Speaker 1: Bloomberg Audio Studios, podcasts, radio news from the heart of
Speaker 1: where innovation, money and power collide in Silicon Valley and beyond.
Speaker 1: This is Bloomberg Technology with Caroline Hyde.
Speaker 2: And Ed Ludlow live from New York. I'm Caroline Hyde
Speaker 2: and I'm.
Speaker 3: Ed Ludlow in San Francisco. This is Bloomberg Technology.
Speaker 2: And it's another day ed of US stocks whip soaring
Speaker 2: following President Trump's tariffs. This is nervy investors respond to
Speaker 2: the speculation on tariff delays since refuted by the White
Speaker 2: House and reports of a legal challenge to those libbes.
Speaker 3: Well in the context of tariffs in this market and
Speaker 3: the technology sector, it is the mag seven Names that
Speaker 3: the focus think about Nvidia and Gain, a name that
Speaker 3: was significantly lower swung to a gain. It's held that
Speaker 3: game and list downgrades and cuts is part of the
Speaker 3: story in Apple and Tesla, but at one point in
Speaker 3: the session, Apple was on track for its biggest three
Speaker 3: day drop since October of two thousand. I want to
Speaker 3: show you some data that was brought up by Apollo
Speaker 3: Global in their newsletter this morning, and it is the
Speaker 3: mag seven Names, and then North America are US revenues
Speaker 3: and Amazon's case sixty one percent majority in North America
Speaker 3: excluding AWS, but for most of them, most of those
Speaker 3: sales come from outside the US and jurisdictions where taris
Speaker 3: will be held hardest. And that's why there's concern in
Speaker 3: part that it will be a hit to earnings going forward.
Speaker 2: And boy, hasn't that been a story for Apple. Now,
Speaker 2: let's just return to the keystock that renowned tech bull
Speaker 2: Dan ives and Webbush has cut his price target for
Speaker 2: the iPhone maker. He's gone way down to two hundred
Speaker 2: and fifty dollars from three hundred and twenty five while
Speaker 2: maintaining though an outperform rating. Johnny us now Bloomberg's ran Vlastellaca.
Speaker 2: Apple has been in the io of the storm, and
Speaker 2: Dan I's singling that out over the course of the weekend.
Speaker 4: Yeah, good morning, thanks for having me. Apple is really
Speaker 4: sort of a poster child for terrif related risk right now.
Speaker 4: It does so much manufacturing overseas, especially in countries like
Speaker 4: China and Vietnam, which are some of the countries that
Speaker 4: have been hit with some of the highest tariff rates.
Speaker 4: So there is so much uncertainty surrounding the company, surrounding
Speaker 4: its earnings potential in this kind of environment. What are
Speaker 4: they going to do? What are tariffs going to look like?
Speaker 4: Are they going to have to raise prices? If they do,
Speaker 4: what is that going to mean for demand? Are they
Speaker 4: going to have or are they going to absorb these
Speaker 4: higher costs? If so, what does that mean for margins
Speaker 4: and earnings? There are so much uncertainty here Because we're
Speaker 4: talking about Apple, which is still the biggest company in
Speaker 4: the world, It's obviously has a lot of implications for
Speaker 4: the market overall.
Speaker 3: We were talking before the show about is this a
Speaker 3: historic Monday or not? Biggest three day drop for Apple
Speaker 3: going back to two thousand. That gives me a sort
Speaker 3: of sense of scale, but talks to me about the
Speaker 3: stock Ryan, I mean, our colleagues at Bloombag Intelligence don't
Speaker 3: think Apple raises prices. It has used mechanisms around the
Speaker 3: world to stay competitive on the services side, in particular.
Speaker 5: How's the stock viewed?
Speaker 6: Well?
Speaker 4: I think so much of this really depends on what
Speaker 4: happens with tariffs. There's so much uncertainty on that point.
Speaker 4: And if they stay in place as they currently are,
Speaker 4: you know, the outlook is very grim. But if they
Speaker 4: come off tomorrow, which you know doesn't seem like it's honestly,
Speaker 4: you see who knows. You know, people are still pretty
Speaker 4: positive about the company's longer term potential, maybe eventually with AI,
Speaker 4: with services, growth, with earnings. It still has a bunch
Speaker 4: of cash, a very strong balance sheet. There's certainly reasons
Speaker 4: to be optimistic, but a lot of people I talk
Speaker 4: to are just very skeptical about it.
Speaker 6: Now.
Speaker 4: I will say that if you look at its RSI,
Speaker 4: it's trading at some of the most oversold levels in years.
Speaker 4: So there is certainly an argument to be made here
Speaker 4: that some people feel like it's gotten oversold, Like you said,
Speaker 4: biggest three day drop at least at one point since
Speaker 4: before the iPod. So that tells you the kind of
Speaker 4: buying opportunity if you like the stock that you could
Speaker 4: be looking at here.
Speaker 3: Welcome to this Monday Bloom those rights Plaseelica, Thank you
Speaker 3: very much. Let's get more on the wider market tat
Speaker 3: term Or. Angela Zeo, CFRA Research VP, Senior ecuty analyst
Speaker 3: joins us.
Speaker 5: Now and I want.
Speaker 3: To go back to the point that we raise at
Speaker 3: the top of the show that if you put the
Speaker 3: mag seven side by side, Angelo, and look at the
Speaker 3: revenues they derive from outside of the United States. Apple
Speaker 3: catches the eye right, there's a lot of it coming
Speaker 3: x USA or x North America. How are you modeling
Speaker 3: that this morning?
Speaker 7: Yeah, now, thanks for having me. So as far as
Speaker 7: that's concerned, yeah, I mean, look, listen, listen, I mean,
Speaker 7: Apple is it's really tough to be a technology hardware
Speaker 7: a company right now, and to us, Apple is probably
Speaker 7: facing its toughest tests in about two decades, it's called
Speaker 7: since the financial crisis, where it actually prospered because of
Speaker 7: the iPhone launch at that point in time. But when
Speaker 7: you kind of look at Apple specifically here to your point,
Speaker 7: forty three percent of sales here in the US the
Speaker 7: rest internationally. So it is a true global company. And
Speaker 7: the fact that they do have you know that most
Speaker 7: of their iPhone production in the in China is the
Speaker 7: issue out here. We do think as far as the
Speaker 7: tariff concerns are concerned. Right now, there's essentially this twenty
Speaker 7: billion dollar or so deficit that they're going to have
Speaker 7: to make up in terms of you know, if you
Speaker 7: were a look at over the last twelve months and
Speaker 7: kind of extract the type of tariff hit that they
Speaker 7: would have gotten from importing all those goods the in
Speaker 7: terms in the US. So when you think about that
Speaker 7: and you look at the potential of what they could
Speaker 7: do here in terms of offsetting that twenty billion dollar increase,
Speaker 7: I think there are a number of things that they
Speaker 7: can do, but I don't think personally it's something along
Speaker 7: the lines of them increasing iPhone prices by about thirty
Speaker 7: percent or so across the line here in the US,
Speaker 7: because that's just going to cause way too much demand destruction.
Speaker 2: So they swallow a marginhead But right now the investor
Speaker 2: base is having to swallow serious headline pressure. We're being
Speaker 2: whip swored by the latest. We don't know whether this
Speaker 2: could suddenly on a dime spin into the green. We're
Speaker 2: off by two and a half percent. How do you,
Speaker 2: as a long term investor hold the trade? Angelou?
Speaker 8: Yeah, I mean you look at where the stock is
Speaker 8: at now.
Speaker 7: I mean we've seen essentially a thirty percent plus correction
Speaker 7: in the shares, So in our view, it's at this
Speaker 7: point it's too late to sell the shares if you're
Speaker 7: an Apple investor. We've told investors we think there's downside
Speaker 7: to about one hundred and fifty five to one hundred
Speaker 7: and sixty five dollars a share. That would essentially apply
Speaker 7: a peak to trough of about forty percent.
Speaker 8: And those are declines that we've seen in the.
Speaker 7: Past from Apple stock, and they've recovered and hit new
Speaker 7: highs back then. We think this is a point in
Speaker 7: time where Apple is going to be able to adjust
Speaker 7: to whatever new scenario that we see. If these fifty
Speaker 7: percent plus tariffs from China are here to stay, we
Speaker 7: think they're going to adjust their business model for that,
Speaker 7: whether it be increasing their iPhone prices by one hundred
Speaker 7: dollars across the board with the iPhone seventeen cycle, and
Speaker 7: then you know, potentially kind of you know, when you
Speaker 7: look at it from an installment cost perspective, that's fairly
Speaker 7: limited to the consumer out there. But nonetheless, there are
Speaker 7: a number of things we think Apple can do here
Speaker 7: to kind of right size their model.
Speaker 2: Let's go to the other areas that you focus. You
Speaker 2: will focus on a lot of chip names, and many
Speaker 2: are worried about the exposure of semiconductors to supply chain
Speaker 2: in Asia, even though there was a carve out of
Speaker 2: semi conductors coming from Asia from a tariff perspective, they're
Speaker 2: in the green today, Angelou. Is that the right way
Speaker 2: to be analyzing the sell off of Lake?
Speaker 8: Yeah, it's interesting.
Speaker 7: So you kind of when we were looking at the
Speaker 7: shares this morning for a lot of these names, specifically
Speaker 7: a namelike Nvidia, we thought it was essentially overdone. But
Speaker 7: you kind of look at the decline we've seen from
Speaker 7: peak to trough on the semiconductor side of things, it's
Speaker 7: been about a forty percent of climb, which is actually
Speaker 7: similar to the decline that we saw from peak to
Speaker 7: trough back in twenty twenty twenty two. And again it's
Speaker 7: one of those situations you never know where the bottom
Speaker 7: is on the chip side of things, but there is
Speaker 7: clearly some very strong secular opportunities tied to the chip sector,
Speaker 7: specifically on the AI side of things.
Speaker 8: We think that infrastructure build out continues.
Speaker 7: Clearly, it's going to be somewhat ratcheted down because those.
Speaker 8: Of the tariff situation we're in right now.
Speaker 7: But nonetheless, I mean, it is an opportunity that you know, persists,
Speaker 7: we think over the next decade or so, and you
Speaker 7: know in video clearly at that top of the list.
Speaker 7: But when you look at the profitability of these companies
Speaker 7: on that AI trade that is going to remain in tact,
Speaker 7: of course, with some downside to the estimates. But again,
Speaker 7: the forty in production we've seen in the share prices reflective.
Speaker 5: Let me jump in here.
Speaker 3: The bigger question to me is is not just where
Speaker 3: the infrastructure build out continues, it's whether the hyper scalea
Speaker 3: capex moderates, because profit estimates for many of these companies
Speaker 3: in the semi space are predicated on that.
Speaker 5: What's your call on that investment cycle?
Speaker 8: Yeah, so, I mean we do think that it's going
Speaker 8: to be challenged.
Speaker 7: So you kind of look at a year ago and
Speaker 7: essentially the capex numbers just continue to go higher and
Speaker 7: hire and our view it actually we've probably seen, you know,
Speaker 7: somewhat of a peak type capex number here in the
Speaker 7: near term.
Speaker 8: We don't think you're talking peak levels at all. Long term.
Speaker 7: We actually think as you go into twenty twenty six,
Speaker 7: we're looking at a capex increase of about four percent
Speaker 7: for the high purpose scalers. On a combined basis, it's
Speaker 7: going to be north of thirty percent this year. It
Speaker 7: starts to level out though, absolutely, but nonetheless I mean
Speaker 7: you kind of look at the secular themes that drive
Speaker 7: infrastructure spending. It is the cloud, it is digital ad spend,
Speaker 7: and long term, those are going to be trends that
Speaker 7: continue to see higher revenue.
Speaker 3: World Angela, How does this technology market compare to ninety eight,
Speaker 3: two thousand and two thousand and eight and every day
Speaker 3: of your working life that's gone before it.
Speaker 8: Yeah, that's a great question.
Speaker 7: I think, you know, specifically from a valuation perspective, I
Speaker 7: think the good news is we don't have a valuation
Speaker 7: problem in tech, and I think historically that has been
Speaker 7: an issue. These are historically very high growth oriented type names,
Speaker 7: and you always have to worry about how much can
Speaker 7: these names really kind of decline. I think the great
Speaker 7: thing is when you look at tech here specifically, if
Speaker 7: it's driving it, it is big tech, and big tech
Speaker 7: has massive cash flow generation.
Speaker 8: Even if we kind.
Speaker 7: Of discount some of the tariff issues at hand, right now,
Speaker 7: you're still talking about an Apple, if they don't offset
Speaker 7: that twenty billion or so, it's still going to generate
Speaker 7: potentially ninety billion or so on an annualized basis. That
Speaker 7: would be your worst case scenario. So when we start
Speaker 7: thinking about the drivers here of tech. The discount now
Speaker 7: that you've seen here over the last nine to ten
Speaker 7: months on the valuation side of things now trading less
Speaker 7: than twenty times on a calendar twenty six pass Again,
Speaker 7: those estimates have to go down. But when we kind
Speaker 7: of look at things here, you got to look at
Speaker 7: it from a long term perspective. You look at that
Speaker 7: twenty percent or so discount on broader tech and I
Speaker 7: think you know, overall, if you're a long term investor,
Speaker 7: I think there's an opportunity here over.
Speaker 8: The next couple of days weeks. You just got to
Speaker 8: be willing to lose some money in the near term.
Speaker 2: Rite that volatility. Angelo Zino of CFIRA, Great to have
Speaker 2: you on the show. Thank you. Coming up, we're going
Speaker 2: to check in on Teslas stock price following a dramatic
Speaker 2: price target cut from Wedbush. We're on that next, and
Speaker 2: what are you drilling into?
Speaker 3: So I think it's fair to say a lot of
Speaker 3: people work this Sunday, and one of the only markets
Speaker 3: open to look at was crypto and bitcoin in particular.
Speaker 3: We went from like eighty eight thousand US dollars per
Speaker 3: token Friday night down now to around seventy eighty five hundred.
Speaker 3: It's moderated, but there's divergence with gold. There is the
Speaker 3: tariff story hitting crypto assets, and we'll continue to track
Speaker 3: it because that was a lot of the focus over
Speaker 3: the weekend. Just in case you missed it, stick with us,
Speaker 3: we'll be right back. This is Bloomberg Technology tesler trading
Speaker 3: at one point in this session below two hundred and
Speaker 3: eighteen dollars a share, a price at which COMMAS secretary
Speaker 3: Howard Lutnik predicted they'd never fall to again. That decline
Speaker 3: followed a forty three percent price target cut by Webbush
Speaker 3: Securities analyst Daniel Iive, citing Trump's trade policies and a
Speaker 3: brand crisis created by Elon Musk, Bloomberg's Global Auto's Edisi
Speaker 3: Crazydales here for more from London. When I was reading
Speaker 3: the Ives, note there were some very specific points, which
Speaker 3: is that, for example, in China, it's not just the
Speaker 3: tariffs themselves, it's the reputation and association of Musk with
Speaker 3: the policy that might drive Chinese consumer is to buy
Speaker 3: domestic models.
Speaker 9: Yeah, that's right, and I mean I think what we've
Speaker 9: seen from the Trump administration is that they've really sort
Speaker 9: of you know, stoked this nationalistic sentiment in other countries already.
Speaker 9: You think about Canada being a great example of this,
Speaker 9: maybe not great, but an example of this, where you know,
Speaker 9: at hockey games suddenly you know there's a booing of
Speaker 9: the national anthem, and you know, we don't have to
Speaker 9: go that far back in history to think of other
Speaker 9: companies that you know, have felt the brunt of sort
Speaker 9: of nationalistic sentiment in China and and you know, felt
Speaker 9: blowback from that. And so I think that's what I
Speaker 9: was maybe was alluding to here, And it's maybe a
Speaker 9: risk that we haven't seen necessarily in China, where you know,
Speaker 9: whereas we've seen these Tesla takedown protests in other countries,
Speaker 9: it's not something that we're seeing on the streets of say,
Speaker 9: you know, Shanghai or Beijing.
Speaker 2: He calls for Elo Musk to step up Craig and
Speaker 2: to show leadership. Now, last time I check. I don't
Speaker 2: think el must particularly cares what Wall Street analysts think
Speaker 2: or ask of him, But are we anticipating a return
Speaker 2: to leading this business rather than his role at the
Speaker 2: White House.
Speaker 9: I think there was a lot of sort of hope
Speaker 9: and optimism last week right when Politico reported that Musk
Speaker 9: you know, was on the cusp of stepping back officially
Speaker 9: from his roles. But I think, you know, not only
Speaker 9: did we hear Musk dispute that and say it's you know,
Speaker 9: fake news, we also heard you know, from jd Vance,
Speaker 9: the Vice President, talk about this idea that you know,
Speaker 9: Doje is nowhere near done, and allude to the idea
Speaker 9: that Musk is going to continue to advise this administration
Speaker 9: you know, for you know, long into the future, and
Speaker 9: so even if officially he is no longer a special
Speaker 9: government employee. I think this, this notion that he would
Speaker 9: fully step back from politics seems you know, seems like
Speaker 9: a stretch, given given how sort of assertive and hands
Speaker 9: on he's been to this point. Maybe he does go
Speaker 9: back to spending more time, you know, say in Austin
Speaker 9: or at facilities like in California. But I think the
Speaker 9: bigger problem here is the sort of daily drumbeat of
Speaker 9: his posts on X that could be really divisive.
Speaker 2: Crater Dal, thanks so much for joining us as always. Meanwhile,
Speaker 2: coming up, we're going to take a closer look at
Speaker 2: how the US China trade tensions could also be playing
Speaker 2: into the negotiations for TikTok. Sam Sak, senior fellow at
Speaker 2: New America joining US ed, what are you keeping an eye.
Speaker 5: On market's over in Asia overnight?
Speaker 3: And also a piece of news, this is the mc
Speaker 3: i AC Asia Pacific Information Tech in debt. Clearly heavy clients,
Speaker 3: but this as President Trump said that he has spoken
Speaker 3: to the Japanese Prime minister. Also getting some headlines crossing
Speaker 3: the Bloomberg terminal. Relating to Asia, Trump says China must
Speaker 3: back off thirty four percent tariff increases by April eighth.
Speaker 3: Trump says that talk to China on possible meetings will
Speaker 3: be terminated, and he threatens a fifty percent additional tariff
Speaker 3: on China starting April ninth if they don't meet an
Speaker 3: Eightril eight deadline. He's talking about to back off of
Speaker 3: the thirty thirty four percent. I think we call them
Speaker 3: reciprocal tariffs right Carrow that were put in place by
Speaker 3: the Chinese.
Speaker 8: The reporters.
Speaker 7: We had a deal pretty much with Jake jack nadded
Speaker 7: deal but pretty close, and then China changed the deal
Speaker 7: because of tariffs.
Speaker 8: If I gave a little of jarriffs, A proven a
Speaker 8: deal at fifteen Brothers which shows you the power of derives.
Speaker 3: There was President Trump speaking last night of allD Air
Speaker 3: Force one, saying China's objections to US tariffs stored a
Speaker 3: deal to sell.
Speaker 5: Off TikTok and keep it operating in the US.
Speaker 3: In the last two minutes, the President has posted on
Speaker 3: truth social threatening a fifty percent additional tariff on China
Speaker 3: if they don't remove the thirty four percent reciprocal tariffs
Speaker 3: that China had put in place by April eighth. You
Speaker 3: said a deadline that post. I think Carry was seeing
Speaker 3: all kinds of assets react. Some that I'm seeing, for
Speaker 3: example God and Dragon index and as that modern edgines is, we.
Speaker 2: Have more boers, go for it.
Speaker 5: Carry pick it up.
Speaker 2: President Trump saying that all talks with China have been
Speaker 2: terminated unless tariffs are pulled. So thus far, unless there
Speaker 2: is a change of sentiment coming from China and they
Speaker 2: withdraw as you were just articulating that extra thirty four
Speaker 2: percent that they put on on Friday, then all China
Speaker 2: talks are terminated unless those tariffs are pulled.
Speaker 3: Yeah, I'm going to look at some of the assets,
Speaker 3: just really quick shares like Ali Barba's US listed ADRs
Speaker 3: clearly getting hit, but the Nazet Golden Dragon China Index
Speaker 3: down almost four percent.
Speaker 5: So it's important.
Speaker 3: Let's get back to the story we're talking about, and
Speaker 3: that is the future of TikTok in the United States.
Speaker 3: Bloombos Kirk Wagner joins us, and essentially, Kurt, what the
Speaker 3: President said last night on Air Force One confirmed what
Speaker 3: you had reported a couple of days earlier that the
Speaker 3: tariff policy of this White House derailed a deal that
Speaker 3: was being negotiated with China to have US investor ownership
Speaker 3: of TikTok in the US.
Speaker 10: Take it from there, Well, that's exactly right. This deal,
Speaker 10: as Trump said, was close to being done. They had
Speaker 10: the framework in place, and you know, the tariffs hit.
Speaker 10: The tariffs are announced, and China said, you know, we're
Speaker 10: going to pause on this thing. And the news you
Speaker 10: just shared Ed and Caroline makes me think that we're
Speaker 10: we're definitely nowhere close to a deal now.
Speaker 6: Right.
Speaker 10: Things are getting more intense, not less intense on this
Speaker 10: traf war. And so you know, as Trump said, the
Speaker 10: tariffs work, I would say tariffs have consequences. Right in
Speaker 10: this case, the deal for TikTok is sort of in
Speaker 10: the crosshairs of this thing.
Speaker 6: We knew that would be the case.
Speaker 10: I think I'm not sure if we knew it would
Speaker 10: be quite this much in the middle of all this,
Speaker 10: but you know, part of the geopolitical fight here, Kit.
Speaker 2: Wagner, we thank you. We have now got the perfect
Speaker 2: voice to discuss the implications of US and China on
Speaker 2: technology and more broadly, Sam Sas is with US senior
Speaker 2: fellow at New America. You have worked for tech giants
Speaker 2: like Zeemans setting up their businesses over in Asia, who
Speaker 2: speak the language, interpret what is going on at the
Speaker 2: moment and how China is going to fight the US
Speaker 2: on this.
Speaker 11: China anticipated the tariffs, but they were shocked by the scale.
Speaker 11: And what we're seeing now is the leadership in Beijing
Speaker 11: is trying to both signal resolves. They say we've got
Speaker 11: this under control, We've diversified our economy, but they're also
Speaker 11: still hoping for some space for a deal. And let's
Speaker 11: watch how they navigate doing both at the same time.
Speaker 11: In you know, TikTok, the deal was ready to come,
Speaker 11: but tariffs derailed it. And now China's saying we still
Speaker 11: can maintain leverage at this key moment.
Speaker 3: Sam I'm just going to remind our audience of the
Speaker 3: breaking news of literally the last thirty seconds, which is
Speaker 3: that President Trump is saying that all talks of China
Speaker 3: have been terminated. He had threatened an additional fifty percent
Speaker 3: tariff if China had not removed the thirty four percent reciprocal.
Speaker 5: Tariff by April eighth.
Speaker 3: The question who's in the stronger position here, the United
Speaker 3: States or China.
Speaker 11: Well, first of all, there were no talks actually planned
Speaker 11: with China, so I'm not sure where that's coming from.
Speaker 2: You know, China has already moved forward.
Speaker 11: We heard news that they're building a rail line linking
Speaker 11: to Europe. They want to secure their exports to Europe.
Speaker 11: It's going around Russia. They're trying to accommodate European sanctions.
Speaker 11: They're looking towards emerging economies. They've signaled that they've already
Speaker 11: significan reduced their trade and investment with the United States.
Speaker 2: So they've priced this in.
Speaker 11: But their economy is weak and they want to try
Speaker 11: to offset the domestic pressure on the economy in the
Speaker 11: hopes that maybe Trump will come around. But look, we're
Speaker 11: quickly moving toward a downward escalatory spile. If Trump moves
Speaker 11: forward with these compounding tariffs.
Speaker 2: If you are Apple, if you are Tesla that has
Speaker 2: significant revenue in China and you're implicated by the brand
Speaker 2: destruction of a domestic consumer going for China right now,
Speaker 2: how do you respond? You wait this out and trying
Speaker 2: to make changes to your business model at this moment.
Speaker 11: The problem is these companies attempted to change their business
Speaker 11: model with the China plus one diversifying to India, to Vietnam.
Speaker 11: But now those transshipment companies have also been hit by tariffs,
Speaker 11: and I think multinationals are reeling from that. Same In
Speaker 11: the fashion industry, they were double producing lines to countries
Speaker 11: that are now impacted by the tariffs. The prices are
Speaker 11: just going to be passed to the consumer and multi
Speaker 11: nationals are going to be hiding in the process.
Speaker 3: So Sam, I go very quickly back to my same question.
Speaker 3: But who's got more leeway here to put their economy
Speaker 3: through pain?
Speaker 5: China or the United States?
Speaker 11: You know, what do you do when both countries are
Speaker 11: under pressure domestically? I think the United States came out
Speaker 11: as from a very strong position in their own economy. Well,
Speaker 11: China was weak, and now that may Flip.
Speaker 3: Sam Sachs, New America Senior Fellow, just the perfect guest.
Speaker 2: Welcome back to bluemog Technology. I'm Caroline Hide in.
Speaker 3: New York and I'm Medladlow in San Francisco. Let's talk
Speaker 3: about the markets and whipsaw, volatility, girations. Call it what
Speaker 3: you will. The breaking headlines of the last thirty minutes.
Speaker 3: Our President Trump talking on truth social about ending tariff
Speaker 3: negotiations with China. Then as that one hundred is swung
Speaker 3: from a four percent decline or more early in the
Speaker 3: session to again now it is down one point nine percent.
Speaker 3: It's probably better exemplified in some of the single mover
Speaker 3: names in the context of tariffs. There is a big
Speaker 3: focus in the research notes and the activity on social
Speaker 3: media around the mag seven names because of their exposure
Speaker 3: in terms of revenue outside of the United States. In
Speaker 3: Nvidia is a name that has swung between a significant
Speaker 3: loss with significant gain. It is now slightly softer. Tesla
Speaker 3: continues to be under pressure. Apple down six percent, and
Speaker 3: we will get to more about Apple with Bloombo's Mark
Speaker 3: German in a moment. Amazon now flat but had actually
Speaker 3: had a big reversal of fortunes.
Speaker 5: Earlier in the day.
Speaker 3: Caro, It's very hard to piece where you win and
Speaker 3: lose in this market. But I think mag seven is
Speaker 3: interesting if you just think about where their businesses are
Speaker 3: around the.
Speaker 2: World, and the threat of ongoing headline risk is one
Speaker 2: that investors are having to navigate. Case in point, the
Speaker 2: last thirty minutes trade. Let's discuss it with Isabelle Lee
Speaker 2: who joins us on the impact of those that have
Speaker 2: controlled the stock market, ultimately the big owners wool Street.
Speaker 2: They've been pushing back over the course of the weekend.
Speaker 2: I think of Bilackman's been speaking out, I've Haas, Weinstein,
Speaker 2: a whole long list, Jaban Diamond. How have they basically
Speaker 2: seen the move shift away from them of late with
Speaker 2: Trump's commitment to tariffing, certainly China. In the last tenty minutes.
Speaker 12: Exactly, it's really been hard to your point headline risk,
Speaker 12: and I want to point out that this intra day
Speaker 12: gap of seven percent, more than seven percent, is the
Speaker 12: largest since twenty twenty. And of course the whole of
Speaker 12: the country and the whole of the world are affected,
Speaker 12: but especially the investing class. We have around ten percent
Speaker 12: of Americans or at least the richest ten percent invested
Speaker 12: in a huge chunk of this, and they really don't
Speaker 12: want to look at their four oh one case. There
Speaker 12: was a meme that says four to one K is
Speaker 12: now two to one K, and it's really astonishing. We
Speaker 12: have strategists cutting down their price targets, vis jump to fifty.
Speaker 12: We have one after the other downgrading their us US
Speaker 12: and even FED cuts are shifting by the hours. So
Speaker 12: it's really an exciting market. We spent the whole weekend
Speaker 12: this big tick I did with Bildana Hirich and Denizza Takova.
Speaker 12: We were just calling people and everyone was really just worried.
Speaker 12: That was a common threat.
Speaker 5: Team in the control room.
Speaker 3: Let's bring up those pictures from last Wednesday where President
Speaker 3: Trump walked out with the chart of death. There it is,
Speaker 3: there is the president countries listed by tariffs and I
Speaker 3: think reciprocals as well. Just anecdotally, some of the responses
Speaker 3: you got to that specific board in his hands were
Speaker 3: some of the most astonishing things I've seen in print journalism.
Speaker 12: Recap some we have Rich Seinberg, he's a senior wealth
Speaker 12: advisor and he was saying he's used to all the
Speaker 12: stress but then this is one of the most frustrating
Speaker 12: he's seen. In fact, he's very, very frustrated. We have
Speaker 12: that quote in the story. Jay Hatfield of Infrastructure Capital
Speaker 12: was saying that this is quote unambiguously stupid and there's
Speaker 12: no reason to cause a quote trade war like this.
Speaker 12: And to Caroline's point, on top of all of this
Speaker 12: is the reverse wealth effect. We had wealth effect for
Speaker 12: the good of two years. Everyone was feeling flushed, everyone
Speaker 12: was feeling happy taking vacations. But now it's the exact opposite,
Speaker 12: and that can have real implications in the economy. If
Speaker 12: you look at your four O and K, or your
Speaker 12: retirement or just your investments in general, you may not
Speaker 12: I want to take that vacation, You may not want
Speaker 12: to buy that big appliances. And yes, maybe the richest
Speaker 12: Americans whld majority of the docks, but if you're an
Speaker 12: average American, if you have fifty thousand inner bank account
Speaker 12: at twenty percent, wipe down is still significant. In fact,
Speaker 12: if that's your wholeness egg, it's a lot scarier than
Speaker 12: for those who are wealthy.
Speaker 3: Bloombergs is a la brilliant reporting. Good to catch up,
Speaker 3: Thank you very much. Let's get back to Apple, and
Speaker 3: after years of avoiding iPhone price hikes in the United States,
Speaker 3: Apple may need to finally concede to raise it's nine
Speaker 3: hundred and nine nine dollars flagship model pricing as tariff's
Speaker 3: hit production. Let's got to bloombergs Mark German. This was
Speaker 3: the subject of this weekend's Power On. You explained the
Speaker 3: historic strategy very well, which is Apple's not raised prices.
Speaker 3: It has removed the bottom tier of handset and only
Speaker 3: offered a premium. So what happens nextly?
Speaker 13: There is precedent for Apple raising prices outside of the US.
Speaker 13: We've seen it post Spruxit in the UK. You've seen
Speaker 13: price adjustments in the European Union. We saw twenty five
Speaker 13: percent iPhone price sits in twenty twenty two in Japan,
Speaker 13: seen some adjustments in Canada and Australia. But you're right
Speaker 13: in the US it's been pretty stagnant. It's actually been
Speaker 13: one of the only things in the technology world over
Speaker 13: the last decade that's been pretty consistent.
Speaker 6: But given these tariffs.
Speaker 13: Something's got to give, and there's going to be adjustments
Speaker 13: with suppliers. They're going to push suppliers to give them
Speaker 13: better pricing. They're going to eat some of the costs themselves,
Speaker 13: They're going to make supply chain changes, but ultimately I
Speaker 13: do strongly believe they will have to make some price adjustments,
Speaker 13: probably with the iPhone seventeen launch later in the year,
Speaker 13: and this is going to be a big sea change trap. Well,
Speaker 13: obviously it's a big shift, but they do have some
Speaker 13: ways to help the consumer here. They've got a trade
Speaker 13: in program, they have installment plans through all the carriers now,
Speaker 13: so I think from a consumer standpoint, it's not going
Speaker 13: to be a massive negative.
Speaker 5: Now.
Speaker 13: We've seen some analyst reports and commentary over the last
Speaker 13: few days. I saw one website claim that a maid
Speaker 13: in USA iPhone would cost thirty thousand dollars per unit.
Speaker 13: I've seen analysts notes saying a made in USA iPhone
Speaker 13: could cost three thousand to thirty five hundred dollars. The
Speaker 13: good news is that these are completely misguided. Apple's not
Speaker 13: moving production to the US, certainly not for the iPhone.
Speaker 13: What you're going to see is them moving to more
Speaker 13: of these safe havens outside of China that are pushing
Speaker 13: tear that are going to get hit with tariffs, but
Speaker 13: less so India, for instance, You know, prior to Trump's
Speaker 13: post earlier today about a fifty percent tariff, India was
Speaker 13: at fifty percent of the size of the tariff on China,
Speaker 13: coming in around twenty six percent versus the prior fifty
Speaker 13: four percent, right, and so.
Speaker 6: That is a big improvement.
Speaker 13: Vietnam is in the high forties, but that's still an
Speaker 13: improvement over the fifty four percent, and they've been stuffing
Speaker 13: the US channel over the last several months with more
Speaker 13: units in order to avoid those tariffs.
Speaker 2: Can I quickly get your expertise on what Tim Cook
Speaker 2: is thinking about right now as well? We all thought
Speaker 2: he was a marvelous politician in and of himself the
Speaker 2: way and which had managed to navigate the previous administration.
Speaker 2: How much do you think he's desperately trying to get
Speaker 2: some sort of carve out.
Speaker 6: Extremely desperately.
Speaker 13: But it seems like Trump, as we expected, is even
Speaker 13: more emboldened than his second tour or his second term,
Speaker 13: and he is doing ever he wants at this point.
Speaker 13: It doesn't seem like he's working with companies on exemptions.
Speaker 13: It doesn't seem like he cares about who showed up
Speaker 13: to his inauguration doesn't seem to care that Apple said
Speaker 13: they're going to invest half a trillion dollars in the
Speaker 13: US basically because of him. He's just doing whatever he wants,
Speaker 13: and it doesn't seem like he's taking the impact into
Speaker 13: a gap.
Speaker 3: There's how this is playing out in markets, in the
Speaker 3: stock analysis, and then there's how it's playing out in
Speaker 3: the culture, how everyday people talk about MAGA and tariffs
Speaker 3: and Apple. This is a video from a post that
Speaker 3: overheard on Wall Street made and I'm not sharing it
Speaker 3: with you, Mark Flippant Lee, but they're suggesting that in
Speaker 3: the future Wall Street analysts will quit and start assembling
Speaker 3: iPhones in the Middle West. As far as I can tell,
Speaker 3: you said that won't happen. Just explain in thirty seconds why.
Speaker 13: I mean there's I mean, they're certainly you know, they
Speaker 13: have the right to quit their jobs and become manufacturing workers.
Speaker 13: But I don't anticipate Apple moving outside of Asia in
Speaker 13: any considerable way. The one thing I do see them
Speaker 13: doing is decentralizing their supply chain, right, but I don't
Speaker 13: see that coming to the US. I think you'll see
Speaker 13: more production in parts of South America, right, maybe parts
Speaker 13: of Europe, maybe parts of in more parts of India
Speaker 13: and China, but I don't think Midwest manufacturing facilities to
Speaker 13: create iPhones are coming anytime soon. I certainly don't think
Speaker 13: they're on the table right now.
Speaker 2: Makes for a good meme for Mark German is nothing
Speaker 2: but straight talk. We thank you so much.
Speaker 5: Nice.
Speaker 2: Let's take a quick look at what's happening in semi
Speaker 2: conductors right now, though ed because throughout the trading day
Speaker 2: we have basically been in the green websodes somewhat on
Speaker 2: this headline risk. But the socks up more than a
Speaker 2: percentage point in video now about one and a half percent,
Speaker 2: taking off that anxiety around the yet further tariffs coming
Speaker 2: China's way, if Trump is to be believed, onto social
Speaker 2: broadcom up three percent. Let's dig into what all of
Speaker 2: this means to the industry. Peter Elstrom and Pisa say
Speaker 2: is doing a tour of the US at the moment
Speaker 2: you're here with me in New York, and people basically
Speaker 2: had seen the chips sector wade because of again it's
Speaker 2: exposure from a supply chain to Asia. Why are they
Speaker 2: managing to shake it off a little bit today?
Speaker 14: Well, the volatility here is really surprising. I thought I
Speaker 14: knew what the tariffs were as I was walking over
Speaker 14: here to the set, and they changed even on my
Speaker 14: way over. So we know that Taiwan is going to
Speaker 14: get hit with tariffs around thirty two percent. China also
Speaker 14: is looking at some tariffs at this point, so there
Speaker 14: are concerns about what exactly those costs are going to be.
Speaker 14: As products move into the US. There'll be an exception
Speaker 14: for the chips themselves, at least so far, we've seen
Speaker 14: the White House carve out this exception for the actual chips,
Speaker 14: but there's not an exception for the products in TSMC
Speaker 14: of course makes products for Apple as German was referring
Speaker 14: to earlier, and also Nvidia in particular, and it's not
Speaker 14: exactly clear what those products are to do when it
Speaker 14: comes to these tariffs. You may see some exceptions there,
Speaker 14: and the analysts are trying to figure this out right now.
Speaker 14: They do believe that invidious servers coming into the US
Speaker 14: are going to be exempted from the tariffs, but it's
Speaker 14: not clear and the White House hasn't been able to
Speaker 14: give clarity on that point so far.
Speaker 3: It's an amazing point that that actually many don't understand
Speaker 3: specific policies relates to tariffs.
Speaker 5: The other part of it.
Speaker 3: Is that everything your team's reported for the last two years,
Speaker 3: which is the United States wants to have more semiconduct
Speaker 3: and manufacturing that fabs take time and billions of dollars
Speaker 3: to implement and build.
Speaker 5: Where are we at in that process?
Speaker 14: Right You talked about these companies that are trying to
Speaker 14: sidestep the tariffs from the Trump administration right now, Apple,
Speaker 14: of course has been very good at this. Look at TSMC,
Speaker 14: though certainly not as high profile. But TSMC came forward,
Speaker 14: they were already spending sixty five billion dollars on chip
Speaker 14: capacity in the US. They promised to spend another one
Speaker 14: hundred billion dollars on capacity in the US. You think
Speaker 14: that they would be one of the companies that will
Speaker 14: get some exemptions here, But so far the Trump administration
Speaker 14: has been holding pretty firm and it's not clear exactly
Speaker 14: how they're going to be affected. As they make chips
Speaker 14: in Taiwan and send them over to the US. Still
Speaker 14: they have their the bulk of their manufacturing in Taiwan.
Speaker 14: They need to be able to send those chips someplace
Speaker 14: else and then they come into the United States. So
Speaker 14: TSMC is making progress in building this geographic diversification, but
Speaker 14: they haven't made that much progress so far.
Speaker 2: What's so interesting is tomorrow we get samsung preliminary revenue.
Speaker 2: It's going to be down and they're in the line
Speaker 2: of fire when it comes to US CUBS. And at
Speaker 2: the same time, we're all worried about AI infrastructure bubbles
Speaker 2: that we were talking about even before this, right, So
Speaker 2: how much were dialing up into what already is a
Speaker 2: feeling that we're over allocated to the chip sector.
Speaker 14: Well, that's the big question with all of these huge
Speaker 14: investments into AI and into data centers in particular. We
Speaker 14: know that the hyperscalers are spending tens of billions of
Speaker 14: dollars at this point on that capacity, but we don't
Speaker 14: know what kind of revenue is sitting on the other
Speaker 14: side of it. So we're trying to get some insight
Speaker 14: into that. Samsung is certainly going to talk about their
Speaker 14: progress in making memory chips for AI. They've been behind
Speaker 14: s k Heinex in particular in terms of building that
Speaker 14: kind of capability pairing up with Nvidia at this point,
Speaker 14: but we're going to get some sign of their progress
Speaker 14: tomorrow and we'll see whether they give us any indication
Speaker 14: about what that AI demand is in the.
Speaker 5: End, Bloomberg's piter Eil stream over in New York. Thank
Speaker 5: you so much.
Speaker 2: Let's turn to another side of the markets right now,
Speaker 2: because twenty twenty five was supposed to see a rebound
Speaker 2: in IPO demand, but look, this market route following Trump's
Speaker 2: tariff announcements has led several companies Klana stub Hub, for example,
Speaker 2: to pause their plans here to talk about this. Or
Speaker 2: Greg Martin, co founder of Rainmaker Securities. Rainmaking was meant
Speaker 2: to be on and now we understand there's a pullback
Speaker 2: because these markets are treacherous. Greg, are all IPOs on ice?
Speaker 6: Well, thank you for having me on.
Speaker 15: I was hoping to be able to talk about the
Speaker 15: excitement we were going to have coming into Clarna and
Speaker 15: subub hitting the road and hopefully a re emergence of
Speaker 15: the IPO market. But the worst thing for the IPO
Speaker 15: market is uncertainty and instability, and that's what we have
Speaker 15: in stage right now. I mean the vix at forty
Speaker 15: five and approaching fifty. It's crazy how instable we are
Speaker 15: right now, and it's a huge web blanket on the
Speaker 15: IPO market.
Speaker 2: Stub Hub Clana. We see Chime, for example, delaying the
Speaker 2: brands that we know have already paused, but there's others
Speaker 2: waiting in the wings. We're already discussing, Well, maybe they'd
Speaker 2: be She and Bolt discord many had been articulated in
Speaker 2: the markets, varying amounts of reports is say whether or
Speaker 2: not they'd actually tap. But Greg, do we think there
Speaker 2: has to be a step away for the entirety of
Speaker 2: twenty twenty five as it stands.
Speaker 15: I think that's strong. I think it's a little bit
Speaker 15: wait and see. We're definitely in pause mode. I think
Speaker 15: people want to see what materializes. I remain an optimist.
Speaker 15: I'm hopeful that trade deals will get done. This uncertainty,
Speaker 15: this instability persists for a long time, and if we
Speaker 15: start to have years of a global recession and you know,
Speaker 15: trade wars, it could push this thing considerably to the
Speaker 15: end or next year.
Speaker 6: I think right now it's really up in the air.
Speaker 15: As we pointed out, Slarner and StubHub of delayed Hinge
Speaker 15: Health was supposed to go public, Chime.
Speaker 6: Circle just filed last week.
Speaker 15: It's just a lot of uncertainty, and I think right
Speaker 15: now it's wait and see mode.
Speaker 6: So I think it's probably at least a quarter of pause.
Speaker 3: What's interesting, let's bring those names back up, is a
Speaker 3: lot of people work at those companies. A lot of
Speaker 3: them have a broad base of investors. Many of them
Speaker 3: the employees and investors watch this program. Does this pause
Speaker 3: in the IPO window open up the secondaries market or
Speaker 3: put pressure on the companies to give employees liquidity in
Speaker 3: other ways?
Speaker 15: Absolutely, we've had a huge dearth of liquidity, you know,
Speaker 15: since twenty twenty one, frankly, and people have been waiting
Speaker 15: for the IPO market to open up. We've started to
Speaker 15: see companies doing tender offers in order to alleviate some
Speaker 15: of the liquidity pressure, but there's still a ton of
Speaker 15: liquidity for pressure that persists. And Frankly, in this period
Speaker 15: of there's a lot of fear in the market, and
Speaker 15: employees and workers in all of these companies are starting
Speaker 15: to think, you know, I'd like to have a little
Speaker 15: bit more of my net worth and cash, and so
Speaker 15: I think there's going to be a lot of pressure
Speaker 15: for companies to enable secondaries trading. So I do expect
Speaker 15: some secondaries trading will happen the flip side of that, though,
Speaker 15: is it investors when they buy secondaries, when they buy
Speaker 15: into these private companies before they go public, they want
Speaker 15: to see a public market in the future because they
Speaker 15: start to think about liquidity. So there's there's there's a
Speaker 15: there's a trade off there, and so we are going
Speaker 15: to see more liquidity pressure, but we also will see
Speaker 15: a little bit of a pause on demand.
Speaker 6: So it'll be interesting to see how the market plays out.
Speaker 3: Greg, is this an America problem or it's a global
Speaker 3: market problem?
Speaker 6: Five pos, It's a global problem. I mean this is
Speaker 6: this is something that hits.
Speaker 15: Everybody everywhere, in every part of the world, and it
Speaker 15: needs to be sorted out. We're seeing every market affected
Speaker 15: by this, and you know, the United States is the
Speaker 15: center of it all of course, but everyone is affected
Speaker 15: by this and it needs to get sorted out or
Speaker 15: else we could have some long term issues.
Speaker 2: India was really active, for example, Greg, though, I want
Speaker 2: to just see where the blame lies, because briefly, core
Speaker 2: weave wasn't exactly accepted with welcome arms when it came
Speaker 2: to the market. It since rallied a bit, but was
Speaker 2: this already in the making.
Speaker 6: I don't think it was necessarily in the making. I mean,
Speaker 6: it was a unique story.
Speaker 15: It had major customer concentration issues, it had a huge
Speaker 15: amount of debt, and frankly, it's actually traded up quite
Speaker 15: well since the IPO and actually is still up about
Speaker 15: twenty percent since an IPO to forty, despite the major
Speaker 15: market pullback last week.
Speaker 6: So I don't think this has anything.
Speaker 15: I don't think this was necessarily in play before Core
Speaker 15: or We was a different story. I think this is
Speaker 15: something that hit from left field, and I think it's
Speaker 15: something that we're all having to deal with and right
Speaker 15: now we're just not certain which direction we'll go, and
Speaker 15: that's why the market.
Speaker 6: Is in pause.
Speaker 3: Crade Martin, co founder of Remaker Securities, thank you very much.
Speaker 2: Well, the EU remains open to and strongly prefers negotiations.
Speaker 6: We will not weigh end up endlessly.
Speaker 3: That was EU Trade Minister Maraschefkevich. Now, trade ministers from
Speaker 3: the Block have been meeting in Luxembourg and discussing how
Speaker 3: the Block should respond to Trump's tariffs. For more, let's
Speaker 3: bring in Bloomberg's Michael Sheppard. That's the thing about tariff's,
Speaker 3: they can go both ways. There's a response. What do
Speaker 3: we know about the EU's position as it stands well, as.
Speaker 16: We heard from the Trade Minister, they are willing to
Speaker 16: sit tight for a minute, but not for too long.
Speaker 16: They want to see how the effects of the latest
Speaker 16: down dreft in markets play out here in Washington and
Speaker 16: whether it might cause the Trump administration to start rethinking
Speaker 16: the levees that they have imposed on the block. That
Speaker 16: is not just the twenty percent across the board tariffs
Speaker 16: that Trump unveiled last week, but also the measures targeting
Speaker 16: autos that took effect on Thursday, and then the levies
Speaker 16: that took effect previously against steel and aluminum. Taken together,
Speaker 16: they have really angered officials in the European Union and
Speaker 16: prompting calls for a strong response and a potential retaliation
Speaker 16: that could take aaim at America's biggest tech companies. And
Speaker 16: this would be through a measure known as the Anti
Speaker 16: Coercion Instrument, and that could result in higher taxes, including
Speaker 16: through the Digital Service Tax, against American tech giants, the
Speaker 16: ones that we know so well like Meta, Google and others.
Speaker 2: Chev what's interesting is the EU is going to be
Speaker 2: watching closely what's just been posted on true social Trump
Speaker 2: threatening yet more tariffs on China because of their tough response.
Speaker 2: So how does the EU navigate not having yet further
Speaker 2: tariff are their direction?
Speaker 16: Well, Caro, they are really having to walk a type
Speaker 16: rope here. And even before his tariff's announcement last week,
Speaker 16: President Donald Trump warned both China and the European Union
Speaker 16: in social media posts that he would retaliate against them
Speaker 16: over any reprisals that they unveiled, and China responded very
Speaker 16: quickly last week to Trump's across the board tariffs, hitting
Speaker 16: all Chinese goods with heavy tariffs of their own. And
Speaker 16: because the European Union has waited a moment, they have
Speaker 16: a chance now to see how that possibility of a
Speaker 16: reprisal to a reprisal from the US could play out.
Speaker 3: I just want to think of materially how this impacts
Speaker 3: technology companies, right, So, for example, Apple makes some iMac
Speaker 3: products in Ireland, part of the EU, subject to a
Speaker 3: twenty percent tariff. Intel has a fab in Ireland, other
Speaker 3: facilities in Germany under consideration. Just that sort of physical component.
Speaker 16: Mike, Well, it's the physical components, but it's also the
Speaker 16: whole demand side question too. If there's a chill in
Speaker 16: the global economy. If there's an overall bump in inflation,
Speaker 16: that will also weigh on on global commerce and even
Speaker 16: anything happening on these shores. If it's important to the US,
Speaker 16: even if it's just consumed in the US, tech companies,
Speaker 16: like every other business across the US, will start to
Speaker 16: feel it. A lot of the tariffs are paid here
Speaker 16: by consumers in this country. It's not just as the
Speaker 16: President is like to say, those countries paying the cost.
Speaker 5: As he sees it, all.
Speaker 2: Stock markets currently down shepiy, thank you, Mike Shephard. There, Look,
Speaker 2: let's quickly look at how the markets have fared. It's
Speaker 2: been ugly in Europe and the stocks six hundred is
Speaker 2: sold off in particular ASML is still off. But we
Speaker 2: think more broadly about the US just in gyration mode.
Speaker 2: At the moment, we're off by three quarters percent on
Speaker 2: the na's that one hundred. We're in a bear market.
Speaker 2: We're likely going to enter a bear market on the
Speaker 2: S and P five hundred. But that does it for
Speaker 2: this edition of Bloemberg Technology. And we really are speaking
Speaker 2: once again with Ed Ludlow back in the fold in
Speaker 2: San Francisco. It's a joy to have you back on