19.040 --> 0:14:22.280 big tech CEOs have really aligned themselves with the president, 0:14:22.560 --> 0:14:25.200 what does this mean for the big chip makers that 0:14:25.240 --> 0:14:28.720 are outside the United States, the tsmcs, the Samsung Electronics 0:14:28.720 --> 0:14:30.120 of the world. 0:14:30.440 --> 0:14:34.600 I mean, it's extreme positive for them because when you 0:14:34.640 --> 0:14:37.840 think about each of them, the question there was how 0:14:37.960 --> 0:14:41.360 is that going to impact there from a policy perspective, 0:14:41.360 --> 0:14:44.200 from a tower in terms of coming into the US, 0:14:44.240 --> 0:14:46.800 And then you start to think about manufacturing. 0:14:46.840 --> 0:14:49.880 You'll continue to have some manufacturer moved to the US. 0:14:50.400 --> 0:14:52.760 But this is actually going to put the brakes on 0:14:53.000 --> 0:14:56.160 some of the policies that some of these tech players had. Look, 0:14:56.160 --> 0:14:58.560 there's going to be section two thirty two, Section three 0:14:58.640 --> 0:15:00.880 or one, there would be other errors go about it. 0:15:01.280 --> 0:15:06.960 But for big tech supply chain, ship players, memory players. 0:15:07.160 --> 0:15:10.360 It's a clear positive. There's no way to really go 0:15:10.480 --> 0:15:11.800 against that thesis. 0:15:12.640 --> 0:15:15.040 Dan, your world has been ropped over the last several 0:15:15.080 --> 0:15:19.280 weeks by AI and the impact some people are speculating 0:15:19.360 --> 0:15:22.360 and may have on certain parts of the marketplace, including 0:15:22.960 --> 0:15:27.000 software companies, particularly software as as service companies. Here, what's 0:15:27.040 --> 0:15:30.080 the current thinking as you talk to investors these days? 0:15:30.680 --> 0:15:33.240 Yeah, I mean, Paul, I'm kanna is the AI goost 0:15:33.280 --> 0:15:37.120 trade because you're trying to fight a goose, because the 0:15:38.320 --> 0:15:41.760 view that this is going to massively disrupt software, it's 0:15:41.760 --> 0:15:45.120 going to massively disrupt cybersecurity, and I've talked about it's 0:15:45.120 --> 0:15:48.680 the opposite. I think it's the most disconnected trade that 0:15:48.760 --> 0:15:50.800 I've seen in my career on Wall Street in terms 0:15:50.840 --> 0:15:53.640 of what's happened to software stocks now. But again, like 0:15:54.000 --> 0:15:57.320 we talked about fighting a goost, there's going to be 0:15:57.400 --> 0:15:59.920 like boxes that are checked. Whether it's open AI and 0:16:00.000 --> 0:16:04.240 one hundred billion, there's zaven Air earning next week, where 0:16:04.240 --> 0:16:08.760 there's app on AI, where there's circuit financing software companies 0:16:08.800 --> 0:16:12.680 showing monetization. This is going to happen, But right now 0:16:12.720 --> 0:16:15.800 you're fighting a ghost and the bears are loving it, 0:16:15.880 --> 0:16:18.320 but again that will be short lived in my opinion. 0:16:19.680 --> 0:16:21.440 That might be the case in the equity market, but 0:16:21.480 --> 0:16:25.240 we're seeing private credit leverage loans really come under pressure 0:16:25.280 --> 0:16:28.400 because of all those loans to a lot of software companies, 0:16:28.480 --> 0:16:31.800 many of which don't have investment grade ratings. Is credit 0:16:32.120 --> 0:16:35.000 driving the concerns in the equity market? 0:16:35.640 --> 0:16:36.240 What's leading? 0:16:36.280 --> 0:16:36.840 What? Dan? 0:16:37.840 --> 0:16:38.080 Yeah? 0:16:38.120 --> 0:16:40.320 I mean, look, if you get blue out right, I 0:16:40.320 --> 0:16:43.080 mean obviously be like some concerns there. But then on 0:16:43.080 --> 0:16:45.520 the other hand, look at A Powell and others. So 0:16:45.600 --> 0:16:48.160 I think if you look relative to some of the 0:16:48.240 --> 0:16:52.240 exposure and what the credit market's telling you, it's still 0:16:52.320 --> 0:16:55.800 very healthy from a credit perspective, but no different than 0:16:55.800 --> 0:16:57.680 we saw the banks a few years ago, a Silver 0:16:57.880 --> 0:17:00.880 Valley Bank and others. There's going to be hyper sensitivity 0:17:00.920 --> 0:17:04.280 to anything that happens here. But the reality is is 0:17:04.320 --> 0:17:07.960 that these companies have more cash and a lot of countries. 0:17:08.000 --> 0:17:10.439 When you actually go through it, the point is like 0:17:10.680 --> 0:17:13.400 they're going to continue to do it. But look, it's 0:17:13.400 --> 0:17:19.640 like you if there's five people trading CDs instrumental oracle 0:17:19.680 --> 0:17:22.760 in their basement, that's going to be extrapoid, right, And 0:17:22.800 --> 0:17:25.119 we saw that like a few weeks ago. It's just 0:17:25.160 --> 0:17:28.240 a reality like we're going through a ghost trade. It's 0:17:28.280 --> 0:17:31.359 an AI ghost trade and you got to navigate through it. 0:17:31.400 --> 0:17:34.840 But net net today it's positive for tech and that's 0:17:34.880 --> 0:17:35.720 one step forward. 0:17:36.040 --> 0:17:37.760 Hey, Dan, you spend a lot of time in Silicon 0:17:37.880 --> 0:17:39.960 Valley and it's just a great place to get a 0:17:40.040 --> 0:17:43.879 sense of kind of where the you know, the tech 0:17:44.040 --> 0:17:49.359 investment mindset is here. Has tariffs dialed back kind of 0:17:49.359 --> 0:17:51.320 the risk profile of some of the good folks on 0:17:51.359 --> 0:17:53.600 sand Hill Roads as they think about what technology is 0:17:53.640 --> 0:17:56.200 the fund is it tempered a little bit? And could 0:17:56.200 --> 0:17:58.480 today's rule and be a major change? 0:17:58.720 --> 0:18:01.840 Yeah, I think temp and maybe have put like a 0:18:01.960 --> 0:18:04.639 little question mark in the back of the mind in 0:18:04.760 --> 0:18:07.479 terms of what was going to be the next policy, 0:18:07.480 --> 0:18:09.720 what was gonna be in next threat, specifically when it 0:18:09.760 --> 0:18:13.800 came to supply chain, how companies are positioned. You can't 0:18:13.840 --> 0:18:16.440 just snab the fingers and change your supply chain. Were 0:18:16.480 --> 0:18:20.159 some about things that could take twenty four thirty six months. 0:18:20.760 --> 0:18:23.920 This ruin it does clear. 0:18:23.680 --> 0:18:26.000 The path a little more, and I think that's something 0:18:26.000 --> 0:18:30.680 that's a positive as you're in a unprecedented build out 0:18:30.720 --> 0:18:33.399 A fourth industrial revenuetion and AI and for the first 0:18:33.400 --> 0:18:36.440 time in thirty years, the US is a headed China 0:18:36.480 --> 0:18:37.320 when it comes attack. 0:18:39.160 --> 0:18:41.600 Stay with us. More from Bloomberg Intelligence coming up. 0:18:41.760 --> 0:18:48.679 F you're listening to the Bloomberg Intelligence podcast. Catch us 0:18:48.760 --> 0:18:51.800 live weekdays at ten am Eastern on Apple, Cocklay and 0:18:51.800 --> 0:18:55.080 Android Auto with the Bloomberg Business app. Listen on demand 0:18:55.119 --> 0:18:58.680 wherever you get your podcasts, or watch us live on YouTube. 0:18:59.400 --> 0:18:59.560 Well. 0:18:59.560 --> 0:19:02.600 In the summer twenty twenty five, Barry Ridholts spoke with 0:19:02.720 --> 0:19:06.680 Neil Katie, the lawyer who argued the case against Trump's 0:19:06.680 --> 0:19:09.720 tariffs in front of the US Supreme Court. Here's what 0:19:09.800 --> 0:19:11.359 he had to say about their legality. 0:19:12.040 --> 0:19:14.479 The President has an easy effects if he wants to. 0:19:14.600 --> 0:19:17.399 He could go to Congress and seek approval for the 0:19:17.440 --> 0:19:19.840 tariffs that he wants. That's what he did the first 0:19:19.840 --> 0:19:22.760 time around. And as we talked about last week, you know, 0:19:22.880 --> 0:19:26.040 that's something that failed in Congress, and so maybe that's 0:19:26.080 --> 0:19:28.119 why he doesn't want to do it. Obviously, these tariffs 0:19:28.160 --> 0:19:31.800 are highly unpopular, but nonetheless, you know, the Congress is 0:19:31.800 --> 0:19:35.040 controlled by his party, and you know that's the place 0:19:35.080 --> 0:19:37.199 to start. Don't run to the federal courts to do 0:19:37.280 --> 0:19:38.600 what you can't do in Congress. 0:19:39.240 --> 0:19:41.640 That was Neil Katiell, the lawyer who argued the case 0:19:41.640 --> 0:19:44.639 against Trump's terroriffs in front of the US Supreme Court. 0:19:44.880 --> 0:19:46.320 You're speaking with Barry Ridtholts. 0:19:46.359 --> 0:19:47.560 Barry Rudults joins us here. 0:19:47.600 --> 0:19:49.680 He is the founder of Erdheltz Wealth Management and host 0:19:49.680 --> 0:19:52.360 of Masters in Business. Here Barry, what do you take 0:19:52.359 --> 0:19:55.520 away from the Supreme Court's decision here today? 0:19:56.520 --> 0:20:01.600 Yeah, long overdue, long waited. I think the market always 0:20:01.640 --> 0:20:06.400 has a hard time digesting data inputs that are kind 0:20:06.400 --> 0:20:09.200 of outside of their sweet spot. So when we get 0:20:09.240 --> 0:20:12.600 an FDA approval or the announcement of a merger, or 0:20:13.240 --> 0:20:17.200 corporate earnings or non finn payroll, hey, the markets are 0:20:17.240 --> 0:20:21.720 really good at integrating that into prices. I suspect it's 0:20:21.760 --> 0:20:24.360 going to take a little while for this to get digested. 0:20:25.080 --> 0:20:29.159 My personal expectation is there are a lot of winners 0:20:29.200 --> 0:20:32.960 and losers from this. I think that the winners are 0:20:33.040 --> 0:20:38.040 going to be obviously the retailers, because prices have gone up. 0:20:38.080 --> 0:20:41.359 We've seen a ton of different research that says somewhere 0:20:41.359 --> 0:20:43.439 between ninety and ninety five percent of the cost of 0:20:43.640 --> 0:20:48.119 tariffs falls on consumers, essentially making them a that tax. 0:20:48.880 --> 0:20:53.520 So not only retailers, but manufacturers like Caterpillar and Deer 0:20:54.160 --> 0:20:58.800 what aren't affected by the Supreme Court ruling. And we 0:20:58.880 --> 0:21:02.160 heard one of the prior guests this is all of 0:21:02.200 --> 0:21:07.800 the tariffs on US auto manufacturers on steel on aluminum. 0:21:07.840 --> 0:21:11.560 That's a whole separate law. That's not the IEPA law. 0:21:11.600 --> 0:21:15.959 That's the two point thirty two law, and that's still 0:21:16.080 --> 0:21:19.080 up in the air. There's no resolution from this case 0:21:19.920 --> 0:21:24.000 for GM Ford, US Steel, et cetera. But when we 0:21:24.040 --> 0:21:28.280 look at companies like Toyota or Costco or Walmart that 0:21:28.560 --> 0:21:32.520 Toyota filed a refund because all of the parts that 0:21:32.760 --> 0:21:38.399 either Toyota proper ships to their US manufacturers that have 0:21:38.440 --> 0:21:40.840 a big price increase, this is going to work to 0:21:40.880 --> 0:21:42.119 those companies benefits. 0:21:44.720 --> 0:21:47.359 So I guess the question is for the markets barrier, 0:21:47.600 --> 0:21:51.880