Speaker 1: Bloomberg Audio Studios, podcasts, radio news from the heart of
Speaker 1: where innovation, money and power collide in Silicon Valley and beyond.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2: Live from New York and San Francisco. This is Bloomberg
Speaker 2: Technology Investors. They are back on edge of the President
Speaker 2: Trump's tariff pause and monster rally yesterday. And this is
Speaker 2: tariff's on China remain in place. Markets now bracing for
Speaker 2: a potentially protracted period of global trade volatility.
Speaker 3: Let's check in on these markets.
Speaker 2: We're currently up over the last two days almost eight percent.
Speaker 2: Remember the euphoria that swept through the markets as tariff
Speaker 2: are put on paus all countries except for China and
Speaker 2: now have a ten percent blanket tariff. But we drop
Speaker 2: again once again today, Ed, and it looks as though
Speaker 2: the anxiety about what China really means the broader markets
Speaker 2: is still there.
Speaker 4: Yeah, let's get some illustrative examples of the company's impacted.
Speaker 5: Right.
Speaker 4: Tesla jumps twenty two percent yesterday. This is a two
Speaker 4: day chart. It's pulled back today, So it goes from
Speaker 4: having its biggest jump since twenty thirteen to pulling back Apple,
Speaker 4: another company impacted, right, switching up the boards and looking
Speaker 4: in Apple ninety day pause on fifty six countries that
Speaker 4: had tariffs implemented, while the administration boosts the tariff level
Speaker 4: on China. Apple so interesting and later in the show
Speaker 4: will dig deep into it. Why that Reuter's report that
Speaker 4: they airlifted tons literally one point five million iPhones from
Speaker 4: India into the US. This is kind of crazy markets
Speaker 4: news cycle and I'm here.
Speaker 3: For it, aren't we?
Speaker 2: Just and President Trump's tariff pause is a welcome relief
Speaker 2: ed but look, investors, our remaining warry of the wider
Speaker 2: economic impacts. So there's one hundred and twenty five percent
Speaker 2: tariff still on China. White House National Economic Council Director,
Speaker 2: that's Kevin Hassett saying there have been well advanced trade
Speaker 2: talks and offers with other nations.
Speaker 3: New Megs Caney lines.
Speaker 2: Breaks it down just the intricacy the ten percent blanket
Speaker 2: tariff on everyone but China, but some get close to
Speaker 2: a deal, it seems yeah.
Speaker 6: According to Kevin Hassett, who was speaking on another network,
Speaker 6: he's the director of the National Economic Council, they've already
Speaker 6: had more than fifteen deals presented to them, and they
Speaker 6: are intending to take these bilaterally one by one. The
Speaker 6: entire trade team, which could include Hassett, but as well
Speaker 6: as Treasury Secretary Scott Besson and Commerce Secretary Howard Lutnick,
Speaker 6: and of course President Trump himself, who admitted yesterday that
Speaker 6: while this is about negotiation, it was also about the market.
Speaker 6: Despite the messaging we initially got from the White House
Speaker 6: Press Secretary and Secretary Bessent that this was always part
Speaker 6: of the plan, this was the art of the deal.
Speaker 6: It's all about negotiations. The President himself admitted he was
Speaker 6: watching the bond market get a little queasy and felt
Speaker 6: that people were getting Yippi, and that contributed to this
Speaker 6: move at least to lower or to pause ninety day
Speaker 6: four ninety days reciprocal tariffs on all countries except China.
Speaker 6: But yes, that ten percent is still in place, and
Speaker 6: that one hundred and twenty five percent levy on China
Speaker 6: in place as well, in addition to the eighty four
Speaker 6: percent reciprocal tariff that China has placed on US imports,
Speaker 6: and that could effectively have the effect of starting a
Speaker 6: decoupling of the two largest economies, which obviously has major
Speaker 6: implications for firms with heavy Chinese exposure, including the technology
Speaker 6: companies that we saw ripping yesterday. As you guys were
Speaker 6: just talking about giving back some of those games today,
Speaker 6: is there is still risk here for a company like
Speaker 6: Apple in Nvidia. And although President Trump said yesterday he
Speaker 6: does think China wants to make a deal, He's expecting
Speaker 6: a phone call from Beijing and would love to talk
Speaker 6: to Shijinping, there has been no sign from shir the
Speaker 6: Chinese government yet that they are interested in making that
Speaker 6: forward progress, suggesting that China does not necessarily want to
Speaker 6: blink first here. Keeping in mind that the idea that
Speaker 6: they're still ongoing conversations over a TikTok divestiture deal as
Speaker 6: an additional piece of leverage and complication to any conversations
Speaker 6: that are had.
Speaker 4: You know, Apple's going to be a big focus in
Speaker 4: the show today because the White House keeps talking about it.
Speaker 4: Yesterday's jump the biggest since nineteen ninety eight. It's this
Speaker 4: crazy times, and India's a focus. I was interested in
Speaker 4: our reporting that Bes listed India as one of the
Speaker 4: nations he'd speak with early on What is the DC reaction?
Speaker 4: Right If you're a Democrat and you're trying to respond
Speaker 4: to the White House tariff policy, what are you hearing?
Speaker 6: Well, Essentially, what Democrats argue is that this is just chaotic,
Speaker 6: that there is so much uncertainty around the policy, and
Speaker 6: then that has the same detrimental impacts of these policies
Speaker 6: staying in place. There was also a lot of concern
Speaker 6: on the part of primarily Democrats yesterday about the potential
Speaker 6: market manipulative effect of President Trump's swings when it comes
Speaker 6: or vacillations when it comes to this policy. Keeping in
Speaker 6: mind that it was yesterday morning he said on true
Speaker 6: Social it was a good time to buy, then hours
Speaker 6: later sparked the biggest rally we've seen since two thousand
Speaker 6: and eight with this decision. In Many including Senator Adam
Speaker 6: Schiff of California, have suggested that this requires an investigation
Speaker 6: into possible insider trading. So that is another narrative we
Speaker 6: are hearing. All of it though, just speaks to the
Speaker 6: uncertainty around this policy. Keeping in mind that while the
Speaker 6: President is now saying that China tariffs are sticking in place,
Speaker 6: that there is a ninety day pause in place for
Speaker 6: other countries. We have seen time and again that he
Speaker 6: does have the power to change his mind to do
Speaker 6: so very quickly. What stands today on Thursday isn't necessarily
Speaker 6: going to stand tomorrow necessarily. And of course we're going
Speaker 6: to have potentially multiple opportunities to hear from the President today.
Speaker 6: He's scheduled to be holding a cabinet meeting right now.
Speaker 6: Signing a bill later presents some opportunities for him to
Speaker 6: speak to the press, and we'll see if he has
Speaker 6: any additional surprising tariff news for US.
Speaker 4: For the most Kaylee Lines in Washington, d C. Thank you
Speaker 4: very much. Another story. Over night, China also announced it
Speaker 4: will quote moderately reduce the number of US movies allowed
Speaker 4: into the country in response to the US government's tariffs.
Speaker 4: The move is seen as a new front in the
Speaker 4: trade war and could signal Beijing's willingness to target American services,
Speaker 4: which could include travel, intellectual property royalties, and transportation care.
Speaker 2: Still so much to digest on the wider tariff implications
Speaker 2: on tech.
Speaker 3: Let's get to it.
Speaker 2: Jay Hatfields with US Infrastructure Capital Management CEO.
Speaker 3: Can you trade in this erratic market?
Speaker 7: You can, but it's very easy to lose a lot
Speaker 7: of money doing so. It's really better for most investors
Speaker 7: to hold their positions, although I will say we have
Speaker 7: been even before the tariff halt, we had said that
Speaker 7: five thousand was a good support level. So now that
Speaker 7: we've kind of bounced off that hard, I think we're
Speaker 7: just neutral on equities right now. But I would counsel
Speaker 7: even HEDGHOM managers to trade cautiously because there's erratic policy
Speaker 7: coming out of the White House. They can announce it
Speaker 7: at one ten in the afternoon, and so it's better
Speaker 7: to just get to your position and kind of hold
Speaker 7: it when.
Speaker 2: You're thinking about potentially the names that you've love and
Speaker 2: want to recommit to. How much are you thinking about
Speaker 2: exposure for China at the moment?
Speaker 7: One hundred percent, I guess, and also to overseas markets,
Speaker 7: so we favor I think you had a guest on
Speaker 7: earlier regional banks. They have no exposure to international They
Speaker 7: do have credit exposure, but we think we have a
Speaker 7: non consensus called economy is pretty strong, and so those
Speaker 7: banks have come down almost as hard as the investment banks.
Speaker 7: But they're not dependent on investment banking. They're really just
Speaker 7: dependent on rates and spreads, So be more conservative in
Speaker 7: this market.
Speaker 4: Jay, I'm just staring at a five day Nasdaq one
Speaker 4: hundred chart, and I'm staring at it because effectively net
Speaker 4: were flat over the course of five trading days. Then
Speaker 4: you think about the drama that we're within those five
Speaker 4: trading days. Do you net understand the tariff policy of
Speaker 4: the White House and are you able to make informed
Speaker 4: markets decisions based on your understanding of that policy?
Speaker 8: Thanks?
Speaker 7: Ed, definitely not. I mean that's really why we're neutral
Speaker 7: on equities. We're actually pretty very constructive on inflation, which
Speaker 7: that view is validated this morning. So we had negative
Speaker 7: headline inflation. And just to mention that too, that everybody
Speaker 7: wants to talk about terroffts, but nobody talks about the
Speaker 7: twenty percent drop and energy. That's very profound, that's very
Speaker 7: stimulative to the US economy. It's very positive for inflation,
Speaker 7: but it never gets mentioned. But to your point about uncertainty,
Speaker 7: there's basically two camps in the White House, the Hawks
Speaker 7: and the doves. Doves are more pro business. You kind
Speaker 7: of saw that when Elon Musk called Navarro a dumb
Speaker 7: bag of bricks, like that's almost unprecedent. I don't think
Speaker 7: that happens in normal organizations where colleagues are highly pejorative.
Speaker 7: So because we don't really know who's gonna win that debates,
Speaker 7: it seems like Bessent't has the Lakes victory. We are,
Speaker 7: like I said, we're neutral on stocks, would be more conservative,
Speaker 7: and also fixed income looks pretty attractive.
Speaker 4: Jay recession calls were pulled on the White House's ninety
Speaker 4: day pause. Should our audience of technology investors, technology employees, founders,
Speaker 4: startup leaders be braced for a recession in your mind?
Speaker 7: Our call is there's no recession but slow growth. But
Speaker 7: the real thing that also people are missing in our
Speaker 7: opinion is that the slowdowns mostly caused by hawkish Federal
Speaker 7: reserve policy and not by tariff policy. As I mentioned,
Speaker 7: energy decline pretty much offsets the tariff increase, So the
Speaker 7: real issue is ultra tight FED policy. We think the
Speaker 7: Fed has a flawed structure policy framework. They're very dangerous
Speaker 7: and there potentially could create a recession. But we do
Speaker 7: think the inflation data is going to be so positive
Speaker 7: they'll be forced to cut rates later in the year.
Speaker 2: I'm really interested in that US economy positivity basically and
Speaker 2: the fact that it means maybe we've got a resilient
Speaker 2: consumer for Apple phones, maybe we've got a resilient consumer
Speaker 2: for Amazon products. Are there any stocks in the tech
Speaker 2: world that you think are worth adding to, not just
Speaker 2: regional banks.
Speaker 7: Absolutely, and this doesn't sound conservative, but we think is
Speaker 7: more conservative. Amazon. They're kind of half Walmart and their
Speaker 7: price and sensitive. They're just passed through entity, and the
Speaker 7: CEO is on this morning saying that AWS demand is
Speaker 7: extremely strong, so they get traded like a tech stock,
Speaker 7: but they're half for retail stock and they're cutting costs.
Speaker 7: So that's, again, like regional banks, pretty defensive. In a
Speaker 7: market that has been destabilized by this white house, they
Speaker 7: can't really sort out who's in charge.
Speaker 2: And you've been putting out his investor and shareholder letter
Speaker 2: today and responding to some of the well current volatility
Speaker 2: than his consumers see. But then push us forward is
Speaker 2: to what your view is on AI and if AWS
Speaker 2: still sees insatiable demand. Many have been trying to work
Speaker 2: out whether the AI bubble that has so inflated this
Speaker 2: market is anyway intact?
Speaker 3: Is it?
Speaker 7: We think so everybody looks at the market and says, oh, well,
Speaker 7: the stocks are way down, so AI must be falling apart,
Speaker 7: they're just high beta stocks. They have two betas, so
Speaker 7: they're twice as volatile as the market. So the market's
Speaker 7: going down, what do you sell. You sell the volatile stuff,
Speaker 7: you sell the investment banks, you sell tech stocks. This
Speaker 7: doesn't mean the AI market has changed, and that's one
Speaker 7: reason though, because we do believe there'll be continued AI spending,
Speaker 7: and Jasse's comments certainly validate that. Really it's investment and
Speaker 7: not consumption that drives recessions. So AI spending is offsetting
Speaker 7: slow housing market and another thing that people haven't Folks
Speaker 7: on have come down fifty basis points. It was disconcerting
Speaker 7: yesterday when they were skyrocketing by the way. I thought
Speaker 7: the market might crash then, But that is helpful. It's
Speaker 7: not going to get the housing market to boom, but stabilize.
Speaker 7: So if you look at investment, you can predict recessions
Speaker 7: pretty well. Stabilizing housing strong tech spending that adds up
Speaker 7: to slow growth. Say you know in that one to
Speaker 7: two percent range.
Speaker 4: J our case study today I think is Apple and
Speaker 4: in the short term they're airlifting iPhone handsets from India
Speaker 4: into the United States. In the long term, the White
Speaker 4: House sees a world in which the iPhone is assembled
Speaker 4: in the United States. Do you see that future being
Speaker 4: achievable for this White House?
Speaker 7: Not really. That's sort of the fundamental flaw of the
Speaker 7: hawkish trade outlook is there's a notion that you can
Speaker 7: have a trade balance with all countries, which is ridiculous
Speaker 7: in the sense that low income countries have low labor,
Speaker 7: they're going to be exporters. That's one way they grow.
Speaker 7: And then the second thing is, if you run a
Speaker 7: gigantic budget deficit, you have to have a trade deficit.
Speaker 7: Financial flows need to equal physical flows. So the first
Speaker 7: thing you need to do if you want to have
Speaker 7: zero trade deficit is lower your budget deficit. So that
Speaker 7: objective is ridiculous. It might have led to the bag
Speaker 7: of bricks comment from Mosque not me, and so that's
Speaker 7: why it's disconcerting to be in this market because one
Speaker 7: side is arguably nutty and the other side is more
Speaker 7: pro business, and we don't know who's going to win.
Speaker 2: Jay At the moment, it looks as of the House
Speaker 2: is going to adopt a plan to advance Trump's tax
Speaker 2: cuts and also the debt ceiling hike. I want to
Speaker 2: get your take on how we can align what many
Speaker 2: had thought would be a tax policy the offset some
Speaker 2: of the volatility of tariffs. If the House can push
Speaker 2: forward and agree one and a half trillion dollars in
Speaker 2: cuts for the budget, is that the right policy right now?
Speaker 7: Absolutely? So that offsets the If we end up with
Speaker 7: sort two percent of GDP, that's about a six hundred
Speaker 7: billion dollar tax increase, So we need to offset that.
Speaker 7: And in fact, that's what the flaw of the initial
Speaker 7: strategy was, is that it just came too fast. You
Speaker 7: could have just said, well, in a year, we'll do this,
Speaker 7: and then you had plenty of time, and so they
Speaker 7: came way before the tax cut, and that's what's destabilizing market.
Speaker 7: And it's just an own goal if you play soccer,
Speaker 7: because they didn't they they didn't need to do that.
Speaker 7: It was just coming out of this Oh good, yeah good.
Speaker 7: I tried that with one of your reporters and they're
Speaker 7: like looked at me, like, what does that mean. I'm
Speaker 7: the biggest soccer fan either, but I know what that is.
Speaker 7: So that's the issue is that timing was horrible. They
Speaker 7: could have gotten the exact same place by just saying
Speaker 7: they're going to do this without doing it right away,
Speaker 7: waiting for the tax cut, waiting for the FED to
Speaker 7: figure out inflation's coming down. So it was just at
Speaker 7: the absolute wrong moment. Also, it wasn't earning season. We
Speaker 7: think earning scenes will calm people down, maybe not get
Speaker 7: the market skyrocket, but when you hear from companies, their
Speaker 7: stocks tend to rally because then you get certainty, even
Speaker 7: if it's not great, like Delta's guidance was highly you know,
Speaker 7: was bad actually, and stock this is before the announcement skyrocketed.
Speaker 7: So we think any news or most news will be
Speaker 7: viewed positively and the earning season will stabilize it. So
Speaker 7: all this tariff news came into absolute terrible time during
Speaker 7: a normally week March. So now not that we're super
Speaker 7: bold up about the market, but we think it'll stabilize
Speaker 7: kind of in this five to six thousand range. It's
Speaker 7: not very stable five to six thousand, but be banging
Speaker 7: around in that range. So we're neutral, not negative. We
Speaker 7: were negative before this policy change.
Speaker 4: Jay Hofield of Infrastructure Capital Management, who I think was
Speaker 4: quite Howard marks on the own goal analogy, thank you
Speaker 4: very much. Now coming out with tariff threats actually helped
Speaker 4: fuel TSMC's AI related growth surge at the start of
Speaker 4: the year. We'll have more next. This is Bloomberg Technology.
Speaker 2: Quick check on the US listed shares of TSMC.
Speaker 3: Their ADRs.
Speaker 2: Look, they're going to be following the road and market
Speaker 2: lower at the moment, off by four point eight percent
Speaker 2: after they rallied hard yesterday. But we've got to keep
Speaker 2: in mind that the company actually posted sales growth forty
Speaker 2: two percent. On of course, AI demand are a head
Speaker 2: of US tariffs. For more, let's bring in Peter Elstrom,
Speaker 2: and what's interesting is the inventory build up is so
Speaker 2: plain to see.
Speaker 3: This is the chip provider for Apple, for Nvidia.
Speaker 8: Right, we don't have all the numbers from TSMC yet.
Speaker 8: All we've gotten is the revenue for this quarter. As
Speaker 8: you say, though it's a forty two percent growth rate,
Speaker 8: it's very very strong. They bumped up revenue to twenty
Speaker 8: five point five billion dollars. So you've got one hundred
Speaker 8: billion dollar run rate company that's growing at forty two percent.
Speaker 8: It's pretty extraordinary. What we don't know what we'll find
Speaker 8: out next week as they report more broadly their earnings,
Speaker 8: we'll get more detail on that. We'll figure out how
Speaker 8: much of this is inventory. As you say, there's probably
Speaker 8: some stockpiling going on right here. To Their biggest customers
Speaker 8: are Apple and Nvidia in particular, they may be accelerating
Speaker 8: some of their purchases to get ahead of some of
Speaker 8: these tariffs so that their customers don't have to pay
Speaker 8: high tariffs as they get into the next few days.
Speaker 4: You know, the data is highly analogous with what we
Speaker 4: saw from PC shipments right front running tariffs thing you
Speaker 4: were coming that short term long term TSMC is pledged
Speaker 4: billions of dollars to build chips in this country. Have
Speaker 4: we learned anything more about that in its progress?
Speaker 8: Well, they didn't say anything at this point, but you're right.
Speaker 8: They had previously pledged in sixty five billion dollars. More
Speaker 8: recently they said they're going to add another one hundred
Speaker 8: billion dollars onto that in US investments. They clearly want
Speaker 8: to make chips in the US, partly to diversify themselves,
Speaker 8: to geopolitically. Partly they'll be able to serve these customers
Speaker 8: like Apple, like in Nvidia, like Tesla more effectively if
Speaker 8: they're able to do it in the US, and they'll
Speaker 8: avoid some of those tariffs if they're going to get
Speaker 8: hit with US Now TSMC doesn't sell that many chips
Speaker 8: directly into the US, but via Apple and via Nvidia
Speaker 8: some of their other customers, they could get hit by
Speaker 8: tariffs that go through their end products.
Speaker 4: Playboys.
Speaker 2: Peter Elstrom, thank you quick look at shares of Apple
Speaker 2: falling after yesterday's massive rally. But there's also reports that
Speaker 2: it shipped about one and a half million iPhones from
Speaker 2: India to the United States in an effort to beat
Speaker 2: President Trump's tariffs es. According to Reuter's ed, is fascinating
Speaker 2: that six hundred tons worth from India. Who knows what
Speaker 2: they were shipping on jumbo jets from China?
Speaker 4: Right right? I did the math. I checked the math.
Speaker 4: Six hundred tons. The average weight of iPhone around seven ounces,
Speaker 4: so with packaging, I think one point five million makes
Speaker 4: sense that short term, long term, the only question is
Speaker 4: can they build the iPhone outside of China and were
Speaker 4: here in the United States? Who knows. Let's get more
Speaker 4: on the fallout of US China tariffs and its impact
Speaker 4: on Apple currently in a million acy president and prison
Speaker 4: analyst that creative strategies joins US. I mean in a
Speaker 4: world where the iPhone's built in America. There are many estimates.
Speaker 4: Bank of America this week said it would be ninety
Speaker 4: percent more expensive. That is an interesting scenario, Carolina.
Speaker 5: Is a very interesting scenario, one that I don't think
Speaker 5: is going to happen anytime soon. I think that Apple
Speaker 5: has other options before coming to the US. And that's
Speaker 5: because unless we are moving part at least of a
Speaker 5: supply chain to the US, is really unreasonable to think
Speaker 5: that Apple can be successfully building iPhones here. So what
Speaker 5: you're seeing with the shipment coming from India is that
Speaker 5: Apple has the opportunity not just to ship, but to
Speaker 5: actually rethink how and where they build iPhones that are
Speaker 5: targeting the US market. So they could shift from China
Speaker 5: to India or other manufacturing facilities to avoid some of
Speaker 5: the harsher targets that China is faced with today. Obviously,
Speaker 5: all of these can change tomorrow or this afternoon.
Speaker 2: What about, of course it can for the margin pressure.
Speaker 2: How much will they suck up some of the margin pressure?
Speaker 2: How much do you think they can pass on to
Speaker 2: a pretty stress consumer here in the US right now?
Speaker 3: There's two aspects of it.
Speaker 5: One is to remember how strong Apple relationship with their
Speaker 5: supplier manufacturer is and so there might be a negotiating
Speaker 5: part there where it's not about just Apple passing on
Speaker 5: to the consumer, but is Apple trading with their supply
Speaker 5: chain to see how best everybody can ride this way.
Speaker 5: Right at the end of the day, you want to
Speaker 5: keep the Apple business with you for the longer time,
Speaker 5: and then when it comes to consumer. I think it's
Speaker 5: a very critical moment for Apple here in the US
Speaker 5: market when it comes to services and Apple Intelligence in particular.
Speaker 5: So they will want the upgrade cycle to continue, and
Speaker 5: they might decide that it's worth sacrifice in some of
Speaker 5: their margins in the short term to then have more
Speaker 5: revenue coming from services and Apple Intelligence longer term.
Speaker 4: The story's hit the terminor just now clarifying that the
Speaker 4: Trump tariffs on China now add up to one hundred
Speaker 4: and forty five percent. You see Apple declines accelerating five percent,
Speaker 4: and as that one hundred pushing even lower an airlift though,
Speaker 4: have you ever seen that in your career? We just
Speaker 4: have thirty seconds, Carolina.
Speaker 2: I had not.
Speaker 5: It's definitely something new, and I think it comes with
Speaker 5: the volatility that we're in right now.
Speaker 2: Carolina Milanesi there with all the expertise and the context
Speaker 2: president and print of Analystic Creative Strategies. Welcome back to
Speaker 2: Bluemak Technology. I'm Karine Hyde in New York. Quick check
Speaker 2: on these markets, d because we are accelerating our losses.
Speaker 2: We're sub four percent on the last SAT one hundred
Speaker 2: after a monster rally yesterday, the biggest gain sets two
Speaker 2: thousand and eight.
Speaker 3: We fade some of that? Is it profit taking?
Speaker 2: Is it once again trying to understand what Chinese tariffs
Speaker 2: that NAR are to the tune of one hundred and
Speaker 2: forty five percent. What that means for the overall risk sentiment?
Speaker 2: We're off by four percent on bitcoin, but hold of
Speaker 2: ourve eighty thousand. Move on to the individual movers that
Speaker 2: want to shine a light on because look, JD dot
Speaker 2: Com up more than three and three quarters percent in
Speaker 2: terms of ADRs traded here in the United States. China
Speaker 2: looking to improve stimulus locally. That means e commerce players
Speaker 2: that are domestic related and focused are going to be
Speaker 2: doing well.
Speaker 3: But we are fading our rally and.
Speaker 2: Ali Baba, we're fading, of course even more on Apple
Speaker 2: best rally since nineteen ninety eight. Yesterday, we're now off
Speaker 2: by more than five percent, as those tariffs to China
Speaker 2: impact that company, Amazon off by almost five percent, Andy
Speaker 2: Jason looking strong into his investor and shareholder note, But
Speaker 2: more broadly, we're worried about exposure there as well.
Speaker 4: Ed with you gone, well, let's get back to the
Speaker 4: tariff story. President Trump's tariff on Chinese imports now total
Speaker 4: at least one hundred and forty five percent. Bluebos Katie Lines,
Speaker 4: who leads our political coverage for US in DC, is
Speaker 4: actually going to come and do some math for me
Speaker 4: because I've lost track on whether this includes reciprocals it doesn't,
Speaker 4: and how we got to one hundred and forty five percent, Kayleie.
Speaker 6: Yeah, And this really is about math and how these
Speaker 6: tariffs layer on top of each other, as there are
Speaker 6: different tariff regimes that China is subject to. As President
Speaker 6: Trump made clear yesterday in his post on True Social
Speaker 6: he has raised the reciprocal tariff rate on China to
Speaker 6: now one hundred and twenty five percent. That of course
Speaker 6: has been escalated multiple times due to China's retaliation, but
Speaker 6: that did not include the twenty percent tariff that he
Speaker 6: had already put into place on Chinese goods earlier this
Speaker 6: year over the trade of fentanyl. So it's about adding
Speaker 6: that one to twenty five to that twenty percent that
Speaker 6: was already existing, which gets us to the total rate
Speaker 6: of one hundred and forty five percent. Now this was
Speaker 6: actually all there in the White House's fine print, But
Speaker 6: obviously it's difficult to understand with this fast moving story
Speaker 6: how all of these tariffs work in tandem together. But
Speaker 6: it does seem that this is a figure that was higher,
Speaker 6: at least than the market previously understood it to be,
Speaker 6: which is why we're seeing things take a turn.
Speaker 3: And this comes despite the fact that.
Speaker 6: President Trump in the Oval Office yesterday said that he
Speaker 6: couldn't imagine taking tariffs on China any further than he
Speaker 6: already had. But maybe perhaps this is further than was
Speaker 6: previously understood. Keeping in mind that China has still an
Speaker 6: eighty four percent retaliatory rate on US goods. It remains
Speaker 6: to be seen whether or not they will escalate that
Speaker 6: further and whether or not they are willing to pick
Speaker 6: up the phone and talk to Donald Trump, as he
Speaker 6: has suggested he is willing to talk to Shijinping wants
Speaker 6: to make a deal, thinks China wants to make a deal,
Speaker 6: but we have seen no sign of that yet.
Speaker 3: Is this trade war.
Speaker 6: Between the two largest economies only seems to be intensified.
Speaker 4: The us K lines at a DC chief mathematics correspondent.
Speaker 4: I appreciate it, Thank you very much. Let's get back
Speaker 4: to the market's reaction to tariffs, specifically the pools on
Speaker 4: tariff's Like yesterday afternoon, Crazy Bloombo's Ryan for Selca, who
Speaker 4: covers the tech sector, joins us Apple. I think, biggest
Speaker 4: jump since ninety ninety eight. Test labings jumped since twenty thirteen.
Speaker 4: The questions why, like why those levels of gains and
Speaker 4: now the pool back this morning.
Speaker 9: Hey, thanks for having me on. So obviously yesterday was
Speaker 9: a huge relief rally, and I'm sure there was some
Speaker 9: short covering, some algorithmths, trading, all kinds of things just
Speaker 9: feeding into the massive gain that we saw yesterday. But
Speaker 9: I think once the dust settled a little bit, people
Speaker 9: kind of realized, you know, hey, the terroristicainst China were raised,
Speaker 9: there's still ten percent tariffs. Kind Of broadly, there's still
Speaker 9: a lot of uncertainty, and I think just sort of
Speaker 9: the pause in itself is just a sign of how
Speaker 9: sort of erratic all the policies have been. There's been introductions, retaliations, escalations,
Speaker 9: and now a pause, and it's it's very hard to
Speaker 9: know what the next step is going to be, and
Speaker 9: therefore it's very hard to know how to position or
Speaker 9: understand what the economic outlook might look like.
Speaker 2: Right, Vasilica, with the ongoing uncertainty narrative, we appreciate it.
Speaker 2: Let's try and get some certainty on what to do
Speaker 2: with your portfolio now. Nancy Tangler, CEO and CIO of
Speaker 2: Laffetanglo Investments, joins us now, and look, you've actually been
Speaker 2: committed to adding certain names, Tesla being one of them.
Speaker 3: Why do that with the exposure to China?
Speaker 10: Yeah, well that's a great question. We were adding to
Speaker 10: it since the market peaked because it got clobbered and
Speaker 10: it was actually below current levels. But that is an
Speaker 10: ongoing concern though. We're we own that stock for and
Speaker 10: we talked about this after Cybercab we Robot Day in
Speaker 10: southern California, but we own it for the energy business
Speaker 10: and we own it as an AI play. So yes,
Speaker 10: the evs matter, but I think it's analogous to Apple.
Speaker 3: What early days.
Speaker 10: When we were buying it twenty thirteen, twenty fourteen, the
Speaker 10: iPhone was a means to the services business.
Speaker 2: Really interesting to bring broader context you can still hold
Speaker 2: on to amid these day to day voluntile moves in
Speaker 2: video or another one you've been adding to. Yes, many
Speaker 2: have been quick to say exposure to China. However, some
Speaker 2: analysts and coming out and I was saying, this is
Speaker 2: one of our favorite picks. They're actually pretty protected from
Speaker 2: the border impact.
Speaker 3: How are you looking at that name?
Speaker 10: Yeah, and we know that Jensen Wong met with the
Speaker 10: President recently to try to get a carve out. We're
Speaker 10: looking at that as part of what we think.
Speaker 11: You know.
Speaker 10: I was on the air on the day Deep Seat
Speaker 10: came out, which was another k I seem to attract
Speaker 10: it a chaos, that is.
Speaker 3: And what we thought was that.
Speaker 10: It would increase the use cases and the availability of
Speaker 10: AI as an option, and we saw that in the
Speaker 10: fourth quarter earnings, even though they're backward looking. We heard
Speaker 10: from CEOs how broadly they're using it across sectors. And
Speaker 10: you heard today Spotify saying we're not hiring anybody unless
Speaker 10: you can prove that their job can't be done by AI,
Speaker 10: so I think in Vidia is obviously the core of that.
Speaker 10: Most of our investments have been on the software side.
Speaker 10: We shifted to software about five six months ago, but
Speaker 10: we still like that name. It's much smaller holding than
Speaker 10: our major holding, Broadcom, which we've called the poor man's
Speaker 10: in video, but we do like to add to it
Speaker 10: on weakness and it gets these peer it has historically
Speaker 10: just like Tesla. If you've owned Tesla since the IPO,
Speaker 10: it's been in a bear market almost fifty percent of
Speaker 10: the time. Yet it's up thousands of percent. So you
Speaker 10: just have to pick your spots, be sure to trim
Speaker 10: in these more volatile names when they run up, and
Speaker 10: that's what we did last summer, and then we're adding
Speaker 10: back in.
Speaker 4: Hello Nancy, It's always great to have you back on
Speaker 4: the show. I don't think you attract chaos. I think
Speaker 4: you just invest in the areas that attract chaos. It's different.
Speaker 4: There's two names that you haven't discussed, and every time
Speaker 4: you come on the show, I always so you haven't
Speaker 4: discussed one in particular, which is meta, but also Amazon.
Speaker 4: Caro brought up a really interesting point earlier, which is
Speaker 4: you know Amazon has this duel mandate. It is a
Speaker 4: technology stock and it is a retail stock depending on
Speaker 4: how you look at it, like a Walmart or it's
Speaker 4: a cloud provider.
Speaker 3: Tells me how you feel about them both.
Speaker 10: So Amazon was in our five for twenty five that
Speaker 10: I published on twelve thirty one, and it's a member
Speaker 10: of our twelve Best Ideas portfolio, and then we own
Speaker 10: it in our strategy.
Speaker 3: So I love the name.
Speaker 10: I think it's a defensive technology name that you can
Speaker 10: be adding to and here, and we have done that.
Speaker 10: But I wrote my notes a couple days ago and
Speaker 10: we've added to it since then. So I think it's
Speaker 10: an important name to own our poster child for our
Speaker 10: investing theme of old economy companies that have pivoted to
Speaker 10: the new technologies as Walmart. You saw them confirm their
Speaker 10: annual guidance. And then Andy Jasse came out today and
Speaker 10: said what Jamie Diamond said. We're cutting costs. We're not
Speaker 10: frantically cutting costs. We're going to our management teams and
Speaker 10: saying where can we save money. That's a well managed company.
Speaker 10: I think it's an all weather stock. Meta we sold,
Speaker 10: as you know, and bought Spotify and so I was
Speaker 10: beating myself up until I went and looked at the
Speaker 10: relative performance since we've done that, and we've done much
Speaker 10: better in Spotify, though, I think Meta is a name
Speaker 10: you can easily own again and add to in this
Speaker 10: weaker environment. That said, the AD revenue for Amazon is
Speaker 10: objected to go down half as much as metas if
Speaker 10: this all continues. So I think Amazon's the better player
Speaker 10: from here, and that's where we've been putting our money
Speaker 10: to work. And then Spotify and Netflix are names that
Speaker 10: we think will hold up in kind of a low growth,
Speaker 10: potentially recessionary environment. Though Goldman withdrew their recession forecasts, so
Speaker 10: maybe we're just getting slow.
Speaker 4: Goth Nancy, how do you assess communication from policymakers over
Speaker 4: the course of the last five days.
Speaker 10: It's been horrific ed. I just I've been at this
Speaker 10: for over forty years. I have never seen a more
Speaker 10: botched policy roll out than this, and I think it
Speaker 10: did a lot of.
Speaker 3: Damage to the administration.
Speaker 10: I know yesterday, you know, we got the declaration that
Speaker 10: this was intended all along, and you just don't understand
Speaker 10: the art of the deal. And then Bill Lackman came
Speaker 10: out and said, oh, This was executed perfectly by the president,
Speaker 10: which makes me think he was selling yesterday into the strength.
Speaker 3: That's just speculation, but I think it's.
Speaker 10: Been horrible and you're seeing more and more of Scott
Speaker 10: Bessett and Kevin Hassett, and I think that will benefit
Speaker 10: the administration, though their message has been imperfect as well.
Speaker 10: It makes no sense from an economic standpoint. Now ten
Speaker 10: percent tariff would kind of act like a flat tax
Speaker 10: and it would move, It would stop distorting behavior. But
Speaker 10: right now, if you think about factory build you know,
Speaker 10: we're up three last three years, it has exploded and
Speaker 10: it continued into the first two months of this year.
Speaker 10: We're now hearing new factories being put on hold. That's
Speaker 10: what happens when you distort policy.
Speaker 3: How do your clients feel about it?
Speaker 2: How are they about remaining committed to funds exposed to equities.
Speaker 10: So we've spent a lot of time doing webinars with
Speaker 10: our clients in since the market peaked in because there
Speaker 10: was already you know, a sharp correction going on.
Speaker 2: Yeh, this whole deep seek was actually the mag seven problem,
Speaker 2: not Maga, right, But do you agree with Besson?
Speaker 3: Oh? No, I thought that was also ridiculous.
Speaker 10: I'm sorry, I thought you're That was when it started though,
Speaker 10: you know, the sort of franticness, But then we got
Speaker 10: a rally.
Speaker 3: No, of course not. I think that's where.
Speaker 10: These guys are losing credibility because those of us that
Speaker 10: do this for a living look at it and go, no,
Speaker 10: that that's not in.
Speaker 3: Fact what it best't used to do it for a living.
Speaker 10: I know, isn't that interesting? Yeah, and took a very
Speaker 10: hard stance on many issues.
Speaker 3: But no.
Speaker 10: But when you go to an administration, your job is
Speaker 10: to be an advocate for the policy projected by the administration,
Speaker 10: which is why I will never be in politics. But
Speaker 10: our clients are pretty measured.
Speaker 3: You know.
Speaker 10: I got calls yesterday should I add more money? And
Speaker 10: it was like, no, no, let's wait, this is not done.
Speaker 10: But mostly we've seen flows in yeah, not mostly one
Speaker 10: hundred percent.
Speaker 4: Yeah for tengler investments. Nancy teglis good to have you
Speaker 4: back with us. Thank you very much. Coming up on
Speaker 4: the show, Meta faces backlash from whistleblower testimony to Congress
Speaker 4: and prepares to fight the FTC on antitrust allegations. Have
Speaker 4: more on the social media giants battles next This is
Speaker 4: Bloomberg Technology.
Speaker 3: Quick check on these markets.
Speaker 2: The losses are accelerating. We're off by more than four
Speaker 2: percent across the S and P and the NASAT. We
Speaker 2: wipe off about a third of yesterday's gains.
Speaker 3: The points drags, when.
Speaker 2: In fact there's only six or seven names in the
Speaker 2: green on the Nasdaq one hundred. Everything else in the
Speaker 2: red booking holdings is a key point drag ASML it's
Speaker 2: a dr is a key point drag.
Speaker 3: But so too is meta.
Speaker 2: And let's just talk about meta and social media a
Speaker 2: little bit more. Because the EU's governing rules on digital
Speaker 2: platforms like X, like meta shouldn't be considered trade barriers
Speaker 2: with the United States. That's all according to the EU
Speaker 2: Digital Chief, Hennah for Kuna. Speaking with the Bloomberg's Oliver Kruk,
Speaker 2: the Digital chief really outlined how the EU's rules affair
Speaker 2: for everyone.
Speaker 3: Take a listen.
Speaker 11: These are same rules for everybody. So these are not
Speaker 11: like trade rules. So when we speak about Digital Service Act,
Speaker 11: Distell Market Acts or AI Act, we know that we
Speaker 11: have same rules for other companies who are operating in
Speaker 11: the European Union. So for the European companies and also
Speaker 11: for Chinese, US and companies, so it's very fail for everybody,
Speaker 11: and these are not creating trade barriers.
Speaker 12: And the digital services actually've been expecting some decisions specifically
Speaker 12: on META and on X. Is there a delay that
Speaker 12: due to the pressure being put by the Trump administration.
Speaker 12: When can we expect progress on those?
Speaker 11: We have several investigations going on on the Digital Service
Speaker 11: Acts and different investigations, and of course we are enforcing
Speaker 11: the rules, respecting also the due process, so and always
Speaker 11: when we are doing investigation from the Commission side, of course,
Speaker 11: the main purpose is also that we want that the
Speaker 11: online platforms that they are complying with our rules, and
Speaker 11: often this is the case during the investigations that they
Speaker 11: are also chasing their behavior and that is of course
Speaker 11: what we want that they are respecting ours.
Speaker 12: So for example X, which is I think the most
Speaker 12: advanced the investigation that you have, What would you like,
Speaker 12: what is the endgame? What would you like X to
Speaker 12: look like? How do you think is an appropriate way
Speaker 12: for it to sort of shift.
Speaker 11: What we are saying in our rules. It's very much
Speaker 11: that the online platforms they have to have the in
Speaker 11: place that how they are assessing and mitigating the systematic risks.
Speaker 11: They are posing for civic discourse, for electoral processes, for
Speaker 11: people's well being, and also that they are transparent with
Speaker 11: the access that the users know for example why certain
Speaker 11: content is shown for them, and the users has to
Speaker 11: have also choices how to change also the recommended system.
Speaker 12: I like to also get an idea of your sort
Speaker 12: of channel of communication to these companies. Have you spoken,
Speaker 12: for example, to Elon Marks, Have you spoken to Mark Zuckerberg?
Speaker 12: Who have you spoken to the taxis and what are
Speaker 12: those conversations like.
Speaker 11: Normally it's of course our commissions technical team who is
Speaker 11: working with those platforms technical teams with their lawyers, and
Speaker 11: that is all the time the dialogue we have going on.
Speaker 11: So when we are enforcing the rules, it's not only
Speaker 11: the investigations, so we have all the time several parts.
Speaker 11: So we have all the time dialogue with online platforms,
Speaker 11: especially of course it's done by our services. And then
Speaker 11: also we have different code of conducts. We are preparing
Speaker 11: different guidelines online platforms. They are also carrying their own
Speaker 11: independent orders, so there's several bars all the time how
Speaker 11: we are implementing and enforcing They're awesome.
Speaker 4: That was EU Digital Chief Hennavk and then speaking with
Speaker 4: her own Oliver Kirk. Now META is facing congressional criticism
Speaker 4: over its dealing with China following whistleblower testimony. Yesterday we
Speaker 4: was Ridy Griffin back here with me and SF. The
Speaker 4: principal accusation is that made by the whistleblower is that
Speaker 4: META was briefing the Chinese communist parties early twenty fifteen.
Speaker 4: But reading your story, it's more about the reaction and
Speaker 4: fury of the lawmakers, if anything, no doubt.
Speaker 13: In fact, I think this congressional hearing ended up being
Speaker 13: an opportunity for members of Congress on both sides of
Speaker 13: the aisle, these senators to take aim at Mark Zuckerberg.
Speaker 13: They called him inauthentic and disingenuous. Even Republicans were questioning
Speaker 13: his magnification if you will, the comments he's made on
Speaker 13: Joe Rogan, the famous podcaster, to suggest he is aligned
Speaker 13: with Trump's agenda. So this proved to be a blasting
Speaker 13: of Zuckerberg and one that we imagine will continue when
Speaker 13: they say that they're going to call him to Congress.
Speaker 2: I mean he's also potentially going to be speaking because
Speaker 2: of the.
Speaker 3: FTC investigation as well. This is not a great time.
Speaker 2: To have federal leaders seemingly not behind you, particularly when
Speaker 2: they're going to be questioning the purchase of WhatsApp, the
Speaker 2: purchase of Instagram, and potentially breaking this company apart.
Speaker 13: Yeah, beginning on Monday, we're going to see perhaps the
Speaker 13: most existential threat to the company begin with the FTC trial.
Speaker 13: So you've got the threat from regulators, lawmakers, and then
Speaker 13: pressures internationally from Europe.
Speaker 3: As you had just posted in that.
Speaker 2: Video, Meta currently off by six point four percent on
Speaker 2: the day, one of the worst points contributors to the downside.
Speaker 3: Ridie Griffin, thanks so much for keeping us up to speaking.
Speaker 4: It's time for talking tech and first up st Micro
Speaker 4: announced plans to cut as many as twenty eight hundred
Speaker 4: jobs over three years in an effort to increase efficiency
Speaker 4: in automation. Though there was no mention of tariffs, the
Speaker 4: semiconducting manufacturer says their latest cost cutting efforts will reshape
Speaker 4: their manufacturing footprint and quote resized global cost base. Meanwhile,
Speaker 4: the company's supervisory board has officially backed its CEO, Jean
Speaker 4: Marc Schowi, just one day after the Italian government publicly
Speaker 4: withdrew their support over top management. Plus, Amazon had equipped
Speaker 4: some of its delivery vans in Europe with defibrillators to
Speaker 4: help speed up aid to heart attack victims. Called Project Pulse,
Speaker 4: the program involved over one hundred contract drivers who were
Speaker 4: trained on the devices who would receive alerts from citizen
Speaker 4: responder apps. Amazon concluded the program after several months and
Speaker 4: is evaluating the feedback on future opportunities. And Tesla is
Speaker 4: set to open a showroom in Saudi Arabia, the latest
Speaker 4: sign that Elon Musk is putting behind a bitter feud
Speaker 4: with one of the kingdom's most powerful men. The showroom's
Speaker 4: expected to showcase its vehicle line lineup, alongside the CYBERCB
Speaker 4: and Opsimus robot. Tesla's entry into Saudi Arabia marks a
Speaker 4: sign of goodwill towards the Saudis and a potential growth
Speaker 4: market for the company. Caroline and let's.
Speaker 2: Just return to Amazon because it also released its annual
Speaker 2: letter to shareholders this morning.
Speaker 3: CEO Andy Jesse acknowledging they want to be.
Speaker 2: More like a startup, but also later discussed that sellers
Speaker 2: could be passing on some tariff costs to customers for more.
Speaker 3: We're joined by Blue Most Tom Giles.
Speaker 2: Let's go to the letter first and foremost, because really
Speaker 2: trying to show that AI demand is still there, and
Speaker 2: also they're trying to be more agile with it.
Speaker 14: They want to be they want to be very like
Speaker 14: a startup. They want to be firm, they want to
Speaker 14: be agile. And what Amazon one of the sayings that
Speaker 14: Amazon is always day one. It's always day Remember what
Speaker 14: it's like when you are a new business, you're a
Speaker 14: new company, You're just starting out and the world is
Speaker 14: your oyster. And that's something that Jasse has worried about
Speaker 14: Amazon employees losing over the last couple of years. That's
Speaker 14: why he said they all have to come back after COVID,
Speaker 14: after people were working from home. He said, come back
Speaker 14: because people are losing that sense culture is extremely important Amazon,
Speaker 14: and he definitely wants them to get that startup mentality
Speaker 14: which is so important for these companies.
Speaker 4: I just tom want to quickly go to the conversation
Speaker 4: Caroline had with Andy Jasse earlier in the year, because
Speaker 4: it's all about CAPEX. Right, listen to this.
Speaker 2: You did say basically one hundred billion dollar run rate
Speaker 2: for CAPEX expenditure. Can you give us even like a
Speaker 2: percentage ratedown of how much that goes to distribution logistics
Speaker 2: and how much goes to AI shares. You know, you
Speaker 2: can tell you most of it, You know most of it.
Speaker 2: You know the Lion's share is more than fifty percent?
Speaker 13: Yes?
Speaker 3: Is it more than eighty percent? We're playing the warmer
Speaker 3: and colder, yes, exactly.
Speaker 4: No clues in the letter about CAPEX earnings isn't far away,
Speaker 4: But I think this isn't the here and now what
Speaker 4: people care about.
Speaker 14: Well, right now people are focused on tariffs right and
Speaker 14: we're seeing that in the markets. We're seeing it with
Speaker 14: the ways that stocks, including of Amazon, are getting whipsawed.
Speaker 14: He hinted at that in an interview with another network,
Speaker 14: talking about how, yeah, there's an expectation that some of
Speaker 14: their sellers are going to pass prices tariffs onto their customers.
Speaker 14: And look, they receive a lot of there's a lot
Speaker 14: of inventory, there's a lot of products. There's a lot
Speaker 14: of sellers who are China based or China affiliated, and
Speaker 14: so if that tariff stays where it is, that is
Speaker 14: absolutely going to affect Amazon's ability to compete with other
Speaker 14: online sellers, especially if those sellers are able to diversify
Speaker 14: their supply chain, get those products from somewhere else. A
Speaker 14: lot of it is made in China, so a lot
Speaker 14: of companies are going to be affected equally in many ways.
Speaker 14: Amazon's is going to do what it can to keep
Speaker 14: prices low, he said, but there's no way that those
Speaker 14: prices will not be passed on in.
Speaker 2: Some way to end users, even as Greenberg reports and
Speaker 2: yesterday showed that they've been trying to get that inventory,
Speaker 2: been changing it up in response to all of this.
Speaker 2: Tom Giles, who flew in on the Red Eye lanning
Speaker 2: this morning.
Speaker 3: What a hero. We thank him for being here in
Speaker 3: New York.
Speaker 2: Meanwhile, that does it for this edition of Bloomberg Technology.
Speaker 2: Ed these marks whipsawing once again.
Speaker 4: Yeah, you put it right earlier. It's a third back
Speaker 4: of what we gained yesterday. But there's still concern about Tariff's.
Speaker 4: A ninety day pause sent markets to euphoria last night.
Speaker 4: I think everyone's taken a bit of a breather. Come
Speaker 4: back to us tomorrow on Bloomberg Technology. This is Bloombog
Speaker 4: Technology