Speaker 1: From the heart of where innovation, money and power collide
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Caroline Hyde and Ed Ludlow.
Speaker 2: Live from New York and Caroline.
Speaker 3: Hyde and I'm Jackie Devalas in San Francisco. This is
Speaker 3: Bloomberg Technology coming up.
Speaker 4: All eyes on President Trump's tariffs on Mexico, Canada and
Speaker 4: China roiling global markets. Plus another big week for tech
Speaker 4: earnings coming up with Panete kicking it off after the
Speaker 4: closing bell today, and a look at Elon Musk's doge
Speaker 4: drive as he claims to cancel payments to federal contractors.
Speaker 4: For first the story of the day, we move markets
Speaker 4: on the back of tariff. There is talk now coming
Speaker 4: that potentially those tarifs arelayed by a month, coming from
Speaker 4: the President of Mexico. We're off of our lows eight
Speaker 4: ten percent on the Nastak one hundred. We're nowhere near
Speaker 4: the sell off of this time last week in reverberations
Speaker 4: to deep seek, but we are down nonetheless as a
Speaker 4: global story unfolds. Move on, Look at what happened to
Speaker 4: the world of crypto over the course of the weekend.
Speaker 4: This was your liquid ascid of choice. We fell hard
Speaker 4: on Sunday. We're now off by three percent over the
Speaker 4: last three training days, but we climb back off of
Speaker 4: today's lows. Move on and have a look at what's
Speaker 4: happening on individual movers. I bring you the biggest points
Speaker 4: drivers to the downside. Currently Tesla off by more than
Speaker 4: four percent. We think of the repercussions to auto's, the
Speaker 4: repercussions to phone sales, Apple or by three point four percent.
Speaker 4: In video is currently off by one point eight percent.
Speaker 4: As we think about the semiconductors in the overall concerns
Speaker 4: around global tariffs, Let's get right to it.
Speaker 2: Who most Kaylee Lines joins us for more.
Speaker 4: And maybe they don't come in for a month, but
Speaker 4: still the shockwaves from a twenty five percent tariff on Canada,
Speaker 4: Mexico and slightly less to China.
Speaker 5: Well in Caroline. It's only Mexico that the president has confirmed.
Speaker 5: The US President, that is, Donald Trump will see the
Speaker 5: tiarifs toll lead for a month. After speaking with Mexican
Speaker 5: President Claudia Scheinbaum, an agreement had been reached in order
Speaker 5: to have this delay in place for Mexico to send
Speaker 5: ten thousand troops to its northern border with the US
Speaker 5: in order to help stem the flow of fentanyl and migrants.
Speaker 5: That is the route of the issue that Donald Trump
Speaker 5: really has here that he is using tariff's leverage to
Speaker 5: try to extract concessions from and it does seem that
Speaker 5: he did indeed get those. And in the interim one
Speaker 5: month period where the extension will be in place, Mexican
Speaker 5: officials will be negotiating with officials from the Trump administration
Speaker 5: Secretary of State Marco Rubio, Treasury Secretary Scott Besstt, and
Speaker 5: ultimately who is presumed to be confirmed as Commerce Secretary,
Speaker 5: Howard Lutnik. They will all be leading those negotiations. As
Speaker 5: for the other two countries that tariffs are set to
Speaker 5: go into effect at midnight tonight, no news yet as
Speaker 5: to whether Canada can avoid its twenty five percent levies,
Speaker 5: ten percent on energy imports specifically a lower level, and
Speaker 5: of course ten percent on all imports coming in from China.
Speaker 5: President Trump has already spoken to Canadian Prime Minister Justin
Speaker 5: Trudeau once today today he is scheduled to do so
Speaker 5: again at three pm Eastern time, so we'll see if
Speaker 5: they too can reach some kind of agreement to stave
Speaker 5: these off for a period of time. If not, these
Speaker 5: tariffs will go into effect it at midnight in Canada
Speaker 5: and Return will be placing retaliatory tariffs on thirty billion
Speaker 5: Canadian dollars worth of US goods at midnight. We're seeing
Speaker 5: other ripple effects as well. The Premiere of Ontario, that
Speaker 5: province has announced today a cancelation of a contract with
Speaker 5: Starlink valued in nearly seventy million dollars. It was set
Speaker 5: to go into effect in June of this year. That
Speaker 5: has been a put on pause and the provincial government
Speaker 5: says no US companies will be getting provincial contracts so
Speaker 5: long as tariffs are in place. The question is going
Speaker 5: to be will they go in place just hours from now?
Speaker 6: Kayleie.
Speaker 3: What else do we know about the reaction from the
Speaker 3: business community kind of on the back of these Mexico
Speaker 3: and Canada terriff escalations.
Speaker 5: Well, the business community has had a bit of a
Speaker 5: mixed reaction, Jackie, mostly by enlarged companies are are hesitant
Speaker 5: to embrace the notion of tariffs and echoes for things
Speaker 5: like the Chamber of Commerce represented here in DC and
Speaker 5: other business leaders as well, who have warned about the
Speaker 5: potential inflationary impacts. Obviously, this administration has pushed back on
Speaker 5: the notion that these would be inflationary, saying, if anything,
Speaker 5: it would bring a one time price increased rather than
Speaker 5: a sustained period of inflation. You're also seeing some reaction
Speaker 5: here in Washington with questions raised around.
Speaker 6: The legality of all of this.
Speaker 5: The powers that Donald Trump is using here to enact
Speaker 5: these levees are the nineteen seventy seven International Emergency Economic
Speaker 5: Powers Act that traditionally is applied when it comes to sanctions,
Speaker 5: not import tariffs, and there is a question as to
Speaker 5: whether or not this authority would actually stand up in
Speaker 5: court if challenged legally when it is being used in
Speaker 5: this way, whether this is actually a national security oriented
Speaker 5: emergency or not, as the President contends that it is.
Speaker 5: Again talking about the flow here a fentanyl and migrants.
Speaker 2: Over the borders.
Speaker 6: Bloomberg's Kaylee lyons, thank you.
Speaker 3: Now, Let's get to the tariff's impact on the chip
Speaker 3: world and Asia. With TSMC shirts stumbling by the most
Speaker 3: in nearly six months, as trading resumed on Monday, playing
Speaker 3: catchup to a global AI sell off with Trump's new
Speaker 3: tariffs Bloomberg's peerrelst joins us to discuss Peter through what
Speaker 3: we know about Trump's discussion with and Nvidia CEO Jensen
Speaker 3: Wang and what he has signaled regarding tariffs on chips
Speaker 3: so far.
Speaker 7: Yeah, well, what we've seen really is you, as you
Speaker 7: were laying out just before this, the rules of the
Speaker 7: game are changing almost by the hour. Here, many many
Speaker 7: changes for these companies to deal with both Nvidia, TSMC,
Speaker 7: on Hi some of the other companies that we've seen
Speaker 7: move in the markets these days. TSMC is an interesting example.
Speaker 7: They're the most advanced chip maker out there. It takes
Speaker 7: them years and tens of billions of dollars to build
Speaker 7: these factories, so their timeframe for making decisions from a
Speaker 7: business standpoint is quite a bit different than some of
Speaker 7: these policy changes that have been made. They make most
Speaker 7: of their advanced chips right now in Taiwan. They make
Speaker 7: them for Apple, and they make them for Nvidia, and
Speaker 7: they ship them into the United States and into other markets.
Speaker 7: So with Trump's tariffs, this idea that maybe they would
Speaker 7: move production into the United States, it's a little bit
Speaker 7: of a different timeframe. They are building a factory in
Speaker 7: the United States, but that's going to take some time
Speaker 7: for them. So we're seeing both this depression on the
Speaker 7: stock price catching up with what happened with deep Seak
Speaker 7: last week, and on top of that, now we have
Speaker 7: these tariff concerns, whether they are delayed or not.
Speaker 4: It's interesting Bernstein actually putting out a note still having
Speaker 4: in Video and an outperform saying they see little impact
Speaker 4: from taris on slocks like in Video right now in
Speaker 4: the overall industry.
Speaker 2: So how to investors gain this out more broadly?
Speaker 7: Peter, Well, there are a couple of concerns layered on
Speaker 7: top of each other. There's the deep seat concerns that
Speaker 7: we saw last week that knocked almost six hundred billion
Speaker 7: dollars off the market cap of Invidia. Of course, that
Speaker 7: was more around the idea that this Chinese company had
Speaker 7: been able to build an AI model it was competitive
Speaker 7: with the best in the West, including open AIS model,
Speaker 7: for a much much lower cost. There's still a lot
Speaker 7: of things that we don't know about how that model
Speaker 7: was built, exactly what chips they used. They did say
Speaker 7: that they used a bunch of Invidia chips there too,
Speaker 7: But I think that primary concern is that perhaps some
Speaker 7: of these AI companies are going to try to do
Speaker 7: things more cheaply rather than trying to invest. The tens
Speaker 7: of billions of dollars are hundreds of billions of dollars
Speaker 7: that we've heard from open Ai and Microsoft and most
Speaker 7: recently Soft Bank in this Stargate venture. On top of that,
Speaker 7: you have the tariff concerns that President Trump has talked
Speaker 7: about he may layer tariffs on top of computer chips too.
Speaker 7: That would hit some of these companies, including TSMC, probably Samsung,
Speaker 7: some of the other players, Asian players that have been
Speaker 7: very active in this market.
Speaker 4: Thank you an eye across all of it, Peter Elstrom me,
Speaker 4: thank you. Let's bring in Silvia Jablonski, now CEO CIO.
Speaker 2: Of Defiance CTS, to discuss the broader market impact.
Speaker 4: How you, as someone who needs to be assessing your
Speaker 4: overall exposure here, does.
Speaker 2: Try to game out what is a very fluid situation.
Speaker 8: Higen warning, Well, it is a very fluid situation. And
Speaker 8: I think you know the only thing you can kind
Speaker 8: of do as an investor, what are your retail investor
Speaker 8: institutional investors just kind of keep an eye on what's
Speaker 8: going on with these negotiations, right, I think that. Hearing
Speaker 8: from mister Hassett this morning, it sounded like all of
Speaker 8: this was around the idea of not important you know,
Speaker 8: drugs fund and all into the US immigration types of issues,
Speaker 8: border control issues, and if that's really the case and
Speaker 8: we see, you know, kind of what happened with Mexico,
Speaker 8: that the delay of this and ongoing conversations is probably
Speaker 8: a positive thing and maybe it feels like it won't
Speaker 8: go into an effect.
Speaker 9: But of course we have that.
Speaker 8: Backdrop of you know, domestication bringing everything back online to
Speaker 8: the US to be produced in the US and things
Speaker 8: like that, so you kind of have to see where
Speaker 8: all of this lands and you know, kind of adjust accordingly.
Speaker 3: So we have some companies coming up or later this
Speaker 3: week and into the month that are reporting earnings. What
Speaker 3: do you expect will be covered as it relates to
Speaker 3: tariffs and perhaps that looming threat. What do you want
Speaker 3: to hear from management and some of those conference calls.
Speaker 8: I think it's too soon. I think it's it's very
Speaker 8: difficult for them to address the situation because we don't
Speaker 8: know whether or not the tech, you know, whether the
Speaker 8: tariffs will be you know, going into a factor or not. Right,
Speaker 8: I think there will be some comments along the lines of,
Speaker 8: you know, we're keeping an eye on this, and it's
Speaker 8: a moving target and food situation similar to you know,
Speaker 8: similarly to how you phrased it. The difficulty is, you know,
Speaker 8: if we get these tariffs and these companies arguably will
Speaker 8: probably raise prices, it probably will impact future earnings and
Speaker 8: SHEP growth and things like this. But I don't think
Speaker 8: anybody wants to touch it this week until we get
Speaker 8: a little bit more color. We might get that, you know,
Speaker 8: today or within the next twenty four to forty eight hours,
Speaker 8: and I think that'll kind of help the situation. What
Speaker 8: I think everybody's looking for from earnings, particularly this week
Speaker 8: when you have you know, some of the big tech
Speaker 8: giants coming out with their earnings, is talk of AI.
Speaker 6: Right, are we monetizing this?
Speaker 8: What are the top and bottom lines going to look like?
Speaker 10: What kind of.
Speaker 8: Revenue generations should we expect, you know, how is it
Speaker 8: going to start filtering into the you know, XMG four
Speaker 8: hundred and ninety three other names that aren't the you know,
Speaker 8: kind of providers of all this stuff. I think that's
Speaker 8: really what the market's out to see. And if that's
Speaker 8: the case, and you know, the tariff thing becomes more
Speaker 8: of a benign event, Well, then you have a great
Speaker 8: buying opportunity here, right, But we need a little more
Speaker 8: time to shake that out.
Speaker 3: There's kind of two stories that are playing out right now.
Speaker 3: You have this need to invest in more AI infrastructure,
Speaker 3: but at the same time, you have investors who are
Speaker 3: really wary of overspending on that front as well. How
Speaker 3: do you think companies are going to kind of weigh that,
Speaker 3: especially as we're seeing more of a bigger push coming
Speaker 3: out of Washington to really build out infrastructure.
Speaker 8: I think it's, you know, to the letter of your point.
Speaker 8: I think there's this you know, big push from Washington
Speaker 8: to participate in the build out of AI infrastructure. You know,
Speaker 8: the US has been left behind so many times when
Speaker 8: it comes to tech and tech advancements, and I think
Speaker 8: that's why Deep Sea kind of read all the markets
Speaker 8: right like, uh oh, look look what they just did, right,
Speaker 8: And so I think that there will be a lot
Speaker 8: of investment and focus out in building out AI infrastructure,
Speaker 8: making sure it's you know, the best infrastructure in the
Speaker 8: world and also the most cost efficient infrastructure in the
Speaker 8: world for what it's actually providing. And so I think
Speaker 8: that's been will continue and AI is just the beginning
Speaker 8: of it, right. I think we're stage one of AI right.
Speaker 8: Stage two will be how it impacts drug companies, pharmaceutical companies,
Speaker 8: aerospace and defense, you know, hearing that on the earnings
Speaker 8: calls from.
Speaker 2: Again those x mag names.
Speaker 8: And then I think step three is like, well what
Speaker 8: else is there?
Speaker 10: Right?
Speaker 8: And that could arguably be quantum computing, the you know,
Speaker 8: next fourth Industrial revolution of technology and supercomputing there and
Speaker 8: so there's a lot of spend that will probably continue
Speaker 8: to go into AI. I think it's just early days still.
Speaker 4: And you've ben providing exposure to quantum in particular silvia,
Speaker 4: but you also provide.
Speaker 2: Exposure to crypto.
Speaker 4: Crypto was the asset to sell in an a liquid
Speaker 4: market over the weekend. How do you think that crypto
Speaker 4: is exposure is going to be to volatile markets but
Speaker 4: still an administration that is process space.
Speaker 8: So crypto has this funny the market has a funny
Speaker 8: relationship with crypto, right. I think sometimes we think of
Speaker 8: it as as gold, right, digital gold and an inflation hedge,
Speaker 8: and then other times we view it as a risk
Speaker 8: asset like a semiconductor stock. Or a high growth tech
Speaker 8: stock or something like this. And so I think that
Speaker 8: right now it's just behaving like the latter. Investors are
Speaker 8: spooped to about tariffs, what that means for the broader
Speaker 8: economic picture. And so crypto is something that's easy to
Speaker 8: buy and sell, and so it suffers along with you know,
Speaker 8: the stocks that we see being hit the hardest today,
Speaker 8: particularly those.
Speaker 10: In the NASDAC.
Speaker 8: But again, you know, we think crypto is going to
Speaker 8: be one of the best, you know, opportunities to have
Speaker 8: in a portfolio, specifically bitcoin, specifically names like micro Strategy
Speaker 8: that track Bitcoin, and so I think you're going to
Speaker 8: see some dip buyers here, and you know, we see
Speaker 8: crypto moving around today right to that effect. So let's
Speaker 8: see put positive news on.
Speaker 6: Tariffs and crypto.
Speaker 8: You know, it'll be an asset to class to watch,
Speaker 8: I think in a favorable sense.
Speaker 3: Sylvia Deblonsky of Defiance ATFS Thank you. Now coming up,
Speaker 3: Elon Musk's Doowe's team demand access to sensitive government information
Speaker 3: and start shutting down payments to federal contractors. This is Bloomberg.
Speaker 4: Elo Musk's gohog team is shutting down payments to some
Speaker 4: federal contracts, singling out the US Agency of International Development
Speaker 4: as a criminal organization and appears to access to sensitive
Speaker 4: systems used.
Speaker 2: At the US Treasury Department. Springing bloemgs Max Schafkin for
Speaker 2: more and is this not the remit of government efficiency?
Speaker 11: We are in some crazy territory right now where we
Speaker 11: have a billionaire who's running you know, six companies, who
Speaker 11: has some kind of affiliation with the White House, but
Speaker 11: it's not entirely clear, but is very very close, of course,
Speaker 11: to President Trump. Is kind of running around Washington disrupting
Speaker 11: in i'd say, in both the positive and negative sense
Speaker 11: of that word, the operations of.
Speaker 6: The federal government.
Speaker 11: We saw over the weekend reports that Musk had taken
Speaker 11: over Treasury in the Department of Treasury's payment system, that's
Speaker 11: like the money that the US government has to pay
Speaker 11: all of its contractors.
Speaker 2: That was a pretty crazy action.
Speaker 11: Then last night Musk got on a Twitter faces and
Speaker 11: essentially said he was shutting down USAID.
Speaker 2: Congress created a USAID.
Speaker 11: It's not clear that that's something that Elon Musk is
Speaker 11: allowed to do. So a lot of questions and just
Speaker 11: a ton of chaos in the federal government right now.
Speaker 3: Max what do we know about who's aiding Trump, who's
Speaker 3: aiding Elon Musk at this point in some of these efforts.
Speaker 3: I mean, this isn't the first time that he's stormed
Speaker 3: into an organization and taken it over. Can you talk
Speaker 3: to us a little bit about the parallels perhaps that
Speaker 3: Twitter has and what we can kind of expect on
Speaker 3: this front. Granted it is government, absolutely, yeah.
Speaker 11: I mean this is very similar to the period immediately
Speaker 11: following Elon Musk's purchase of Twitter, where he brought in
Speaker 11: this very small crew of loyalists, a combination of people
Speaker 11: who've sort of worked with him for a real, really
Speaker 11: long time, as well as you know, like twenty year
Speaker 11: old intern types who are doing all sorts of stuff.
Speaker 11: The email that went out to federal workers last week,
Speaker 11: last week so object line quote fork in the road,
Speaker 11: Musk sent a nearly identical email to Twitter employees before
Speaker 11: laying off many of them. Now, I will say there
Speaker 11: are huge differences again between it, It's pretty obvious say this,
Speaker 11: but between the federal government and a forty four billion dollar,
Speaker 11: you know, private company that Elon Musk controlled, And that's
Speaker 11: why you're seeing, you know, a lot of criticism from
Speaker 11: from Democrats as well as groups that are concerned about
Speaker 11: funding me cut off. And of course there will be
Speaker 11: political implications of this as well.
Speaker 4: Senator of Oregon Ron Wyden most vocal out there saying
Speaker 4: you can't do this. All of us have been so
Speaker 4: close to doze and the birth of it. Can't be
Speaker 4: surprised in the least that he's running roughshild No.
Speaker 11: I mean, I think it's somewhat surprising how quickly this
Speaker 11: has moved. But you're right, this is what Trump and
Speaker 11: Elon Musk said when they were running, when Trump was
Speaker 11: running for president, and so in that sense, it's not
Speaker 11: a surprise.
Speaker 10: Do you think there were a lot of people, a
Speaker 10: lot of sort.
Speaker 11: Of moderates who supported Trump who were hoping for something different.
Speaker 11: It's kind of similar to the tariff story, right, there's
Speaker 11: I hope that you know, this would all be bluster
Speaker 11: or something, and and and you know, this is what
Speaker 11: what they said they were going to do.
Speaker 2: And and one difference though here again.
Speaker 11: Is that Elon Musk doesn't work for the government, or
Speaker 11: it's it's not clear what is what his authority is.
Speaker 11: He hasn't he hasn't been subject to a confirmation hearing
Speaker 11: he hasn't put his financial stuff in it in a trust.
Speaker 11: He's also very erratic. Right, this is probably more extreme
Speaker 11: than it would have been if it were just were
Speaker 11: a different Trump appointee.
Speaker 2: He was doing this, but.
Speaker 11: Having somebody with musks temperament and reputation and just frankly
Speaker 11: energy levels, uh, sort of takes us to another level.
Speaker 6: Bloomberg's mass Chapkin, thank you.
Speaker 4: Open Ai and self back deepening their relationship further, joining
Speaker 4: forces and a joint venture to say AI services to
Speaker 4: businesses across Japan. Now, Sulfa Bank founder Masoshi Sun and
Speaker 4: open Ai CEO Samalmon took to the stage in Tokyo
Speaker 4: to outline this new venture with hiring one thousand people
Speaker 4: to market open ai products to arrange Japanese industries. Sam
Speaker 4: Almond also talked about the company's next AI agent.
Speaker 2: It's called deep Research, which.
Speaker 4: Can conduct online research on a user's behalf and is
Speaker 4: powered by chatbot chatchubt Jakimore and AI Developments.
Speaker 3: Now, let's discuss AI safety and how USAI policy could
Speaker 3: be shaped by China's advances. Following Deep Seek were joined
Speaker 3: by Doug Caladis from the group Americans for responsible.
Speaker 6: Innovation, Doug, it seems like we have a.
Speaker 3: Different narrative going now after deep sea developments last week.
Speaker 3: It's kind of sparking this renewed escalation in arms race
Speaker 3: in AI. But at the same time, you know, you
Speaker 3: have the Biden Administration's Executive Order on AI being rescinded
Speaker 3: in Trump's first week in office. Where does this leave
Speaker 3: any kind of priority for AI safety in the US.
Speaker 12: That's a very good point, And these are a lot
Speaker 12: of the arguments that we're hearing. We believe that step
Speaker 12: one is understanding what the problem is.
Speaker 10: Now.
Speaker 6: What you'll often hear people say.
Speaker 12: Is that the problem is that China is going fast
Speaker 12: and the US needs to go faster. Sure, but why
Speaker 12: is China going fast. It's China going fast because they're
Speaker 12: independently developing their own technology that can rival US technology. No,
Speaker 12: and I don't think anyone believes that they're piggy backing
Speaker 12: off of US efforts. They're using US chips or US
Speaker 12: design chips, and they're using US design algorithms. So if
Speaker 12: we're serious about keeping our lead over China, we have
Speaker 12: to understand how they're getting access to the technology and
Speaker 12: act quarterly. If we simply run faster and they're holding
Speaker 12: onto our back. We are not going to run them.
Speaker 4: So you have worked for senators. When you're going in
Speaker 4: advising government, do you just say, look, fast follows the
Speaker 4: way forward, but from China.
Speaker 2: But here's what we do to protect ourselves. What is
Speaker 2: the response?
Speaker 12: It's difficult, and I think the understanding is that they're
Speaker 12: different policy tools that the US government has used to
Speaker 12: try to prevent China from fast following, and we understand
Speaker 12: them as as chip controls, export controls, concerns about security
Speaker 12: of both closed weight and open weight models, and these
Speaker 12: things are very technical. But I do think that a
Speaker 12: lot of what you're hearing about how none of these
Speaker 12: things are working and we just need to throw it
Speaker 12: all away or think about what we're doing.
Speaker 10: Missus the mark.
Speaker 12: We know that a lot of the chip export controls
Speaker 12: have time delay, so what China was using to train
Speaker 12: their models was based off of chips that they are
Speaker 12: no longer able to get in large part, so we
Speaker 12: needed to give the export controls time to work. There's
Speaker 12: also a very good argument to be made about expanding
Speaker 12: the export controls and covering trips that probably should have
Speaker 12: been covered the first time around, but weren't for whatever reason.
Speaker 12: So there's a number of things that we can do
Speaker 12: instead of simply throwing our hands in the air.
Speaker 4: But does that not choke the golden goose that has
Speaker 4: been in Vidio?
Speaker 2: How do you ensure that they prosper?
Speaker 4: At the same time, Asktailing there been a it's up.
Speaker 12: What's really interesting is that if you looked at Nvidia's
Speaker 12: reaction to what the Biden administration did, they certainly complained
Speaker 12: about what was called the diffusion rule, which limited some
Speaker 12: of our exports. However, the diffusion rule really didn't have
Speaker 12: much impact on Nvidia's stock price. It was pretty minimal,
Speaker 12: and if you look at what happened with deep Seek,
Speaker 12: that obviously had a major impact on Nvidia's stock price.
Speaker 12: So we would make the argument that Nvidia actually does
Speaker 12: well if you prevent some of these non US companies
Speaker 12: from simply using tools to more or less steel technology
Speaker 12: from the US, particularly the algorithms, by using Nvidia chips.
Speaker 12: So in the long run, I believe this would actually
Speaker 12: benefit companies like Nvidia.
Speaker 6: Doug pivoting to Washington a bit.
Speaker 3: When you were on the show in November, you mentioned
Speaker 3: that you were actually a fan of one of President
Speaker 3: Trump's executive orders from his first administration, and the man
Speaker 3: behind that order was Michael Kratzio's, who was just appointed
Speaker 3: to be the director for the Office of Science and
Speaker 3: Technology do to be confirmed at the end of the month,
Speaker 3: And I'm curious, what, knowing about Kratzios and his approach
Speaker 3: in the past as former White House Chief Technology Officer,
Speaker 3: what kind of approach to policy are you expecting from
Speaker 3: this office.
Speaker 12: So Kratios is a very serious person and he understands
Speaker 12: the technology well. And I would put in the same
Speaker 12: can Howard Lutnik, Who's Trump's designed to be the Commerce Secretary.
Speaker 12: So Kratzio's and Lutnik are going to be two of
Speaker 12: the people who have the biggest influence on AI policy
Speaker 12: than Trump administration. And we saw Lutnik at his most
Speaker 12: recent hearing, his confirmation hearing, saying that he believes in
Speaker 12: the expert controls. He believes we need to be serious
Speaker 12: about clamping down on Chinese access to US technology, and
Speaker 12: he's going to see it through. And I think that
Speaker 12: he and Cratsios together will really want to do whatever
Speaker 12: they can to maintain the US lead in innovation.
Speaker 4: An interesting day for the EU's ai AC to be
Speaker 4: going into force as well. Doug Kaladis's great test some
Speaker 4: time with you from American's for Responsible Innovation, Welcome back
Speaker 4: to Blue Meg Technology.
Speaker 2: I'm Caroline Hide in New York and.
Speaker 6: I'm Jackiedavils from Pan Francisco.
Speaker 2: Yess I have quite check on.
Speaker 4: These markets because boy, volatility the name of the game today.
Speaker 4: The reverberations of tariffs that were initially going to be
Speaker 4: twenty five percent Canada, Mexico, ten percent China may be
Speaker 4: delayed by a month. That's what the Mexican president says
Speaker 4: in the latest rebounce off. Our lows are up now
Speaker 4: offer the lows down still eight ten percent, nowhere near
Speaker 4: the wipeout we had this time last week on the
Speaker 4: back of deep seak anxiety.
Speaker 2: But tariff anxiety is clear.
Speaker 4: And let's just think about some of the other feed
Speaker 4: across other angles that we're watching.
Speaker 2: President Trump's tariffs is in.
Speaker 4: Fact there's a plan to eliminate in long held tariff
Speaker 4: exemption for packages worth less an eight hundred dollars, Jackie.
Speaker 4: This is allowing Chinese e commerce retailers like She and
Speaker 4: like Tamu to ship cheap products directly to the US
Speaker 4: consumer without tariffs. It's given them an advantage over homegrown Amazon.
Speaker 2: Of course, Spencer Soper can give us the read through look.
Speaker 4: Some of the bouncing off of the low is happening
Speaker 4: with the Chinese companies as well after that Mexican headline.
Speaker 4: But this is all surrounding how they're able to bypass
Speaker 4: costs at.
Speaker 2: The moment, and that's going to come to an end.
Speaker 13: Yeah, it's clear as mud right now exactly how it's
Speaker 13: going to play out. The key question is Trump imposed
Speaker 13: this new ten percent tariff on goods from China and
Speaker 13: then eliminating this Deminimus loophole. The big question now is
Speaker 13: does that apply just to the new ten percent or
Speaker 13: to the old tariffs as well. And we're still kind
Speaker 13: of getting clarity, you know, minute by minute on that.
Speaker 13: Either way, it's going to hurt these Chinese firms like
Speaker 13: t Mood, you know, which is owned by PDD in
Speaker 13: China as well as she In because they've been able
Speaker 13: to send items one package at a time to US consumers,
Speaker 13: you know, slipping in under that eight hundred dollars threshold
Speaker 13: for d Minimus where they're eluding the tariffs whereas bigger retailers,
Speaker 13: including Amazon, will generally bring in big cargo containers by
Speaker 13: ship and they're paying the tariff on all of the
Speaker 13: inventory in those containers. Because the threshold is measured by
Speaker 13: each particular shipment. So if you're sending one individual shipment,
Speaker 13: you're below the eight hundred, but if you have a
Speaker 13: larger shipment of lots of inventory, you're above the threshold.
Speaker 3: Spencer, do you have any sense of just how much
Speaker 3: of an impact potential tariffs could actually mean for Timu
Speaker 3: and she In? I mean, they've seen a huge run
Speaker 3: up over the last couple of years. Can they afford
Speaker 3: to basically bear some of the brunt of this or
Speaker 3: are they more sensitive to a disruption?
Speaker 13: Yeah, that's the million dollar question they've all been kind.
Speaker 9: Of bracing for.
Speaker 13: This team of particular is already you know, sourcing more
Speaker 13: inventory in the US. You know, the down side of
Speaker 13: their model of shipping to consumers direct from China's that
Speaker 13: it takes a long time, and so they've been trying
Speaker 13: to source more inventory within the US to be close
Speaker 13: to customers just like Amazon and get it to them
Speaker 13: more quickly. The downside of that is they don't have
Speaker 13: this tariff savings, and if that tariff safe savings completely
Speaker 13: goes away, the million dollar question is do these companies
Speaker 13: actually survive? And that's you know, that's where there's just
Speaker 13: going to be a lot of debate and we'll have
Speaker 13: to see what happens. But they've already been positioning expecting
Speaker 13: some change like this to happen.
Speaker 3: Bloomberg, Spenser Sober, thank you. Let's get more on the
Speaker 3: impact of US tariffs on China. We're joined now by
Speaker 3: Amy Seligo, partner at Albright Stone Bridge Group.
Speaker 6: Amy, let's talk about what we know.
Speaker 3: About Trump's previous approaches to tariffs and what we can
Speaker 3: learn perhaps from his past escalations on China.
Speaker 6: What does it mean kind.
Speaker 3: Of going into this new administration and are you seeing
Speaker 3: kind of similar tactics or new ones perhaps being employed now.
Speaker 9: Great to be with you.
Speaker 14: I think what's so interesting is, as he's threaten to do,
Speaker 14: President Trump imposed tariffs almost immediately, and so he almost
Speaker 14: had to rely on IEPA on this International Emergency Economic
Speaker 14: Powers Act to justify immediate tariffs against of course Canada,
Speaker 14: Mexico and China. And that is novel for this president.
Speaker 14: And so the way that he deals with justifying lifting
Speaker 14: the tariffs will be novel as well, very different from
Speaker 14: how he deployed tariffs in the past after investigations that
Speaker 14: demonstrated harm through Section two thirty two Section three oh
Speaker 14: one of US trade laws. This use of IEPA to
Speaker 14: justify tariffs I think gives him a little more or
Speaker 14: a lot more bargaining power and leverage on the one hand,
Speaker 14: but also justification to pull the tariffs back. He under
Speaker 14: IEPA talked about the flows of fentanyl coming into the
Speaker 14: United States from China, going through Canada and Mexico, as
Speaker 14: well as of course illegal immigration. But in talking about
Speaker 14: the tariffs that he's about to impose, he also talks
Speaker 14: about the trade imbalance, and that I think gives China
Speaker 14: the justification to challenge the use of IIPA to put
Speaker 14: these tariffs on China in the first place. And that's
Speaker 14: exactly what China has already done. Rather than threatened immediate retaliation,
Speaker 14: they've been very vague about that. They have said, is
Speaker 14: this even legal what the President is doing? And so
Speaker 14: really I do think we're in a different place in
Speaker 14: the second Trump administration than we were in Trump one
Speaker 14: point zero and how he used.
Speaker 9: Tariff's last time.
Speaker 4: I'm looking at the market reaction to something that has
Speaker 4: been well signaled, and it was shocked. Apple is still
Speaker 4: the biggest drag on the downside to the Nasdaq was
Speaker 4: seeing in video and Tesla. So we're trying to work
Speaker 4: out what it means for phone shipments, for ship shipments,
Speaker 4: for autoshipments, which are so globally dependent.
Speaker 2: Aiming, what do you think the ripple effect is going.
Speaker 14: To be incredibly disruptive, without a doubt, And so I
Speaker 14: think the reason that so many are shocked are not
Speaker 14: because the President hasn't said it all along on the
Speaker 14: campaign trail and since since his election, but because of
Speaker 14: these profound consequences that you just mentioned, Caroline, It is going.
Speaker 2: To be significant.
Speaker 14: I will say, however, the President is looking for a
Speaker 14: deal here. He is looking to use this leverage of
Speaker 14: this thread of these tariffs in order to justify likely
Speaker 14: maybe pulling them back, I shouldn't say likely, maybe pulling
Speaker 14: them back quickly if he sees progress from China, more
Speaker 14: progress on the fenteryel trade flows, and of course on
Speaker 14: the illegal immigration, two issues that during the transition period,
Speaker 14: it sounds like the US government and the Chinese government
Speaker 14: have been making progress, and I think again that is
Speaker 14: why we're so surprised this is happening so quickly.
Speaker 9: We shouldn't be.
Speaker 14: The President promised it, but I think he's doing this
Speaker 14: in order to have some leverage to make some kind
Speaker 14: of deal. Yeah, and my final point, Caroline, just the
Speaker 14: Chinese government has been much more reluctant to be vehement
Speaker 14: in its opposition than Canada and the Mexican governments because,
Speaker 14: of course the tariff raid is much smaller, even though
Speaker 14: the threat President elect Trump had made was a much
Speaker 14: larger tariff levy. And so we are early in the
Speaker 14: Chinese government is going to play a long term game
Speaker 14: in negotiating with this new team.
Speaker 4: What was way more show came was actually deep seek
Speaker 4: that did come completely by surprise, and that adds another
Speaker 4: layer of complexity. What do you think that means for
Speaker 4: chip exports going forward?
Speaker 14: It's going to be a real challenge, as we all saw.
Speaker 14: Of course, the Nvidia CEO for the first time, I
Speaker 14: met President Trump on Friday and of course is talking
Speaker 14: about this. The Trump administration very early on, through an
Speaker 14: executive order, has said we are really going to promote
Speaker 14: AI dominance by the United States by putting in place
Speaker 14: more restrictions, and so I do think that the Deep
Speaker 14: seek arrival on the scene, coinciding with the inauguration of
Speaker 14: President Trump, necessitated a response from the Trump team. I think,
Speaker 14: as you were just talking about with Spencer, the new
Speaker 14: team is still coming into shape that is going to
Speaker 14: be directing these policies. But I anticipate we're going to
Speaker 14: see more export controls. We're going to see more threats
Speaker 14: of tariffs in order to deal with that. That is
Speaker 14: going to have some real ramifications for the American company,
Speaker 14: these technology companies that continue to rely on China. President Trump,
Speaker 14: I think Robert Leittheiser many have said, this is going
Speaker 14: to cause some pain because we do need to we
Speaker 14: need to transform the way that our country maintains its
Speaker 14: economic leadership role. Not going to be easy in the
Speaker 14: short term.
Speaker 3: Amy, you mentioned that China here is playing the long game.
Speaker 3: Help us map out some potential scenarios for what retaliation
Speaker 3: could look like.
Speaker 14: Well, I think that the Chinese government wants to take
Speaker 14: it slow in retaliation that could have broad based impact
Speaker 14: because of course we know that the government is talking
Speaker 14: to the new team in the White House now of course,
Speaker 14: the Vice president of China was here for the inauguration.
Speaker 14: He met with his counterpart prior to the inauguration. So
Speaker 14: Vice President Elect at the moment JD. Vance and Vice
Speaker 14: President Han Jung sat down together talked about a whole
Speaker 14: host of issues. The Vice President of China stayed in
Speaker 14: the US through the inauguration and then flew.
Speaker 9: Right back to China.
Speaker 14: But what this means is the two sides clearly.
Speaker 9: Or are already talking.
Speaker 14: President Frump himself has intimated that he wants to go
Speaker 14: to China early. He wants to have some kind of
Speaker 14: a deal. And so to answer your question, I think
Speaker 14: the Chinese government is very much keeping that in mind
Speaker 14: as it thinks about retaliation. Of course, they don't want
Speaker 14: to adversely impact the Chinese government still struggling in its
Speaker 14: economic recovery, but they have to respond somehow, and so
Speaker 14: will likely take a very targeted retaliatory measure, likely targeting
Speaker 14: some US company. And so that's not good news for
Speaker 14: the American business community that absolutely is concerned about the
Speaker 14: prospect of retaliation. But I foresee that retaliation will be
Speaker 14: quite measured for the time being.
Speaker 4: Amy Seliko deep expertise on China and US or Wright
Speaker 4: Stonewridge Group.
Speaker 2: We thank you.
Speaker 4: Coming up Palantaires set to report results after the closing bell.
Speaker 4: Ken earnings live up to the explosive stop run for
Speaker 4: software John and last year. That's next, This is Bloomberg Technology.
Speaker 2: It's another big week for tech earnings. First up Paleteer.
Speaker 4: Its extraordinary valuation is going to be in focus with
Speaker 4: the stock trading at levels some see is just difficult
Speaker 4: to maintain. Bloomberg's common ranicky is with us a phenomenal
Speaker 4: run up, a valuation that is two hundred times the
Speaker 4: price is two hundred times future earnings.
Speaker 2: Can twenty eight percent growth and revenue do it?
Speaker 10: I mean, it remains to be seen.
Speaker 15: I think something that's so interesting about Palneer stock is
Speaker 15: just how bullish investors are. Obviously, we saw an incredible
Speaker 15: run last year.
Speaker 10: And even in the last few weeks.
Speaker 15: You know, the shares slumped at the beginning of the year,
Speaker 15: but have rallied nearly thirty percent just in the last
Speaker 15: two weeks to a record high just before this earnings report.
Speaker 10: So investors are excited about this company.
Speaker 15: I think they're excited about the long term potential here
Speaker 15: and I mean Pounteers a lot to prove in this
Speaker 15: earnings report.
Speaker 3: There's an AI arms race that just seems to be
Speaker 3: intensifying in recent weeks. I'm curious what Palenteer's edge is here.
Speaker 3: We're very familiar with its contracts with the Defense Department,
Speaker 3: but what else is there too their business model that
Speaker 3: perhaps could benefit from this AI arms race we're seeing.
Speaker 15: So I think one of the biggest growth places for
Speaker 15: Palenteer going forward is actually in commercial contracts. So, as
Speaker 15: you said, we know that it's a big like it
Speaker 15: has a lot of business with the US government with
Speaker 15: globally with other governments, and it's also really building out
Speaker 15: the private side, so commercial contracts and especially bringing its
Speaker 15: AI to the table and saying this.
Speaker 10: Is how this could help you in your businesses.
Speaker 15: So I think that's something that people are really wanting
Speaker 15: to see.
Speaker 10: They want to see continued.
Speaker 15: Growth in the commercial side of Palenteer's business, And you're right,
Speaker 15: it's really coming out on top as a big AI outperformer.
Speaker 3: Bloomberg's Carmen Ryanicky thank you now. Airsprace drone monitoring technology
Speaker 3: startup Hidden Level has announced it to and its role
Speaker 3: in national security with one hundred million dollars in investment.
Speaker 3: Joining us now to discuss is Jeff cole In Level
Speaker 3: CEO and co founder Jeff. The defense industry and Silicon
Speaker 3: Valley have not typically had the most seamless of relationships,
Speaker 3: especially when you think about just how slow the Pentagon moves.
Speaker 6: Why don't you talk to us a little.
Speaker 3: Bit about how your technology actually works and what it
Speaker 3: took to really get this kind of massive contract you
Speaker 3: know in the books for you.
Speaker 9: Yeah, no, thank you for having me. It's wonderful to
Speaker 9: be here.
Speaker 10: You know.
Speaker 16: As a company, we're based in upstate New York and Syracuse.
Speaker 16: A team we founded the company in twenty eighteen out
Speaker 16: of a basement, but we're a team that's been together
Speaker 16: for almost twenty years doing this type of tech with
Speaker 16: the defense industry, with the commercial industry, and we really
Speaker 16: saw what we needed to do was bring to life
Speaker 16: next generation sensing technology at a cost effective manner, make
Speaker 16: it available not only through our hardware sales, but through
Speaker 16: our infrastructure where we l airspace awareness data on small
Speaker 16: drones large aircraft. This made it ultimately much easier for
Speaker 16: the end users. So combining a mixture of dual use
Speaker 16: commercial applications, defense national security. Our focus was making sure
Speaker 16: we have fun while addressing a safer and smarter world.
Speaker 16: So that's what really made this, I'll say, a journey
Speaker 16: that was really supported by our venture capitalist is not
Speaker 16: just that we were addressing DoD national security, but also
Speaker 16: the commerciality of a safer world.
Speaker 4: Strategic investors like Lockheed, Martin Ventures as well as DFJ
Speaker 4: supporting this one hundred million dollar RAYS now worth more than.
Speaker 2: Half a billion.
Speaker 4: I'm interested as to how you compete against the Lockheed,
Speaker 4: how you can ensure that you're getting under the new administration,
Speaker 4: new contracts to startups such as yourself.
Speaker 10: Yeah.
Speaker 16: So not only have we brought in incredible vestors like Lockheed,
Speaker 16: BOOZL and DFJ and so many others, but part of
Speaker 16: the reason we did that with folks like Lockey, Martin
Speaker 16: and Booze Allen was strategic partnerships. We have a very
Speaker 16: different business model. We sell hardware directive firm, fixed price.
Speaker 16: We have this data infrastructure that's available to DoD, federal, state, local,
Speaker 16: and enterprise commercial users.
Speaker 9: So rather than trying to.
Speaker 16: Replace, we're a new feature, something that the defense industry
Speaker 16: is able to integrate into existing solutions very quickly.
Speaker 9: This is shown by our recent deployments all.
Speaker 16: Throughout the Northeast to support a wide array of drone
Speaker 16: concerns and issues, and then also our involvement in the
Speaker 16: inauguration and through our budding partnership most recently with Palenteer.
Speaker 3: Jeff, can you give us a sense of where your
Speaker 3: technology is actually being deployed any regions, or perhaps the
Speaker 3: scale of prototypes out there currently.
Speaker 9: Yeah, one of our largest deployments is in the DC area.
Speaker 16: It's been live since twenty twenty one. It was actually
Speaker 16: a natural progression for us, after supporting the US government
Speaker 16: in deployments throughout the Northeast, that they asked us to
Speaker 16: help assist with the inauguration.
Speaker 9: So on support of Northcom and Joint.
Speaker 16: Task Force National Capital Region, and with our partnership with Palenteer,
Speaker 16: we expanded our capabilities by putting our passive RDAR technology
Speaker 16: in that infrastructure we already had out, and we're able
Speaker 16: to provide an extremely comprehensive low altitude to high altitude
Speaker 16: picture on everything from small drones demand aircraft.
Speaker 4: Many will be thinking about New Jersey, Jess, but many
Speaker 4: will also be thinking of the context of this race,
Speaker 4: whether it's an AI race versus US China, whether it's
Speaker 4: a drone race versus US China, What do you make
Speaker 4: about the risk levels right now?
Speaker 16: The complexities of our airspace are immense, adding small drones,
Speaker 16: adding AI, the things that you could do with drones
Speaker 16: ten years ago versus right now is just rapidly changing.
Speaker 16: And the complexities of our airspace. All the folks that
Speaker 16: are involved, the stakeholders, not just dud in state and local,
Speaker 16: but it's also our commercial users as a power grade,
Speaker 16: everything this just adds for challenge and difficulty. It was
Speaker 16: a big reason for starting in Level was with our infrastructure,
Speaker 16: we were able to integrate all these users simultaneously for
Speaker 16: the first time ever where they can all work off.
Speaker 9: The same air picture.
Speaker 16: This gave them the ability to have very rapid response
Speaker 16: and quick decision making, which is needed as a complexity
Speaker 16: of the airspace is just getting worse.
Speaker 4: And nothing brings that into sharper relief than the tragicy
Speaker 4: that occurred last week in Washington.
Speaker 2: Jeff Cole hidden Level CEO, We Thank You.
Speaker 4: Oh.
Speaker 2: It was a big night for Beyonce.
Speaker 4: She won her first Album of the Year at the
Speaker 4: Grammys last night for her album Country Album Calwoodkater and
Speaker 4: again the first black artist to win Best Country Album
Speaker 4: for moll Bloemmeggs. Ashley Carmen joins us she would say
Speaker 4: it's a lost time coming. Her husband would say it's
Speaker 4: a long time coming.
Speaker 2: What are the viewers to make that?
Speaker 17: I mean, I think this was a moment that everyone
Speaker 17: has been waiting for. Last year, jay Z talked to
Speaker 17: the Grammys about basically saying like, Beyonce's won more Grammys
Speaker 17: than any artist in history, and yet she has not
Speaker 17: one Album of the Year. So it was kind of,
Speaker 17: I don't want to say an ultimatum, but it felt
Speaker 17: like it sort of put the pressure on of like
Speaker 17: she's up again. Is she gonna get snubbed again? Is
Speaker 17: Taylor gonna take it home? And this year, finally.
Speaker 7: She's got it.
Speaker 3: Ash Ashley not to bring it back to technology all
Speaker 3: the time, but I am curious, given you can do.
Speaker 4: That, You can do that, Jackie, you can bring it
Speaker 4: back to technology all the time.
Speaker 3: We'll give every big artist and music labels in the
Speaker 3: room tonight or last night. I'm curious what the relationship
Speaker 3: between AI and the music industry.
Speaker 6: Where does that stand right now? Did you get kind
Speaker 6: of a vibe for where that is at the moment.
Speaker 17: So actually this was a story that I would say
Speaker 17: it hasn't really been picked up much. But the Beatles
Speaker 17: won for their song Now and Then, which used AI
Speaker 17: to actually clean up the vocals from John Lennon some
Speaker 17: tape that had been left over that just without AI
Speaker 17: really would.
Speaker 2: Have been difficult.
Speaker 17: It was very muddy and difficult to get the lyrics
Speaker 17: and the song out of it. And so they actually
Speaker 17: won for that track, which is kind of a historic
Speaker 17: moment because they've been very open about the AI use there.
Speaker 17: And as you might recall, last year, there was sort
Speaker 17: of a debacle around that artist ghostwriter who had made
Speaker 17: and used AI to make a track featuring quote unquote,
Speaker 17: you know, Fake Drake and Fake the Weekend. So he
Speaker 17: wasn't allowed to submit that song last year, and so
Speaker 17: this year this was sort of the officially sanctioned AI
Speaker 17: use case.
Speaker 4: I meanwhile, there's going to be some smarting dung by
Speaker 4: Drake as Kendrick Lamar RUMs home. I'm also interested in
Speaker 4: what this little spells close and Kia and Exist week
Speaker 4: we got Spotify coming off, and this is that Bendon Batta.
Speaker 10: Yes, totally, I mean Spotify.
Speaker 17: You mentioned the Kendrick Lamar or the Drake lawsuit over
Speaker 17: the Kendrick Lamar distrack.
Speaker 2: Drake had tried to bring Spotify.
Speaker 17: Into this previously. He ended up not doing anything with
Speaker 17: that ensuing.
Speaker 6: UMG.
Speaker 17: But I think you know, Spotify's already had a hell
Speaker 17: of a year. They are their stock is doing very,
Speaker 17: very very well, so I can't imagine that anything about
Speaker 17: last Night changes.
Speaker 2: That for them. Spotify.
Speaker 4: We wait for earnings tomorrow, and indeed we are expecting
Speaker 4: some revenue growth of thirteen percent.
Speaker 2: Ashley Common, great to have you with us.
Speaker 4: That does it for this edition of Bloomberg Technology. You
Speaker 4: do not want to forget to check out our own podcast.
Speaker 4: You can find it on Spotify or indeed on Apple
Speaker 4: and ihow as a Bloomberg