Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and Eva Low in San Francisco.
Speaker 2: This is Bloomberg Tech coming up. Musk's political aspirations in
Speaker 2: focus after the Tesla CEO says he's formed a new
Speaker 2: political party.
Speaker 3: Plus more tariff warnings from President Trump. Today, as countries
Speaker 3: rush to negotiate trade deals, we bring the tech.
Speaker 2: Angles and Cory've agrees to buy Core Scientific in a
Speaker 2: nine billion dollar all stock transaction. We'll discuss that and
Speaker 2: the rest of the tech m and a landscape.
Speaker 3: But first we get to these markets that come off
Speaker 3: of record highs, anxiety building around the trade announcements, and
Speaker 3: indeed where the negotiations will go down to the wire
Speaker 3: come July ninth. I'm looking at the NaSTA one hundred
Speaker 3: of by three quarters of percent at the moment ed
Speaker 3: we're seeing stocks down, bonds down, dollar higher. But there
Speaker 3: is one key company that drags from a points perspective,
Speaker 3: and you've got it.
Speaker 2: Yeah, that's our top story, and that is Tesla. The
Speaker 2: stock down more than seven percent in the session, now
Speaker 2: down more than twenty seven percent year to date, Musk
Speaker 2: says he's formed the America Party. The concern from the
Speaker 2: Cell side, in particular is that this is just more
Speaker 2: distraction that must won't be as focused on Tesla as
Speaker 2: he pursues these political ambitions. There's also the factor weighing
Speaker 2: on the stock that is President Trump over the weekend,
Speaker 2: commenting on the news of Musk setting up his own
Speaker 2: political party.
Speaker 4: It's always been a two party system, and I think
Speaker 4: starting a third party just hands to confusion. It really
Speaker 4: seems to have been developed for two parties. Third parties
Speaker 4: have never worked, so he can have fun with it.
Speaker 5: But I think it's ridiculous.
Speaker 3: Let's get it straight to Bluemeg's Max Chrafck and the
Speaker 3: President thinks it's ridiculous. Big investors, analyst notes out today,
Speaker 3: think it's really worrying.
Speaker 4: Yeah, and you know President Trunk's Trump's political observation that
Speaker 4: you know, third party candidates have generally not done well.
Speaker 4: That is true historically, And of course there's there's also
Speaker 4: just the risk that you know, having a poor relationship
Speaker 4: with the you know, the president of the United States,
Speaker 4: with the party that's in power. As Musk is trending
Speaker 4: towards is going to have negative consequences, not just for Tesla,
Speaker 4: which of course does have you know, areas of exposure,
Speaker 4: regulatory exposure as well as benefiting from these EV tax
Speaker 4: credits that are about to go away, but also for
Speaker 4: Musk's other companies, you know, SpaceX, massive government contractor some
Speaker 4: of these other companies also depend on sort of regulatory
Speaker 4: you know, good relations with regulators. So so lots and
Speaker 4: lots of risk here for investors.
Speaker 2: And I think that's what we're seeing in the stock
Speaker 2: We're showing some of Musk's posts on X over the weekend,
Speaker 2: as well as the president's response on True Social but
Speaker 2: the catalyst was the big beautiful bill Max. I think
Speaker 2: it'd be really helpful if you just exp lane this
Speaker 2: basically difference in fiscal policy opinion here between elam Mosque
Speaker 2: and the President of the United States.
Speaker 4: Well, there's a question of fiscal policy opinion, whether or
Speaker 4: not you agree that these tax cuts should have been
Speaker 4: extended or I think from Musk's point of view, maybe
Speaker 4: there should be more cuts to pay for them. But
Speaker 4: then there's also the sort of vibes thing. You know,
Speaker 4: Musk spent a lot of time and and you know,
Speaker 4: hurt his popularity through doge you know, comes away cutting
Speaker 4: you know, a little less than two hundred billion dollars
Speaker 4: maybe best case from the deficit. And now he's reading
Speaker 4: these headlines talking about trillions of dollars being added to
Speaker 4: the deficit, you know, over a decade. And so so
Speaker 4: I think I think there's a sort of personal affront.
Speaker 4: And I also think it's important we not missed the
Speaker 4: fact and Trump brought this up in his post that
Speaker 4: there are aspects of this tax bill that are going
Speaker 4: to affect the bottom line of Musk's companies. Now, it's
Speaker 4: possible that as Tesla you know, pivots to Robotaxi, these
Speaker 4: hits won't matter as much. But we're talking about significant money,
Speaker 4: significant money that's going to make Tesla's cars more expensive
Speaker 4: for consumers, and that's going to cut into Tesla's margins,
Speaker 4: which we've already seen under pressure, you know, over the
Speaker 4: last few quarters.
Speaker 3: And that's exactly why Annasov William Bair Blair actually downgraded
Speaker 3: the stock today. JP Morgan said about forty percent hit
Speaker 3: to profitability on the back of these regulatory changes. There
Speaker 3: is one note of optimism, though, coming from Ralliant Global
Speaker 3: advisors Jason Sue, who had said, look, this is kind
Speaker 3: of the only option left to Elo Musk actually is
Speaker 3: a savvy political move. What did you make of that nomax?
Speaker 4: You know, I think there's always obviously always, you know,
Speaker 4: different interpretations and so on. You know what we saw
Speaker 4: from investors when Musk and Donald Trump had their sort
Speaker 4: of first blow up at the beginning of June, and
Speaker 4: then then they kind of like seem to be patching
Speaker 4: things up the stock started going better.
Speaker 6: I don't really I think you really.
Speaker 4: Have to squint to see how you starting some kind
Speaker 4: of quicksotic third party is kind of a brilliant political move.
Speaker 4: I think you know the consensus, you talk to Wall
Speaker 4: Street investors, you talk to balls and bears. This is
Speaker 4: not going to help the company. This is a drag
Speaker 4: on the company. You know, no matter what your point
Speaker 4: of view. Obviously there are some exceptions, and you know,
Speaker 4: who knows that Elon Musk has has pulled stranger things
Speaker 4: off before, So maybe this will turn out to be
Speaker 4: some kind of brilliant political gambit.
Speaker 2: Bloomberg's Max Chafkin, thank you very much. Let's continue the conversation.
Speaker 2: James fishback from Azoria partners. He is a former advisor
Speaker 2: to the Department of Government Efficiency or DOGE, and he's
Speaker 2: written an open letter to Tesla's board of directors calling
Speaker 2: on them to meet with Elon Musk and seek clarity
Speaker 2: over his political ambitions. Azoria is also postponing the listing
Speaker 2: of its Azoria Tesla Convexity ETF. After Musk said he
Speaker 2: was forming a new political party. James Fishback joins us, Now,
Speaker 2: I think we just start with the basics, James, if
Speaker 2: we can, Why did you write open letter to Tesla's
Speaker 2: board and why do you think they need to understand
Speaker 2: the formation of the America Party in the context of
Speaker 2: whether or not is a net benefit to the company
Speaker 2: and Tesla's future goals.
Speaker 6: Well, good morning, Ed.
Speaker 7: The truth is that when you have a full time
Speaker 7: CEO and Elon Musk, who has been an extraordinary CEO,
Speaker 7: his time and energy needs to go to Tesla and
Speaker 7: synergistic companies like Xai or SpaceX.
Speaker 6: A political party.
Speaker 7: Regardless of how I might feel or the President might
Speaker 7: feel about how ridiculous this stunt is, it does not
Speaker 7: help Tesla in any way, shape or form. I wrote
Speaker 7: the Tesla board this weekend asking for one thing clarity.
Speaker 7: Sit down with Elon Musk this week and clarify what
Speaker 7: his full time obligation to Tesla will be in light
Speaker 7: of this new political party. If he cannot, If he
Speaker 7: cannot be Tesla's full time CEO, the boord what it
Speaker 7: needs to take into that into account and needs to
Speaker 7: hold him accountable.
Speaker 2: Has Tesla's Bullard responded to Aleta James.
Speaker 7: I have not heard back from Tesla's board yet. I'm
Speaker 7: confident that this week they are going to have this
Speaker 7: conversation with mister Musk. Let's just remind everyone listening. Elon
Speaker 7: Musk is free to burn his own money in a
Speaker 7: political party. He is not free to bring shareholders like
Speaker 7: us along with him. He does not own Tesla.
Speaker 8: We do.
Speaker 6: And if Elon Musk does not want.
Speaker 7: To be the full time CEO of Tesla, he should
Speaker 7: tell us now, because starting a new political party, with
Speaker 7: the travel, the candidate recruitment, the training and the organizing
Speaker 7: that comes with that is not a wise use of
Speaker 7: his time.
Speaker 9: Ed.
Speaker 7: He has been an extraordinary engineer and visionary leader for
Speaker 7: Tesla and for SpaceX. I have FSD in my car.
Speaker 7: I know you do as well. It is a magical technology.
Speaker 7: Robotaxi is brilliant. It's rolling out right now in Austin.
Speaker 7: That's what his time and energy should be focused on,
Speaker 7: not trying to sabotage the President of the United States, James.
Speaker 3: Can you remind our audience your exact exposure to Tesla,
Speaker 3: how much you own? How that is the scale within
Speaker 3: assets under management of Azoria.
Speaker 7: Yeah, absolutely so. This Tesla Convexity ETF very simply was
Speaker 7: designed to combine the power of owning an asymmetric stock
Speaker 7: like Tesla with asymmetric call options on an asymmetric stock
Speaker 7: like Tesla.
Speaker 6: And so this was.
Speaker 7: Upwards of a billion dollar investment we were going to
Speaker 7: make on behalf of retail and institutional investors over the
Speaker 7: next few months in Tesla. We can't do that in
Speaker 7: good faith right now because you have a CEO who
Speaker 7: is putting personal political ambitions ahead of his obligations and medicaid,
Speaker 7: the detriment of shareholders and Caroline, there's a much bigger
Speaker 7: story at play here in America. We have seen CEOs
Speaker 7: who have pursued and imposed a political agenda at the
Speaker 7: moral and financial detriment to their companies, which is why
Speaker 7: tomorrow we are still publicly listing or Azoria five hundred
Speaker 7: Meritocracy ETF, which invests in the top five hundred companies
Speaker 7: in America and excludes any company with a political DEI
Speaker 7: hiring target. Those are moral failures and their financial ones
Speaker 7: as well.
Speaker 3: Will that exclude Tesla? And what of the ETF future
Speaker 3: plans If you don't hear back from the board.
Speaker 7: Well, look, we have to hear what the board is
Speaker 7: going to say.
Speaker 9: First.
Speaker 7: My biggest concern now is that mister Musk, who have
Speaker 7: a lot of respect for that, he is going to
Speaker 7: use his position at Tesla and resources and time and
Speaker 7: energy that could be better spent on optimist robots, on robotaxi,
Speaker 7: on the new model. Why rollout that he's going to
Speaker 7: use that time and energy on this new political party.
Speaker 7: Whether you agree with it or not, the truth is
Speaker 7: the CEO of a company has a full time obligation
Speaker 7: to that company's employees and shareholders, and so we need
Speaker 7: to see clarity if we are going to revive the
Speaker 7: Asoria Tesla Convexity ETF. I hope we get that clarity
Speaker 7: care line, because Tesla is the best AI investment that
Speaker 7: investors can and make right now. Between the energy business,
Speaker 7: Humanoid robot's full self driving and robotaxi. This is a
Speaker 7: compelling stock to invest in, but we can't do that
Speaker 7: right now when his political ambitions or front center.
Speaker 2: James Tesla is the only publicly traded name in Elon Inc.
Speaker 2: Across many companies, but he is also CEO of SpaceX
Speaker 2: and of Xai and has leadership role at Neuralink. And
Speaker 2: what I hear all the time from investors in XAI
Speaker 2: is actually they feel that's his primary focus. XAI in
Speaker 2: the run up to the November election, Musk was the
Speaker 2: biggest donor. What he wants to do with the America
Speaker 2: Party is back candidates for House and Senate seats. So
Speaker 2: how does that work. He's already stretched across multiple companies.
Speaker 2: What difference does it make if he's putting his own
Speaker 2: wealth towards a political endeavor. He's basically continuing with something
Speaker 2: he's been doing eight or nine months anyway.
Speaker 7: Yeah, that's a great point. So his work at XAI
Speaker 7: or SpaceX directly complements his work at Tesla. So when
Speaker 7: you talk about the technologies, the GPUs, the dojo models
Speaker 7: it's being used at Tesla, those are also carrying over
Speaker 7: to XAI. The synergies, the physical materials, the engineering breakthroughs
Speaker 7: at SpaceX have carried over into the cyber truck, for example.
Speaker 7: So there's obvious synergies between his work at Tesla and
Speaker 7: at SpaceX and at XAI. No synergies exist between Tesla
Speaker 7: and its AI efforts. And starting a political party that
Speaker 7: seeks to sabotage the President of the United States who
Speaker 7: just delivered one point two trillion dollars in spending cuts
Speaker 7: over the next ten years.
Speaker 10: I don't get Elon.
Speaker 7: With all due respect to Elon, he promised a trillion
Speaker 7: dollars in spending cuts over the last six months, didn't
Speaker 7: come anywhere close to delivering that, and now he wants
Speaker 7: to start a political party. Meanwhile, President Trump just signed
Speaker 7: in the big beautiful bill this past weekend that actually
Speaker 7: delivered not just one trillion dollars in spending cuts, but
Speaker 7: a record investment in our border security. Companies like Matroid
Speaker 7: benefiting from that deploying AI vision technology at the border
Speaker 7: to stop human trafficking and drug smugglers. And then second,
Speaker 7: record tax relief for working families who for under the
Speaker 7: Biden Harris administration, we're getting the very short end of
Speaker 7: the day.
Speaker 3: Bringing it back to the Tesla perspective here, though in
Speaker 3: particular rather than political one. What about Musk's own pay package?
Speaker 3: What about potentially thinking of succession planning here? How is
Speaker 3: the board likely to respond to that? How are your
Speaker 3: retail investors that you've been building an ETF for going
Speaker 3: to respond to that? To think, that's a great question.
Speaker 7: Elon deserves to get paid for the extraordinary work he
Speaker 7: has done at Tesla. What that judge in Delaware did
Speaker 7: is nothing short of political lawfare, and Tesla shareholders, including Azoria,
Speaker 7: want him to be paid and paid hugely for the
Speaker 7: contributions he's made and the wealth that he's generated.
Speaker 2: For all of us.
Speaker 7: So that is a separate issue. Of course, anytime you
Speaker 7: have a CEO as big and as bold and as
Speaker 7: visionary as Elon, you have to think about succession plans.
Speaker 7: I trust Robin, I trust the board to have this
Speaker 7: conversation with Elon this week to clarify his new America Party,
Speaker 7: not on the merits of what the party stands for,
Speaker 7: but what it means for his full time obligations to's
Speaker 7: Tesla as.
Speaker 3: CEO Zoria, CEO James fishback. Thanks for joining us today.
Speaker 3: Appreciate it. President Trump is said to announce more trade
Speaker 3: deals and deliver tariff warnings today. It's ahead of the
Speaker 3: Wednesday deadline. This comes as US officials actually signal that
Speaker 3: trading partners will have potentially until August first before tarif's
Speaker 3: actually kick in. For more Bluebergs, Tyler Kendall is joining
Speaker 3: us now. So the clock is ticking less than an hour.
Speaker 3: What do we expect to hear?
Speaker 11: Yeah, hey, Caroline, as you said, we're almost two twelve
Speaker 11: pm Eastern, which is when President Trump said that we
Speaker 11: could expect the first round of his tariff letters to
Speaker 11: be sent down. He said to expect twelve to fifteen
Speaker 11: countries to receive them, but at the moment, it really
Speaker 11: is unclear which ones are going to and how they're
Speaker 11: out ultimately going to respond.
Speaker 12: Now, our understanding is.
Speaker 11: The letters are going to be out in the next
Speaker 11: coming days, but really the tariffs aren't going to be
Speaker 11: enacted for about three weeks time August first, which would
Speaker 11: suggest that the administration is open to negotiating further here
Speaker 11: despite the July ninth deadline coming up on Wednesday, and
Speaker 11: we heard the Treasury Secretary Scott Vessont basically say as
Speaker 11: much in an interview over the weekend, saying that the
Speaker 11: playbook from the administration is what they would like to
Speaker 11: call maximum pressure. They're going to send out these letters
Speaker 11: in a bid to get our trading partners to put
Speaker 11: their best offer on the table. Now, I'll quickly point
Speaker 11: out one development that we've been tracking, which is really
Speaker 11: sort of a reversal in which countries seem to be
Speaker 11: getting priority here when it comes to talks. The administration
Speaker 11: has expressed frustration when it comes to Japan, for example,
Speaker 11: And you had President Trump this morning threatening an additional
Speaker 11: ten percent tariff on any country that aligns with the
Speaker 11: bricks after those that group of nations held the summit
Speaker 11: over the weekend, which could spell trouble for India, of course.
Speaker 11: But Caroline and Ed pair that with the confirmation this
Speaker 11: morning that the European Union's arsenal On Vonderlin had a
Speaker 11: phone call with President Trump just yesterday, and what really
Speaker 11: does feel like a reversal of favor for the trading block,
Speaker 11: which we had been, our understanding had been was really
Speaker 11: at the end of the negotiating line.
Speaker 6: Boo Books.
Speaker 2: Tyler Kendall from Washington, DC. Thank you very much. Let's
Speaker 2: get more on global tariffs in their impact join us now.
Speaker 2: Is Liza Tobeing Ghano, Global managing director, your trade lies
Speaker 2: there is advising on geopolitical risk. You heard Tyler's reporting there.
Speaker 2: How much is this about managing expectations versus getting something
Speaker 2: definitive from this administration today on what has been agreed
Speaker 2: and what will be agreed in the weeks to come.
Speaker 12: Right, Good morning, ed in Caroline, It's nice to be
Speaker 12: on with you.
Speaker 6: Yeah.
Speaker 12: Secretary Scott Bessett has messaged this as a maximum pressure
Speaker 12: can so they're trying to ratchet up the pressure and
Speaker 12: get more concessions from US trading partners. It does seem
Speaker 12: that by kicking the deadline back to August first, they
Speaker 12: are needing more political wins. They need more deals in
Speaker 12: order to make this look like more of a success.
Speaker 12: But what I think markets may be missing at the
Speaker 12: moment is that there is another big chapter in President
Speaker 12: Trump's trade agenda looming in the background, and that's the
Speaker 12: sectoral terriffs. So of course what we're all obsessing about
Speaker 12: right now is the reciprocal tariffs, and there's a lot
Speaker 12: of uncertainty the uncertainty keeps extending, and the US courts
Speaker 12: are raising more questions about the legality of these reciprocal tariffs.
Speaker 12: But by contrast, the Department of Commerce meanwhile is undertaking
Speaker 12: these investigations to lay the groundwork for sectoral tariffs. These
Speaker 12: are the Section two thirty two investigations into things like
Speaker 12: semiconductors and pharma and various medals and a whole host
Speaker 12: of other key things. And if you'll recall this investigation,
Speaker 12: Commerce has this authority in terms of looking at the
Speaker 12: national security vulnerability. So that's still looming. It's been delayed
Speaker 12: by these trade negotiations, but it's still coming, and it's
Speaker 12: arguably a lot more consequential than za we'recal tariffs.
Speaker 2: A lot of that directly relates to China, right, And
Speaker 2: the latest headline is the President warning an additional ten
Speaker 2: percent tariff in response to anti American policies, as he
Speaker 2: calls them from bricks nations. But if you consider the
Speaker 2: bricks nations and where this administration is focused, all of
Speaker 2: these different negotiations happen in parallel. Do you think China
Speaker 2: gets more time and is more of a priority than
Speaker 2: anyone else.
Speaker 12: Yeah, there's a few trade partners that are sort of
Speaker 12: on a separate track and they're not really part of
Speaker 12: these ongoing reciprocal tariff negotiations. China, Canada, and Mexico. You
Speaker 12: know Canada and Mexico of course, because they're USMCA trade partners,
Speaker 12: and they're on a separate track. But China, because the
Speaker 12: President has been saying that he has a deal already
Speaker 12: with China, this is coming out of the London trade talks.
Speaker 12: What you really have there is more of just a
Speaker 12: fragile truce that centered around rare earths and export controls,
Speaker 12: and so it's very fragile. I think the administration would
Speaker 12: like to keep the door open to further trade talks
Speaker 12: and maybe some kind of a phase two with China.
Speaker 12: They would like to see China open up more, but
Speaker 12: of course it takes two to tango, and China has
Speaker 12: consistently disappointed US trade negotiators, and what Washington may try
Speaker 12: to offer towards Beijing as concessions or conciliatory diplomatic moves
Speaker 12: will be read in Beijing as softness and weakness, and
Speaker 12: they will push harder for more concessions. So I think
Speaker 12: there's a lot of fragility here, and either side could
Speaker 12: tip over this Apple car in terms of this kind
Speaker 12: of fragile US China truth, Oh.
Speaker 3: Apple cart takes me exactly where I want to go
Speaker 3: because for us in the world of technology, Apple has
Speaker 3: been the front line of fire when it comes to
Speaker 3: tariff exposure. We also think of the chip the semiconductor names,
Speaker 3: and you mentioned section two thirty two. All of this
Speaker 3: give us the advice you're giving leadership at Corporate America
Speaker 3: right now. Do you navigate tariff's like this or do
Speaker 3: you ultimately take the takeaway is build more in America
Speaker 3: and signal more rather than see the realities of where
Speaker 3: tariffs go in the next month or week.
Speaker 12: I think with China, you have to have a China strategy,
Speaker 12: and that has to take the medium and long term
Speaker 12: into account. It has to take into account China's track
Speaker 12: record and the track record over decades really of US
Speaker 12: China trade negotiations eventually disappointing and breaking down.
Speaker 6: So I think you kind of have to bake that in.
Speaker 12: What remains to be seen is how seriously the administration
Speaker 12: will back up President Trump's desire to reindustrialize here in
Speaker 12: the United States. There's some areas where this sort of
Speaker 12: conflict among goals is quite striking. For one thing, the
Speaker 12: US needs a strategy on rare earth. I think the
Speaker 12: US dependency on China for rare earth and permanent magnets
Speaker 12: has become really a hot topic that everyone's tracking now,
Speaker 12: but we still don't have the US still doesn't have
Speaker 12: a strategy to deal with the lack of demand. Really,
Speaker 12: and what you saw in the big beautiful Bill over
Speaker 12: the weekend was there had been some measures in place
Speaker 12: on the green energy side to put more funding towards
Speaker 12: solar and wind power that would have created more sustainable
Speaker 12: demand for the off take of these nascent rare earth projects.
Speaker 12: That was stripped out of the bill unfortunately. So I
Speaker 12: think you need to see more, you know, an array
Speaker 12: of support beyond terrors to strategies to reindustrializing in the
Speaker 12: United States.
Speaker 3: Lasotomin, I'm Gano Global. Great to catch up with you.
Speaker 3: Thank you now coming up TikTok maybe building a brand
Speaker 3: new app for US users. That story is next in
Speaker 3: talking tech. This is in berg tech. It's time now
Speaker 3: for talking tech. And first up, Huawei's Ai Research Lab
Speaker 3: is pushing back on allegations and relied on rival models
Speaker 3: to develop its own platform now. The accusations come after
Speaker 3: the company published a source code for its PANDU pro
Speaker 3: e models. That was last week, where users on GitHub
Speaker 3: debated its origins. While we're responding stating the use of
Speaker 3: open source code is common practice and they strictly adhere
Speaker 3: to licenses. Plus, China hits back at EU restrictions on
Speaker 3: their medical device makers, announcing reciprocal curves. Beijing says it
Speaker 3: will exclude EU based companies from Chinese government procurement on
Speaker 3: certain medical devices. The move comes ahead of high stakes
Speaker 3: and meetings between the EU and Chinese leaders. And TikTok
Speaker 3: maybe building a new version of its.
Speaker 6: App for US users.
Speaker 3: It's according to reports, and the company is planning to
Speaker 3: launch the new app on September the fifth. TikTok users
Speaker 3: would have to download the new app and migrate in
Speaker 3: order to continue using the social media platform and the
Speaker 3: existing app, but it's said to work only until March
Speaker 3: of next year.
Speaker 2: Ed Okay, Coming up, Core, We've agrees to buy Core
Speaker 2: Scientific in a nine billion dollar also transactions, got the
Speaker 2: details of some Monday m and a coming up next.
Speaker 2: This is Bloomberg Tech. Welcome back to Bloomberg Tech. I'm
Speaker 2: looking at a couple of big tech names moving to
Speaker 2: the downside. And what's interesting about Apple and Alphabet both
Speaker 2: lower this Monday is news out of the EU. So
Speaker 2: starting with Apple, Apple is a pee that five hundred
Speaker 2: million euro fine that was relating to the app store
Speaker 2: saying that the requirements that you has for appstore changes
Speaker 2: are unlawful. Maybe some pressure there. Similarly, Alphabet or Google
Speaker 2: is saying that it's going to list the search results
Speaker 2: of competitors right at the top of the page in
Speaker 2: order to conform the Digital Markets Act. Again, a stock
Speaker 2: that's down one percent. That news came out on July
Speaker 2: fourth holiday here in America. Maybe it's having an impact.
Speaker 2: Then there's the big one, Tesla, the biggest mover to
Speaker 2: the downside in terms of the points drag on those
Speaker 2: major industries. Elon Musk has founded the America Party. The
Speaker 2: cell side are worried that it's going to be a
Speaker 2: distraction away from Tesla his core obligation. And there's the
Speaker 2: impact of the President of the United States commenting on that.
Speaker 2: Later in the program, we're going to go out to
Speaker 2: Crag Trudell. It's going to give us a lot more
Speaker 2: of the market reaction in this story. Correct.
Speaker 3: Yeah. Amid all of that, though, we've got some m
Speaker 3: and A news ed and that's a cap Gemini in
Speaker 3: France races to build Boulder AI offerings with the Transalactic deal.
Speaker 3: And here in the US, Core Weave has agreed to
Speaker 3: buy Course Scientific to expand its data center capacity. Again
Speaker 3: it's capitalizing on AI demand. Leanna Baker's here with us.
Speaker 3: Who leads the deal team? Leanna, Let's go to Core
Speaker 3: We've and Core Scientific first, because this is all about
Speaker 3: the need for compute. They actually eyed the asset about
Speaker 3: a year ago from a much less price point.
Speaker 13: And since then Core Scientific shares have gone up a lot,
Speaker 13: so I think patience has paid off for them. Although
Speaker 13: you might see that shares are down today. That's something
Speaker 13: we're following closely because you don't often see that in
Speaker 13: M and A But because it's an all stock deal
Speaker 13: and Core Weave is a pretty volatile stock that could
Speaker 13: be weighing on shares.
Speaker 6: Of course Scientific.
Speaker 2: There's also this kind of broader m Anda Monday vibe.
Speaker 2: Cap Gemini is doing something in the market to get
Speaker 2: itself up to speed on AI. What do we know
Speaker 2: about the backstory here. I've been reading reports about this
Speaker 2: piece of M and A for some time.
Speaker 13: Thanks Ed, We've been all over this story. So cap
Speaker 13: Gemini first started talks with this company a couple months ago.
Speaker 13: They were in advanced negotiations and then we had dislocation
Speaker 13: and market. You might remember all that tariff drama, so
Speaker 13: talks sort of stalled there, but then it came back.
Speaker 13: We've been hearing a few weeks ago that things were happening.
Speaker 13: We were trying to get that final price. We didn't
Speaker 13: get there, unfortunately, but you saw it announced today. Since then,
Speaker 13: since talks broke off, you know, the euro has strengthened
Speaker 13: a bit. Maybe that came into play, but definitely there's
Speaker 13: going to be consolidation among companies that consult other companies.
Speaker 13: These B to B companies are being affected by AI
Speaker 13: and that's going to be a trend that we're seeing.
Speaker 13: So i'd say WS is looking to get stronger here
Speaker 13: by getting with a bigger rival Bloomberg.
Speaker 2: Leanna Baker, who leads our deals team, thank you very much.
Speaker 2: Let's get back to today's big story, Tesla. After CEO
Speaker 2: Elon Musk announce the formation of a new political party,
Speaker 2: how do investors feel about it. Let's bringing Michael Green,
Speaker 2: portfolio manager and chrief strategists at Simplify Asset Management. I
Speaker 2: was on the Bloomberg on the HDS function. I think
Speaker 2: you have a very small holding in Tesla, maybe thirteen
Speaker 2: thousand shares or so to clarify that for us. But
Speaker 2: your reaction is somebody that has exposed that name and
Speaker 2: Elon Musk forming a political party.
Speaker 6: How do you react, well, very quickly.
Speaker 14: So Simplify has a two x levered variant of the
Speaker 14: Tesla fund that provides access to that. It is a
Speaker 14: very small fund. As an investor in Tesla, however, I
Speaker 14: would would argue that this is not so much a
Speaker 14: choice that he has, but almost an inevitability. At this
Speaker 14: point he is man. Tesla is very closely as his
Speaker 14: SpaceX and related businesses from Elon Musk. They're very heavily
Speaker 14: tied into the political allocation machine, whether that is the
Speaker 14: Department of Defense and NASA through SpaceX, whether that is
Speaker 14: through the environmental credits associated with Tesla and Solar. You know,
Speaker 14: this is a business that is deeply tied into the
Speaker 14: political framework, and at the end of the day, unfortunately
Speaker 14: Elon Musk has now managed to basically alienate both Democrats
Speaker 14: and Republicans. Democrats by aligning with Trump initially in the
Speaker 14: anti woke movement, and now of course Republicans by breaking
Speaker 14: with Donald Trump and launching the American Party. I've drawn
Speaker 14: the analogy that this is much more like William Randolph
Speaker 14: Hurst than any form of traditional technologist. He's largely known
Speaker 14: at this point for his political and communications empire in the.
Speaker 6: Form of Twitter.
Speaker 14: Is a town square that really seems to be setting
Speaker 14: the tone here, whether he is established.
Speaker 2: As opposed to as opposed to being the key inventor
Speaker 2: or the technical brain himself.
Speaker 9: Right.
Speaker 2: Like, the thing that we always go back to is
Speaker 2: that in many annual regulatory filings in the boiler plate,
Speaker 2: they will put Elon Musk is essential to this company
Speaker 2: and if anything were to happen to him, that would
Speaker 2: be to Tesla's detriment. But as I know, I've reported
Speaker 2: a lot on it, right, there are many talented and influential,
Speaker 2: impactful people at that company. Even so, there is an
Speaker 2: element of key man risk from Tesla's own perspective. It's
Speaker 2: in the filings.
Speaker 14: Yeah, at the end of the day, the Tesla buyer
Speaker 14: is suffering from their car being keyed in a parking lot,
Speaker 14: not because of the technologists, but because of the chief
Speaker 14: executive officer and a leader of the company. That is
Speaker 14: clearly a risk, both from a management standpoint and a
Speaker 14: talent acquisition standpoint. He is a transformative figure to many
Speaker 14: in the technology space who dared to actually build stuff
Speaker 14: in a technology world that was largely focused around consumer apps.
Speaker 14: You but he is not the inventor, He is not
Speaker 14: the key technologist. What he is is the key spokesperson,
Speaker 14: and so the underlying behavior that is occurring here, it's
Speaker 14: not entirely clear that he has a choice to back
Speaker 14: away from the political sphere given the exposure that his
Speaker 14: businesses have. Whether this is reckless or not is ultimately
Speaker 14: going to be determined by the history books. We can't
Speaker 14: really know the influence, but with a deeply divided electorate,
Speaker 14: the threat of a third party does have the potential
Speaker 14: to disrupt elections, primarily purting republics, much more than it
Speaker 14: would likely hurt democrats.
Speaker 3: This is a global company as well, and Michael, we've
Speaker 3: seen the impact in Europe that Musk's political affiliations have had.
Speaker 3: You then think about China, where real growth engine for them.
Speaker 3: But maybe China starts to look at the lessening in
Speaker 3: political weight that Elon has had with the administration backs
Speaker 3: away there, and then you've got competition. Do you remain
Speaker 3: as exposed to this name as little as it is?
Speaker 14: Well, ultimately, we have a fund that is dedicated to Tesla,
Speaker 14: so we will buy that just based on whether shareholders
Speaker 14: want exposure to that name or not through that fund.
Speaker 14: But at the end of the day, this is a
Speaker 14: business that, for the very first time in history, is
Speaker 14: actually looking at the potential for a sales decline. It
Speaker 14: has had extraordinary success in a few models. The model
Speaker 14: Y was obviously a huge runaway success, but it has
Speaker 14: an aging product mix. It has a significant new competition,
Speaker 14: particularly from Chinese companies coming in, and this is of
Speaker 14: course creating conditions under which the business itself is very
Speaker 14: much under threat. It has always been a bit of
Speaker 14: a mystery from a valuation standpoint, and so it's very
Speaker 14: hard to create a compelling argument for why you should
Speaker 14: be aggressively buying Tesla and now, other than the desire
Speaker 14: to gain exposure to a very high volatility, high beta name,
Speaker 14: which has been one of the key characteristics that have
Speaker 14: attracted people to it over time.
Speaker 3: Yet, Michael, give us the signal that you're getting from
Speaker 3: those that have wanted to get into your fund, that
Speaker 3: have wanted the exposure, to the volatility or to the
Speaker 3: mystery around you know, Musk in and of itself, is
Speaker 3: that waned in any way in the current political environment.
Speaker 14: We haven't really seen it, weanhe in any meaningful way.
Speaker 14: But the reality is is that most of these levered
Speaker 14: ETFs are simply offering investors a tool to access lower
Speaker 14: cost leverage than they could obtain through a margin account.
Speaker 14: You can get a two x levered exposure at a
Speaker 14: fraction of the cost once you factor in management fees
Speaker 14: and the costs of the leverage that can be obtained
Speaker 14: in the institutional space. It's much less expensive than in
Speaker 14: trying to obtain that through margin or through options. And
Speaker 14: so the argument is very compelling if you want that
Speaker 14: levered exposure. The question is ultimately, do you want LeVert
Speaker 14: exposure to a business that really has gone somewhat ex
Speaker 14: growth and is now looking at the situation in which
Speaker 14: those political liabilities both in China where it's perceived as
Speaker 14: an American company at a time period where that's probably
Speaker 14: not particularly attractive. Europe similar phenomenon, and as I mentioned,
Speaker 14: you know, growing competition in the United States as well
Speaker 14: as the political headwinds make this a very challenging environment
Speaker 14: for Elon Musk.
Speaker 3: Fascinating conversation, Michael Green, simplify asset management. Appreciate your time today.
Speaker 6: Now coming up more.
Speaker 3: Crackdown on jips as the US where we're looking at
Speaker 3: the White House saying to prepare more chip cubs in
Speaker 3: an effort to combat smuggling into China. More on that next,
Speaker 3: This is Bloomberg Tech.
Speaker 2: The White House is set to restrict shipments of AI
Speaker 2: chips to Malaysia and Thailand and an efforts cracked down
Speaker 2: on suspected chips smuggling into China. That's according to sources.
Speaker 2: For more, let's got out to bloombergs Mike Sheppard in Washington, DC.
Speaker 2: It's a very clear story, right that the restriction is
Speaker 2: to prevent the flow of advanced semiconductors through a backdoor
Speaker 2: third party into China.
Speaker 8: What do we know, Well, what we're hearing from the
Speaker 8: Commerce Department is that we may be seeing a move
Speaker 8: soon to try to limit sales. It will require companies
Speaker 8: based in Malaysia or Thailand to obtain licenses to buy
Speaker 8: these advanced AI chips. Pretty much, when you think about it,
Speaker 8: it is Nvidia and also AMD that makes the most
Speaker 8: advanced out there used for artificial intelligence purposes, and the
Speaker 8: idea is to prevent those buyers in Malaysia and Thailand
Speaker 8: from averting chips possibly to Thailand and to China. And
Speaker 8: the concern that the US has articulated over and over again,
Speaker 8: and it's not just the current administration, but the prior
Speaker 8: administration too, was that other countries could be through their
Speaker 8: prior relationships with China, a source of chips that China
Speaker 8: right now is prohibited from buying. The US is imposed
Speaker 8: restriction after restrictions since the early part of the twenty
Speaker 8: twenties aimed at keeping these advanced chips from China to
Speaker 8: slow its position in the race to dominate artificial intelligence. Now,
Speaker 8: what is unclear is where this rule is. It's still
Speaker 8: in the draft stages. Things could still change, and it's
Speaker 8: important to note that Secretary of State Marco Rubio is
Speaker 8: heading to the region. He'll be in Kuala Lumpur later
Speaker 8: this week for a regional meeting of Foreign policy chiefs
Speaker 8: from various countries in the area. They obviously have a
Speaker 8: lot at stake when it comes to the arrows that
Speaker 8: the Trump administration is preparing to unleash on so many
Speaker 8: of those countries, not just Malaysia and Thailand, but so
Speaker 8: many others in the region. But they're also going to
Speaker 8: be concerned as well about export controls. This step is
Speaker 8: also considered another glimpse of what would replace what the
Speaker 8: Biden administration had unveiled in its final days before leaving office,
Speaker 8: the so called AI Diffusion Rule that restricted countries' access
Speaker 8: on a three tiered basis. But it was an approach
Speaker 8: that many in the industry and many allies around the
Speaker 8: world had viewed as cumbersome and perhaps unfair to them.
Speaker 3: Well, said mag Shepphin appreciate the update. Look, let's get
Speaker 3: an investor perspective on those potential chip curbs, and more broadly,
Speaker 3: Beth kinniggers with us IO finally technology analysts. So, despite
Speaker 3: all of this and the clear narrative the US wants
Speaker 3: to restrict access to technology to China, we still have
Speaker 3: Jensan Wong actually wanting to sell into China. More long term,
Speaker 3: Beth is that a fool stream.
Speaker 6: Yeah.
Speaker 9: I think there are two sides to this. From in
Speaker 9: video's perspective, they don't.
Speaker 6: Want to lose that revenue. This is a massive country.
Speaker 9: But what the United States government is really communicating is
Speaker 9: that the technology has too far reaching implications for this
Speaker 9: to really be about the next consumer app, the next
Speaker 9: enterprise app.
Speaker 6: This is really a matter of national security.
Speaker 9: From an investors standpoint, I love that demand signal. I
Speaker 9: love the signal that the United States government is doing
Speaker 9: everything they can to control this technology.
Speaker 6: I don't have demand concerns.
Speaker 9: I think this is bullish, regardless of if in video
Speaker 9: sales into China or not.
Speaker 3: What about supply concerns therefore, and whether or not we're
Speaker 3: able to bring the manufacturing and the expertise into the
Speaker 3: United States so that we're not so dependent to be
Speaker 3: able to make that sophisticated technology abroad.
Speaker 9: I think a lot of this is hitting the news
Speaker 9: buyers now and has been let's just say, the last
Speaker 9: six months. But the United States has been preparing for
Speaker 9: this for years. We know that because Taiwan Semiconductor has
Speaker 9: built this sab in Arizona. This is not an overnight project.
Speaker 9: It's been going on for years. As someone who's tracked
Speaker 9: AI for many, many years. Therefore, I think we are
Speaker 9: more prepared than what might be assumed right now to
Speaker 9: onshore and to keep those supply chains fairly domestic.
Speaker 2: But if we saw shares in Malaysia and Thailand drop
Speaker 2: overnight in those respective fields data center chips. But many
Speaker 2: of the cell side notes point out that actually those
Speaker 2: most exposed to this potential initiative are American companies. Which
Speaker 2: American companies do you worry about?
Speaker 9: I will be quite bold and tell you I'm not
Speaker 9: too worried about this. I think if there was ever
Speaker 9: a technology that has this outsized demand, and it goes
Speaker 9: back to is it.
Speaker 6: Going to be five hundred billion?
Speaker 9: Is it going to be seven hundred billion in AI
Speaker 9: chip sales by the time we end.
Speaker 6: This decade, maybe even higher?
Speaker 9: And I have very little concern over what a China
Speaker 9: impact would be specifically on this technology.
Speaker 6: It is not a consumer technology.
Speaker 9: Consumer technologies your Tesla, your Apple, they badly need China's population.
Speaker 6: This is not a consumer technology. It's primarily enterprise.
Speaker 9: And then of course you have sovereign AI at the
Speaker 9: government level.
Speaker 6: We really do not.
Speaker 9: Need China the way we did on the consumer side
Speaker 9: with those other technologies.
Speaker 6: Beth.
Speaker 2: You mentioned one demand signal. I follow you on social
Speaker 2: which are the hard and soft data sets? Are you
Speaker 2: tracking right now to give you your demand signals that
Speaker 2: inform your thesis.
Speaker 9: What we probably track most closely is really those generation
Speaker 9: of GPUs that product roadmap by Nvidia, and then of
Speaker 9: course within that supply chain there are many partners that
Speaker 9: will give you early signals. What I'm hearing and what
Speaker 9: I'm seeing is we will close this.
Speaker 6: Year with Nvidia on top again.
Speaker 9: Zero demand issues again twenty twenty three and twenty twenty
Speaker 9: four combined is what we have for H two of
Speaker 9: twenty twenty five.
Speaker 6: That is a very big statement and it's so far,
Speaker 6: so good. Green Light, green Light and video.
Speaker 3: Stay with it, Beth. It's interesting that maybe we think
Speaker 3: about an Oracle and its exposure to trying to build
Speaker 3: out it's cloud offering over in Malaysia, for example, and
Speaker 3: maybe that has to be thought through a little bit
Speaker 3: more and politically negotiated if there are limitations to access
Speaker 3: to the GPUs that it needs over there. Who are
Speaker 3: the other names that you do like that you is
Speaker 3: it all just about in videos? A no one stop
Speaker 3: shop or can you broaden it out.
Speaker 9: I'm still loving hardware quite a bit. When we look
Speaker 9: at Nvidia, there are company sandwich between that custom silicon
Speaker 9: which is going to see a resurgence off inference, and
Speaker 9: one stock that's in between Nvidia and something like Amazon's
Speaker 9: Tremium is a stere Labs.
Speaker 2: Beeth Kendick, Biofund. Great to have you back on Bloomberg Tech.
Speaker 2: Thank you very much.
Speaker 3: I believe you've.
Speaker 5: Now hit a point. I think the board's gonna have
Speaker 5: to get involved because this is now over. I think
Speaker 5: there's a line in the sand that he's now starting across,
Speaker 5: and that's a frustration. There's someone's a huge supporter of
Speaker 5: Tesla Autonomous, the Golden Age head. You cannot kind of
Speaker 5: go down this path.
Speaker 2: That was Wedbush analyst Dana Ives there earlier today weighing
Speaker 2: in on Musk's pelistical aspirations, and here's what Jed Dolsheimer
Speaker 2: from William Blair had to say as well.
Speaker 10: With Elon, it's a little bit of a double ed
Speaker 10: sword where you know, I would argue what people are
Speaker 10: paying for is his ability to innovate. Elon Musk is
Speaker 10: one of the great innovators of our modern day. So
Speaker 10: taking him out, does the board really would they would
Speaker 10: they really want that? And I think, you know, when
Speaker 10: you kind of asked that difficult question, I just don't
Speaker 10: see them stepping in at this stage.
Speaker 2: Bloombek's crazed ol has he had to unpack the impact
Speaker 2: of the news on Tesla shares. We got the cell
Speaker 2: side reaction in those sound bites, that investor sentiment mirrors
Speaker 2: that as well.
Speaker 15: Yeah, I think that's right. You know, I think Musk
Speaker 15: may have had a point when he told us back
Speaker 15: in May that you know, for every person on the
Speaker 15: political left that he was turning off with his actions
Speaker 15: in Washington, he was, you know, perhaps opening some doors
Speaker 15: for Tesla on the political right. Now he's potentially getting
Speaker 15: himself on the wrong side of the GOP and on
Speaker 15: the wrong side of President Trump. And you know, I
Speaker 15: think there's probably a fair number of consumers too who
Speaker 15: would just say, altogether, you know, I'd rather not have
Speaker 15: my car sort of be wrapped up in the politics
Speaker 15: of the world's rich person and you know, have what
Speaker 15: I drive sort of send some political signal altogether that
Speaker 15: that's not you know, a reason necessarily for people to
Speaker 15: go out and buy your car.
Speaker 3: And they haven't been. We saw the sales down thirteen
Speaker 3: percent in the previous quarter. Craig, We're also seeing the
Speaker 3: impact on the stock. We're down another seventy one billion
Speaker 3: dollars in terms of market cap today. We're not actually
Speaker 3: at the depths that we saw in the previous feud
Speaker 3: at the beginning of June. What does that tell us?
Speaker 15: Yeah, I mean I think this is still a stock
Speaker 15: that is pretty richly valued and maybe has some value
Speaker 15: you know, ascribed to it left over from you know,
Speaker 15: even if we think back to just where the shares
Speaker 15: were trading before Trump won the election, right, the stock
Speaker 15: is still up from from those levels, and so, you know,
Speaker 15: are are we going to see investors continue to rethink
Speaker 15: and sort of reevaluate whether this you know, company has
Speaker 15: a better shot with an Elon Musk who has gone
Speaker 15: from you know, maybe being well positioned with the White
Speaker 15: House to now not being well positioned at all and
Speaker 15: perhaps even becoming something of a foe for for President Trump.
Speaker 2: Craig, I wrote to Tesla's board this morning. Through the
Speaker 2: avenues they're available to me, I wrote to Elon, As
Speaker 2: you know, I regularly ask him to come on the program.
Speaker 2: Do we have any sense of like the test of
Speaker 2: response at all? And if the answer is no, I
Speaker 2: think that's okay because it's pretty standard.
Speaker 1: Yeah.
Speaker 15: I mean, I think this is a board that has
Speaker 15: been pretty you know, mums the word over the years
Speaker 15: and really has only piped up in very you know,
Speaker 15: rare circumstances. I think, you know, it's it's going to
Speaker 15: be interesting in the months to come. You know what
Speaker 15: exactly this board has planned for a compensation package for Musk.
Speaker 15: We know that Tesla disclosed earlier this year that it
Speaker 15: had set up a special committee for compensation related matters.
Speaker 15: And you know, so not only is there this question
Speaker 15: of you know, just how much the board wants him around,
Speaker 15: but also how are they going to keep him around?
Speaker 3: Crad Dow, We appreciate it from London.
Speaker 9: Now.
Speaker 3: That does it for this edition of Bloomberg Tech d Yeah,
Speaker 3: don't forget to check out the podcast.
Speaker 2: You know where to find it. It's on the Bloomberg
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Speaker 2: From New York City and San Francisco, this is Bloomberg
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