1 00:00:00,840 --> 00:00:05,080 Speaker 1: From the heart of where innovation, money and power collide 2 00:00:05,400 --> 00:00:10,680 Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with 3 00:00:10,840 --> 00:00:13,320 Speaker 1: Caroline Hyde and Ed Ludlow. 4 00:00:27,400 --> 00:00:30,800 Speaker 2: Live from San Francisco. This is Bloomberg Technology coming up 5 00:00:30,920 --> 00:00:35,959 Speaker 2: more tariffs. President Trump initiates trade probes into semiconductors and 6 00:00:36,000 --> 00:00:41,400 Speaker 2: pharmaceutical imports. Plus Trump pledges expedited permits for Nvidia and 7 00:00:41,479 --> 00:00:46,120 Speaker 2: other companies investing in the US. And Estranis has big 8 00:00:46,200 --> 00:00:49,960 Speaker 2: satellite plans for Taiwan. How the nation could have full 9 00:00:50,000 --> 00:00:53,760 Speaker 2: bandwidth as early as next year. Let's get straight to markets. 10 00:00:53,800 --> 00:00:56,920 Speaker 2: Our focus today is the chip industry, with the administration 11 00:00:57,480 --> 00:01:00,680 Speaker 2: pressing forward with a plan to impose the civic tarifs 12 00:01:00,680 --> 00:01:03,560 Speaker 2: on semis. Actually, in the last thirty minutes or so, 13 00:01:03,680 --> 00:01:07,240 Speaker 2: equity markets have pulled back, but there is some outperformance 14 00:01:07,240 --> 00:01:10,479 Speaker 2: in the Philadelphia Semiconductor Index. The logic that I'm hearing 15 00:01:10,520 --> 00:01:13,559 Speaker 2: from people is certainty, we kind of now know more 16 00:01:13,600 --> 00:01:17,120 Speaker 2: about what's happening in terms of the specific movers. Nvidia 17 00:01:17,360 --> 00:01:20,240 Speaker 2: continues to be in the headlines right They pledge to 18 00:01:20,319 --> 00:01:23,399 Speaker 2: produce five hundred billion dollars worth of AI infrastructure in 19 00:01:23,440 --> 00:01:26,600 Speaker 2: the United States within the next four years, but there 20 00:01:26,600 --> 00:01:30,319 Speaker 2: are questions about capital expenditures, generally on the hyperscalers. Amazon 21 00:01:30,360 --> 00:01:32,880 Speaker 2: is one of the big movers to the downside, particularly 22 00:01:32,880 --> 00:01:36,000 Speaker 2: on the Nasdaq one hundred as a point drag. HPE 23 00:01:36,240 --> 00:01:40,920 Speaker 2: Enterprise reporting from Bloomberg citing sources that Elliott's taken a 24 00:01:40,959 --> 00:01:43,440 Speaker 2: one point five billion dollar state. Later in the program, 25 00:01:43,560 --> 00:01:46,000 Speaker 2: we'll get full details of that. It's an important story 26 00:01:46,000 --> 00:01:48,240 Speaker 2: this morning. Let's get back to our top story. The 27 00:01:48,280 --> 00:01:53,160 Speaker 2: Trump administration has initiated trade probes into semiconductor imports. It's 28 00:01:53,240 --> 00:01:57,240 Speaker 2: a precursor to broader levies on chips. Bluebog. Tyler Kendall 29 00:01:57,280 --> 00:02:00,840 Speaker 2: has the details from the White House. Good morning, Tyler, Yeah, 30 00:02:00,880 --> 00:02:01,480 Speaker 2: Good morning, ed. 31 00:02:01,520 --> 00:02:03,840 Speaker 3: While the White House has formally announced its Section two 32 00:02:03,880 --> 00:02:06,880 Speaker 3: thirty two investigation, which is widely seen as a precursor 33 00:02:07,120 --> 00:02:09,680 Speaker 3: for the administration to implement tariffs on the basis of 34 00:02:09,800 --> 00:02:13,160 Speaker 3: national security concerns, and we learned that the investigation actually 35 00:02:13,160 --> 00:02:16,120 Speaker 3: started back on April first. That means that the Commerce Secretary, 36 00:02:16,120 --> 00:02:18,840 Speaker 3: Howard Lutnik now has two hundred and seventy days from then, 37 00:02:18,960 --> 00:02:21,880 Speaker 3: so roughly nine months, to release his finding report, which 38 00:02:21,919 --> 00:02:25,200 Speaker 3: would then spur the tariffs into place. But we know 39 00:02:25,240 --> 00:02:26,840 Speaker 3: that this White House is really looking at more of 40 00:02:26,880 --> 00:02:29,760 Speaker 3: an expedited timeline here. Howard Lutnik himself has said that 41 00:02:29,760 --> 00:02:32,640 Speaker 3: we could see these tariffs ultimately implemented in the next 42 00:02:32,720 --> 00:02:34,800 Speaker 3: one to two months. We have to keep in mind 43 00:02:34,960 --> 00:02:37,720 Speaker 3: this investigation really is wide ranging. It includes chips, but 44 00:02:37,720 --> 00:02:39,640 Speaker 3: it also includes the equipment used to make the chips 45 00:02:39,639 --> 00:02:43,120 Speaker 3: as well as those downstream consumer electronics that contain them. 46 00:02:43,160 --> 00:02:45,560 Speaker 3: The Commerce Department says that they are looking at legacy 47 00:02:45,639 --> 00:02:47,720 Speaker 3: chips as well as cutting edge chips that are used 48 00:02:47,720 --> 00:02:50,320 Speaker 3: in artificial intelligence applications. 49 00:02:50,360 --> 00:02:51,519 Speaker 2: Now, this White House really. 50 00:02:51,520 --> 00:02:53,919 Speaker 3: Has taken more of a stick versus cart approach when 51 00:02:53,919 --> 00:02:56,600 Speaker 3: it comes to chip makers. President Trump long criticizing the 52 00:02:56,639 --> 00:02:59,799 Speaker 3: Chips and Science Act with its subsidies and funding, instead 53 00:02:59,800 --> 00:03:03,400 Speaker 3: safeing that his tariff plan will spur production in the US, 54 00:03:03,440 --> 00:03:05,960 Speaker 3: and actually, yesterday from the Oval Office, president Trump saying 55 00:03:06,000 --> 00:03:08,840 Speaker 3: that a recent Invidia manufacturing announcement was a result of 56 00:03:08,840 --> 00:03:11,040 Speaker 3: his tariffs, but ed, as you well know and have 57 00:03:11,160 --> 00:03:14,280 Speaker 3: mentioned and reported on, President Trump implied that in video 58 00:03:14,360 --> 00:03:17,359 Speaker 3: was investing five hundred billion dollars in the US, when 59 00:03:17,480 --> 00:03:20,079 Speaker 3: rather the announcement was that they are pledging to produce 60 00:03:20,160 --> 00:03:24,200 Speaker 3: five hundred billion dollars worth of goods in the US the. 61 00:03:24,280 --> 00:03:26,519 Speaker 2: Books Tyler Kenda at the White House, thank you very much. 62 00:03:26,560 --> 00:03:30,000 Speaker 2: The President also pledged to make it easier for Nvidia 63 00:03:30,080 --> 00:03:32,840 Speaker 2: and other companies that are committed to the United States. 64 00:03:32,919 --> 00:03:36,000 Speaker 2: By Brady Ford in New York has the details of that. 65 00:03:36,240 --> 00:03:38,120 Speaker 2: But also I think we need to recap some of 66 00:03:38,160 --> 00:03:41,080 Speaker 2: the numbers from the Nvidia announcement yesterday. Good morning, Brady, 67 00:03:41,240 --> 00:03:44,320 Speaker 2: Good morning. Five hundred billion of goods. That is the 68 00:03:44,360 --> 00:03:46,440 Speaker 2: amount that in video said that is the kind of 69 00:03:46,600 --> 00:03:50,040 Speaker 2: upper limit of what it's targeting as it invests more 70 00:03:50,080 --> 00:03:51,360 Speaker 2: in building in the US. 71 00:03:51,520 --> 00:03:54,200 Speaker 4: It said that it's going to be making chips out 72 00:03:54,240 --> 00:03:58,720 Speaker 4: of Phoenix with TSMC, making servers out of Texas with 73 00:03:58,880 --> 00:04:02,320 Speaker 4: Fox Con. And I mean this is in line with 74 00:04:02,400 --> 00:04:05,360 Speaker 4: the announcements we've been hearing from companies like Apple or 75 00:04:05,360 --> 00:04:09,160 Speaker 4: open Ai or Eli Lilly that as tariffs are hitting, 76 00:04:09,240 --> 00:04:12,640 Speaker 4: as Trump is putting on pressure, companies feel this urge, 77 00:04:12,800 --> 00:04:15,480 Speaker 4: this kind of need to show that, look, we have 78 00:04:15,560 --> 00:04:18,600 Speaker 4: an ability to produce in America, and I imagine it 79 00:04:18,600 --> 00:04:21,080 Speaker 4: helps them a lot. With the administration as well. We 80 00:04:21,160 --> 00:04:24,200 Speaker 4: saw that in Trump's tweet today that look, if you 81 00:04:24,640 --> 00:04:26,880 Speaker 4: are being part of what he calls the you know, 82 00:04:27,000 --> 00:04:30,400 Speaker 4: Golden age of America and investing here, we're going to 83 00:04:30,480 --> 00:04:31,680 Speaker 4: try to help you out. He said that we're going 84 00:04:31,720 --> 00:04:32,840 Speaker 4: to expedite permits. 85 00:04:33,680 --> 00:04:35,000 Speaker 5: Those are done at the local level. 86 00:04:35,200 --> 00:04:38,039 Speaker 4: But of course, if someone at the top of the 87 00:04:38,040 --> 00:04:40,400 Speaker 4: food chain is telling you, as a local government official, 88 00:04:40,480 --> 00:04:42,719 Speaker 4: that hey, let's let's get these on the road. You know, 89 00:04:42,800 --> 00:04:45,159 Speaker 4: I write a lot about data centers, and yes, waiting 90 00:04:45,200 --> 00:04:51,080 Speaker 4: for utilities, waiting for permits, these things can slow down projects. 91 00:04:51,960 --> 00:04:53,680 Speaker 2: Brady Ford's going to be that later in the hour 92 00:04:53,760 --> 00:04:57,320 Speaker 2: with that Hpe Elliott News as well, Brady Ford, Bloomberg News, 93 00:04:57,360 --> 00:04:59,880 Speaker 2: thank you. What does the tariff news this morning mean 94 00:05:00,040 --> 00:05:03,520 Speaker 2: free technology investors? And what's the outlook in particular for 95 00:05:03,640 --> 00:05:08,280 Speaker 2: AI CAPEX JP Morgan Asset Management Global market strategist Stephanie 96 00:05:08,279 --> 00:05:11,160 Speaker 2: Aliaga joins us now, and I think we start there right, 97 00:05:11,279 --> 00:05:15,000 Speaker 2: which is the news and certainty. I look at the 98 00:05:15,040 --> 00:05:20,680 Speaker 2: Philadelphia Semiconductor Index, it's slightly higher versus other benchmarks this morning. 99 00:05:21,279 --> 00:05:24,159 Speaker 2: Section two three to two is an interesting strategy, but 100 00:05:24,279 --> 00:05:27,240 Speaker 2: maybe the market knows more now than it did, say 101 00:05:27,279 --> 00:05:28,200 Speaker 2: forty eight hours ago. 102 00:05:29,279 --> 00:05:30,839 Speaker 5: Thank you, Ed. It's been remarkable. 103 00:05:30,920 --> 00:05:32,680 Speaker 6: You know, at the beginning of this year, we saw 104 00:05:32,720 --> 00:05:35,680 Speaker 6: a real rerating of a lot of those leading tech 105 00:05:35,680 --> 00:05:39,120 Speaker 6: companies and a lot of scrutiny around the AI CAPEC cycle. 106 00:05:39,440 --> 00:05:41,760 Speaker 6: A lot of that was due to concerns around deep 107 00:05:41,839 --> 00:05:44,960 Speaker 6: seek and also the fact that those leading tech companies 108 00:05:45,000 --> 00:05:48,640 Speaker 6: were over owned and overloved perhaps. But now in the 109 00:05:48,760 --> 00:05:51,599 Speaker 6: last couple weeks, what we've seen is market shift to 110 00:05:51,720 --> 00:05:55,160 Speaker 6: really begin to appreciate how these companies are the poster 111 00:05:55,279 --> 00:05:59,880 Speaker 6: children of globalization and they are highly exposed to the 112 00:06:00,320 --> 00:06:02,839 Speaker 6: trade war that is going on right now, all of 113 00:06:02,880 --> 00:06:06,400 Speaker 6: these different tariff headlines, and you can see these companies 114 00:06:06,440 --> 00:06:11,000 Speaker 6: are quite actively trying to figure out ways to show 115 00:06:11,040 --> 00:06:13,680 Speaker 6: that they can reshore some production or expedite some of 116 00:06:13,720 --> 00:06:16,400 Speaker 6: that processes. But at the end of the day, not 117 00:06:16,560 --> 00:06:21,760 Speaker 6: only are the mag seven let's take, highly globally exposed 118 00:06:21,920 --> 00:06:26,440 Speaker 6: in their suppliers and their revenue, but they're also cyclically exposed. 119 00:06:26,560 --> 00:06:29,120 Speaker 6: And you mentioned the capex cycle and what the outlook 120 00:06:29,200 --> 00:06:33,000 Speaker 6: is there. A lot of those assumptions will to become 121 00:06:33,120 --> 00:06:38,120 Speaker 6: under a greater scrutiny if we have a slower moving economy. 122 00:06:38,400 --> 00:06:43,440 Speaker 2: Does the outlook for AI CAPEX hold, get cut or 123 00:06:43,480 --> 00:06:45,120 Speaker 2: grow based on what's happening. 124 00:06:46,200 --> 00:06:49,719 Speaker 6: First, we need to consider just how significant the rates 125 00:06:49,720 --> 00:06:52,160 Speaker 6: of growth that we saw in capex were over the 126 00:06:52,279 --> 00:06:56,640 Speaker 6: last two years. The hyperscalers grew more than fifty percent 127 00:06:56,880 --> 00:07:00,480 Speaker 6: in their cap BAX expenditures from twenty twenty reader twenty 128 00:07:00,520 --> 00:07:04,360 Speaker 6: twenty four. Is that rate of growth sustainable, particularly in 129 00:07:04,360 --> 00:07:07,160 Speaker 6: an environment where we're looking at a likely cooler economy, 130 00:07:07,520 --> 00:07:10,120 Speaker 6: a lot of uncertainty. So I think some of that 131 00:07:10,160 --> 00:07:12,240 Speaker 6: frauth comes down longer term. 132 00:07:12,400 --> 00:07:13,520 Speaker 5: There's still a lot. 133 00:07:13,320 --> 00:07:16,120 Speaker 6: Of CAPEX that needs to be spent on AI, but 134 00:07:16,520 --> 00:07:19,760 Speaker 6: in this environment of uncertainty, management teams are going to 135 00:07:19,760 --> 00:07:24,800 Speaker 6: be really focused on defending margins and ways that they 136 00:07:24,840 --> 00:07:28,080 Speaker 6: can indeed the bottom line. 137 00:07:28,120 --> 00:07:31,400 Speaker 2: Okay, defending Martin. There's some calculus that the cell side 138 00:07:31,440 --> 00:07:33,600 Speaker 2: is doing that the CEOs of all of these companies 139 00:07:33,600 --> 00:07:35,800 Speaker 2: are doing. Which is and bear with me on it. 140 00:07:36,640 --> 00:07:39,800 Speaker 2: If you on shore you're manufacturing or the assembling of 141 00:07:39,800 --> 00:07:43,920 Speaker 2: your electronics component to America, it's probably more expensive. The 142 00:07:43,920 --> 00:07:47,160 Speaker 2: cost of doing business is greater by let's say twenty 143 00:07:47,200 --> 00:07:50,640 Speaker 2: five percent. But you face a choice because if your 144 00:07:50,640 --> 00:07:52,880 Speaker 2: components come for a market where there is a levee 145 00:07:52,920 --> 00:07:56,080 Speaker 2: of tariff or tariff of twenty five percent net, you've 146 00:07:56,120 --> 00:07:58,640 Speaker 2: got a decision to make right, what's the most cost 147 00:07:58,680 --> 00:08:00,760 Speaker 2: effective and do you pass it on to the customer? 148 00:08:01,200 --> 00:08:03,640 Speaker 2: How is that impacting your view of markets right now? 149 00:08:03,760 --> 00:08:07,600 Speaker 6: Absolutely, tariffs do nothing to stimulate demand, and immediately what 150 00:08:07,640 --> 00:08:10,360 Speaker 6: they're going to do is increase costs. And it's not 151 00:08:10,400 --> 00:08:12,240 Speaker 6: as easy to just pass those costs along to your 152 00:08:12,240 --> 00:08:16,000 Speaker 6: consumers because then that will tighten or shrink the amount 153 00:08:16,000 --> 00:08:18,040 Speaker 6: of demand that you're facing that you're getting from those 154 00:08:18,040 --> 00:08:18,960 Speaker 6: consumers as well. 155 00:08:19,120 --> 00:08:20,600 Speaker 5: So I think that's the overall risk here. 156 00:08:20,640 --> 00:08:24,040 Speaker 6: You know, supply chains they can adjust, they have been 157 00:08:24,240 --> 00:08:27,280 Speaker 6: over the last many years, but it takes time, it 158 00:08:27,400 --> 00:08:29,320 Speaker 6: costs a lot of money. And there was a reason 159 00:08:29,360 --> 00:08:32,000 Speaker 6: why they were so global in nature to begin with. 160 00:08:32,400 --> 00:08:35,240 Speaker 6: They were optimized that way, and it's a big reason 161 00:08:35,280 --> 00:08:38,000 Speaker 6: why these tech companies have been able to defend and 162 00:08:38,080 --> 00:08:41,360 Speaker 6: grow their profit margins on a secular basis over the 163 00:08:41,440 --> 00:08:42,280 Speaker 6: last many years. 164 00:08:43,240 --> 00:08:46,920 Speaker 2: There's a little discussion in the media about how financial 165 00:08:46,920 --> 00:08:50,320 Speaker 2: institutions like the one you work for put more emphasis 166 00:08:50,360 --> 00:08:55,520 Speaker 2: on geopolitical analysis than fundamental analysis. Perhaps historically that balance 167 00:08:55,800 --> 00:08:59,080 Speaker 2: has been different. We had a headline from the European 168 00:08:59,160 --> 00:09:02,520 Speaker 2: Union about full minutes ago that cause markets to pull back, 169 00:09:02,520 --> 00:09:04,839 Speaker 2: which is the EU doesn't think there's going to be 170 00:09:04,880 --> 00:09:07,720 Speaker 2: any movement on tariffs and talk so not going very well. 171 00:09:08,040 --> 00:09:09,679 Speaker 2: Could you just explain to our audience, like, when you 172 00:09:09,720 --> 00:09:13,200 Speaker 2: think about the technology sector from an equity markets perspective, 173 00:09:13,640 --> 00:09:16,400 Speaker 2: how you factor in the politics of this, how one 174 00:09:16,480 --> 00:09:18,720 Speaker 2: jurisdiction behaves with regards to another. 175 00:09:19,600 --> 00:09:23,440 Speaker 6: Absolutely, there's a lot of uncertainty and headline volatility right 176 00:09:23,480 --> 00:09:26,240 Speaker 6: now in the midst of all of these negotiations. I 177 00:09:26,240 --> 00:09:29,000 Speaker 6: think on the medium to longer term, the reality is 178 00:09:29,679 --> 00:09:32,800 Speaker 6: the chip industry, for instance, but also a lot of 179 00:09:32,800 --> 00:09:38,400 Speaker 6: these other highly sophisticated tech services are very globally integrated 180 00:09:38,920 --> 00:09:43,160 Speaker 6: and it is very difficult to immediately decouple. Now we're 181 00:09:43,400 --> 00:09:45,840 Speaker 6: likely going to see greater efforts around that as we 182 00:09:45,920 --> 00:09:48,240 Speaker 6: have been over the last few years, so that remains 183 00:09:48,280 --> 00:09:51,280 Speaker 6: a risk. But I do think it's notable of all 184 00:09:51,360 --> 00:09:54,600 Speaker 6: of the sectors that are at risk or exposed to 185 00:09:54,640 --> 00:09:56,880 Speaker 6: these tariffs, and there are many of them, that the 186 00:09:56,920 --> 00:09:59,960 Speaker 6: tech sector was the first one that was really granted. 187 00:10:00,320 --> 00:10:04,599 Speaker 6: These kind of sweeping are broad based exemptions at least temporarily, 188 00:10:04,920 --> 00:10:07,400 Speaker 6: and I think there is an understanding that this is 189 00:10:07,520 --> 00:10:11,959 Speaker 6: very mission critical for the US and maintaining its tech leadership. 190 00:10:12,320 --> 00:10:14,000 Speaker 5: And maybe at the end of all of. 191 00:10:13,960 --> 00:10:17,320 Speaker 6: This, perhaps you know the too big to be faced 192 00:10:17,520 --> 00:10:20,360 Speaker 6: with massive tariffs from the administration's policies. 193 00:10:21,640 --> 00:10:24,880 Speaker 2: Stephanie ilg JPB Organ Asset Management. Terrific to have you 194 00:10:24,920 --> 00:10:27,360 Speaker 2: on the program. Thank you very much. Now, coming up 195 00:10:27,600 --> 00:10:30,280 Speaker 2: navigating the tech tariff uncertainty, We're going to go back 196 00:10:30,440 --> 00:10:34,120 Speaker 2: and have more on the offs and ons of tariffs, 197 00:10:34,120 --> 00:10:36,200 Speaker 2: so we step back from the brink. Do we know 198 00:10:36,320 --> 00:10:51,720 Speaker 2: more that conversation? Next this is Bloomberg Technology. Back to 199 00:10:51,760 --> 00:10:54,800 Speaker 2: our top story tariffs coming for the chip sector. With 200 00:10:54,880 --> 00:10:59,600 Speaker 2: new tariffs reshaping global trade, technology faces rising costs and 201 00:10:59,679 --> 00:11:03,720 Speaker 2: fresh uncertainty. To help us understand the broader policy implications, 202 00:11:04,000 --> 00:11:08,000 Speaker 2: Joining us now, Karen Cornblue Milkin Institute, Senior Advisor for 203 00:11:08,000 --> 00:11:12,200 Speaker 2: Emerging Technology, a former Principal Deputy White House Chief Technology Officer, 204 00:11:12,240 --> 00:11:17,280 Speaker 2: also Ambassador to the OECD under Barack Obama. Let's start 205 00:11:17,320 --> 00:11:21,920 Speaker 2: with the certainty or uncertainty piece today as it stands 206 00:11:21,960 --> 00:11:24,439 Speaker 2: with the Section two thirty two probe launched into the 207 00:11:24,440 --> 00:11:29,560 Speaker 2: semiconductor industry. Do we understand what this administration's tariff policy is? 208 00:11:31,600 --> 00:11:33,320 Speaker 5: That is the question of the hour. 209 00:11:33,400 --> 00:11:36,079 Speaker 7: I mean, I think it's quite remarkable and we should 210 00:11:36,080 --> 00:11:41,400 Speaker 7: start there that this sector, which is arguably the critical 211 00:11:41,440 --> 00:11:45,120 Speaker 7: sector for our economy for national security, we seem to 212 00:11:45,160 --> 00:11:50,040 Speaker 7: be making policy on the fly. So what happened on Friday, 213 00:11:50,280 --> 00:11:55,120 Speaker 7: Customs put out a list and it became clear that electronics, 214 00:11:55,200 --> 00:11:58,040 Speaker 7: not just semiconductors, were going to be exempt from. 215 00:11:57,880 --> 00:11:59,840 Speaker 5: The reciprocal tariffs. 216 00:12:00,840 --> 00:12:05,920 Speaker 7: Then over the weekend, the Commerce Secretary Lutnik said, well, 217 00:12:05,920 --> 00:12:09,199 Speaker 7: that's only going to be this reprieve is only temporary. 218 00:12:09,679 --> 00:12:14,520 Speaker 7: Then Stephen Miller, the President's deputy chief of staff, said 219 00:12:15,360 --> 00:12:20,760 Speaker 7: that they'd be subject to this national security review, and 220 00:12:20,800 --> 00:12:23,880 Speaker 7: the President reiterated that, saying that the tariffs were going 221 00:12:23,920 --> 00:12:28,640 Speaker 7: to be twenty five percent plus. So making policy for 222 00:12:28,720 --> 00:12:34,960 Speaker 7: this incredible sector over the weekend. And what's so incredible 223 00:12:35,000 --> 00:12:37,680 Speaker 7: is that this is the sector that is you know, 224 00:12:37,760 --> 00:12:41,360 Speaker 7: especially the mag seven right, they're ten percent of GDP, 225 00:12:42,080 --> 00:12:44,600 Speaker 7: They're a huge proportion of the S and P. 226 00:12:45,360 --> 00:12:47,520 Speaker 5: And here we are making. 227 00:12:46,960 --> 00:12:50,640 Speaker 2: Policies like this. Let me ask you, this is about communication. 228 00:12:50,880 --> 00:12:53,440 Speaker 2: You know you've held Office in the White House in 229 00:12:53,520 --> 00:12:56,320 Speaker 2: the field of technology. You've been in an ambassador to 230 00:12:56,360 --> 00:13:03,199 Speaker 2: the OECD. An understand global trade, the communication from this administration, 231 00:13:04,000 --> 00:13:08,559 Speaker 2: How is it received, interpreted, understood and acted on by 232 00:13:08,640 --> 00:13:13,080 Speaker 2: other jurisdictions like the European Union or China for example. 233 00:13:15,400 --> 00:13:19,560 Speaker 7: I mean, you know this to make policy and change 234 00:13:19,559 --> 00:13:23,160 Speaker 7: it like this is so difficult for other countries to 235 00:13:23,480 --> 00:13:26,360 Speaker 7: adjust to, you know, they I mean, we just saw 236 00:13:26,360 --> 00:13:27,760 Speaker 7: this with Europe today. 237 00:13:28,600 --> 00:13:29,960 Speaker 5: But I think they've been prepared. 238 00:13:30,200 --> 00:13:32,280 Speaker 7: That's what's interesting here is that I think you see 239 00:13:33,120 --> 00:13:35,880 Speaker 7: not only some companies like Apple seems to have been 240 00:13:36,360 --> 00:13:39,400 Speaker 7: planning for a long time for this kind of disrupt 241 00:13:39,520 --> 00:13:44,200 Speaker 7: not this level of disruption, but some disruption. China seems 242 00:13:44,200 --> 00:13:48,439 Speaker 7: to be prepared and not being caught flat footed. But still, 243 00:13:48,880 --> 00:13:53,760 Speaker 7: as you know, the global supply chains are involved, so 244 00:13:53,920 --> 00:13:57,320 Speaker 7: much investment, involves so much time, and this kind of 245 00:13:57,360 --> 00:14:01,040 Speaker 7: disruption is incredibly difficult for them. But then as you're 246 00:14:01,080 --> 00:14:04,840 Speaker 7: asking about the countries, governments are not that familiar with 247 00:14:04,880 --> 00:14:08,880 Speaker 7: the inner workings of these sectors, and so they're learning 248 00:14:09,000 --> 00:14:12,960 Speaker 7: on the fly as well what's important, not what's not important, 249 00:14:13,120 --> 00:14:15,440 Speaker 7: and what the implications of all this are and for 250 00:14:15,480 --> 00:14:17,800 Speaker 7: them to do that kind of homework and then respond 251 00:14:17,920 --> 00:14:20,280 Speaker 7: is incredibly difficult. 252 00:14:20,800 --> 00:14:24,600 Speaker 2: What is the end goal of using tariffs as a 253 00:14:24,640 --> 00:14:26,280 Speaker 2: tool policy for this administration? 254 00:14:26,360 --> 00:14:31,720 Speaker 7: Karen Well, at the risk of sandwashing, which is a 255 00:14:31,840 --> 00:14:34,600 Speaker 7: term that's been used here to and when people try 256 00:14:34,640 --> 00:14:38,920 Speaker 7: to interpret some of the Trump administration's policies, it seems 257 00:14:39,120 --> 00:14:43,760 Speaker 7: like the tariffs are gradually falling into three main buckets. 258 00:14:43,960 --> 00:14:46,680 Speaker 7: One is about raising revenue the ten percent across the 259 00:14:46,680 --> 00:14:50,040 Speaker 7: board tariffs, which could raise two hundred billion dollars or more. 260 00:14:51,040 --> 00:14:54,280 Speaker 7: A second one, which is where we see the semiconductors, 261 00:14:54,320 --> 00:14:59,080 Speaker 7: the semiconductor machinery and the electronics, as well as steel, autos, 262 00:15:00,040 --> 00:15:05,160 Speaker 7: aluminum falling, maybe timber, is national security. And then there's 263 00:15:05,160 --> 00:15:09,200 Speaker 7: a third one, which is the overall competitiveness and job creation, 264 00:15:09,240 --> 00:15:12,160 Speaker 7: where we see these reciprocal tariffs that look like they're 265 00:15:12,200 --> 00:15:14,440 Speaker 7: for negotiating down tariffs overseas. 266 00:15:14,520 --> 00:15:17,520 Speaker 2: Should I ask you about that third bucket, because the 267 00:15:17,520 --> 00:15:19,560 Speaker 2: big headline of the last twenty four hours is this 268 00:15:19,640 --> 00:15:24,280 Speaker 2: commitment from Nvidia to build five hundred billion dollars worth 269 00:15:24,320 --> 00:15:27,560 Speaker 2: of AI infrastructure. We're talking goods and sales, not a 270 00:15:27,560 --> 00:15:32,040 Speaker 2: CAPEX commitment in America and the criticism of the past administration, 271 00:15:32,640 --> 00:15:35,800 Speaker 2: which you participated in and served in, was that the 272 00:15:35,880 --> 00:15:39,520 Speaker 2: Chips Act on paper was one thing, but unlocking the 273 00:15:39,560 --> 00:15:42,360 Speaker 2: funding from it and actually getting people moving to onshore 274 00:15:42,720 --> 00:15:46,680 Speaker 2: didn't really happen. Is Trump now achieving that with a different. 275 00:15:46,400 --> 00:15:51,240 Speaker 7: Tool, Well, I mean it remains to be seen. You know, 276 00:15:51,240 --> 00:15:53,040 Speaker 7: there are a bunch of there were announcements made under 277 00:15:53,040 --> 00:15:55,960 Speaker 7: Trump one. There were announcements of a huge amount of investment, 278 00:15:55,960 --> 00:15:58,320 Speaker 7: and there was actually quite a lot of investment that 279 00:15:58,440 --> 00:16:01,840 Speaker 7: was made under Biden as well. So far these are 280 00:16:02,080 --> 00:16:05,920 Speaker 7: these are announcements, the Apple announcement, the Nvidia announcement, the 281 00:16:05,920 --> 00:16:11,840 Speaker 7: TSMC announcement. TSMC in the past has made announcements of investments, 282 00:16:11,840 --> 00:16:14,280 Speaker 7: but then they haven't been able to find the. 283 00:16:14,160 --> 00:16:15,400 Speaker 5: Workers that they need. 284 00:16:15,680 --> 00:16:18,040 Speaker 7: And what you're going to see now for all of 285 00:16:18,080 --> 00:16:21,080 Speaker 7: these companies, they may make announcements, but when it comes 286 00:16:21,120 --> 00:16:23,280 Speaker 7: down to it, their prices are going to go up. 287 00:16:23,520 --> 00:16:25,840 Speaker 7: There's going to be a delay in there being able 288 00:16:25,880 --> 00:16:29,520 Speaker 7: to get the equipment, and then there's a worker shortage. 289 00:16:29,520 --> 00:16:31,760 Speaker 7: So if we want to see any of this come, 290 00:16:32,360 --> 00:16:34,760 Speaker 7: I think we're going to have to We're going to 291 00:16:34,800 --> 00:16:37,760 Speaker 7: have to lock down the certainty we can't be driving 292 00:16:37,800 --> 00:16:41,320 Speaker 7: prices up and there needs to be serious workforce training. 293 00:16:43,920 --> 00:16:47,480 Speaker 2: Current to end. Are we stepping back from the brink here? 294 00:16:48,600 --> 00:16:51,400 Speaker 2: Or is this just a pause while the administration kind 295 00:16:51,400 --> 00:16:53,600 Speaker 2: of works out the most effective method. 296 00:16:55,040 --> 00:16:58,520 Speaker 7: So the two thirty two, the section two thirty two investigation, 297 00:16:58,600 --> 00:17:01,520 Speaker 7: this is the national security invest stigation that's going to 298 00:17:01,600 --> 00:17:06,239 Speaker 7: happen for the electronics that they put a deadline on 299 00:17:06,400 --> 00:17:09,560 Speaker 7: comments for a month from now, and they're going to 300 00:17:09,600 --> 00:17:13,800 Speaker 7: move really quickly. I think the President has really stuck 301 00:17:13,800 --> 00:17:16,439 Speaker 7: his neck out. He personally has said that the tariffs 302 00:17:16,480 --> 00:17:18,639 Speaker 7: are going to be twenty five percent plus, So I 303 00:17:18,680 --> 00:17:21,119 Speaker 7: think we can expect to see those And when you 304 00:17:21,160 --> 00:17:24,760 Speaker 7: think about that plus perhaps the fentanyl terror or certainly 305 00:17:24,800 --> 00:17:28,360 Speaker 7: this fentanyl tariffs of twenty percent from China, I think 306 00:17:28,359 --> 00:17:30,600 Speaker 7: you're going to still see very high tariffs. 307 00:17:31,359 --> 00:17:33,479 Speaker 5: I think you're going to see uncertainty. I think you're 308 00:17:33,480 --> 00:17:34,840 Speaker 5: going to see raising costs. 309 00:17:35,720 --> 00:17:38,960 Speaker 7: So I hope you know, as they're making policy on 310 00:17:39,000 --> 00:17:41,760 Speaker 7: the fly, they're going to realize how critical this sector 311 00:17:41,960 --> 00:17:44,720 Speaker 7: is and they're going to address a bunch of those 312 00:17:44,840 --> 00:17:48,720 Speaker 7: vulnerabilities in this policy where they can't reach the results 313 00:17:48,760 --> 00:17:49,560 Speaker 7: they want to reach. 314 00:17:50,359 --> 00:17:54,399 Speaker 2: Karen Cornblue, former US Ambassador to the OECD. Grateful to 315 00:17:54,440 --> 00:18:05,440 Speaker 2: have you on the program. Thank you. Metas Mark Zuckerberg 316 00:18:05,520 --> 00:18:08,760 Speaker 2: took to the witness stand yesterday and an historic antitrust 317 00:18:08,800 --> 00:18:12,600 Speaker 2: trial in which the FTC alleges Meta's purchase of Instagram 318 00:18:12,680 --> 00:18:16,960 Speaker 2: and WhatsApp destroyed competition. Joining us now as Schweter Cojuria 319 00:18:17,000 --> 00:18:20,359 Speaker 2: of Wolf Research, who currently has an outperform rating on 320 00:18:20,480 --> 00:18:24,560 Speaker 2: Meta with a six hundred and forty dollars target price. 321 00:18:24,680 --> 00:18:27,040 Speaker 2: I'm looking at the stock. We're basically flat. In the session, 322 00:18:27,880 --> 00:18:31,520 Speaker 2: we'll get to the details of this trial, but simply 323 00:18:32,000 --> 00:18:35,360 Speaker 2: is there or is there not antitrust risk in this name? 324 00:18:36,080 --> 00:18:37,280 Speaker 5: I think there is. Yes. 325 00:18:37,320 --> 00:18:40,760 Speaker 8: It would be difficult to say no, given that there 326 00:18:40,800 --> 00:18:42,919 Speaker 8: is an ongoing case, which I think that will be 327 00:18:43,000 --> 00:18:48,200 Speaker 8: stretched for several weeks now. And the bigger question also 328 00:18:48,359 --> 00:18:51,720 Speaker 8: is if there is a likelihood of a settlement. If 329 00:18:51,920 --> 00:18:57,240 Speaker 8: the probability of settlement increases, then maybe the overhand is gone. 330 00:18:57,359 --> 00:18:59,560 Speaker 8: But otherwise, yes, I think there's a real risk. 331 00:19:00,040 --> 00:19:02,600 Speaker 2: Let me ask you this, This isn't data, but when 332 00:19:02,640 --> 00:19:05,560 Speaker 2: Mark Zuckerberg appears on day one of the trial, what 333 00:19:05,640 --> 00:19:06,480 Speaker 2: does that tell you. 334 00:19:07,160 --> 00:19:10,959 Speaker 8: That it is very very important for the company and 335 00:19:11,119 --> 00:19:14,560 Speaker 8: for him personally, and the fact that he has spoken 336 00:19:14,600 --> 00:19:18,560 Speaker 8: with President Trump multiple times since his inauguration it tells 337 00:19:18,640 --> 00:19:21,280 Speaker 8: us a little bit about how important this is for him. 338 00:19:21,680 --> 00:19:25,399 Speaker 2: The argument the FTC makes was largely based on email 339 00:19:26,200 --> 00:19:30,639 Speaker 2: documentary evidence that showed Zuckerberg having concerns prior to the 340 00:19:30,680 --> 00:19:33,280 Speaker 2: acquisition of Instagram that they would be a threat to 341 00:19:33,280 --> 00:19:38,359 Speaker 2: Facebook in the domain of photo images. That's very interesting argument. 342 00:19:38,440 --> 00:19:39,479 Speaker 2: Is it a strong one? 343 00:19:39,640 --> 00:19:40,280 Speaker 5: I don't think so. 344 00:19:40,400 --> 00:19:42,480 Speaker 8: I think FTC has a weak case on hand for 345 00:19:42,520 --> 00:19:46,040 Speaker 8: a variety of reasons. First of all, they are saying 346 00:19:46,080 --> 00:19:48,920 Speaker 8: that Meta is a monopoly. This is a backward looking 347 00:19:49,000 --> 00:19:53,760 Speaker 8: case from twenty twenty, and Instagram was not that big 348 00:19:53,800 --> 00:19:56,040 Speaker 8: of a platform with one million users at the time. 349 00:19:56,200 --> 00:19:59,440 Speaker 8: Success was not guaranteed, and they didn't even make revenue. Second, 350 00:19:59,480 --> 00:20:01,800 Speaker 8: they approved this case over a decade ago already, and 351 00:20:01,840 --> 00:20:05,199 Speaker 8: they're revisiting the same case. And the third thing is 352 00:20:05,200 --> 00:20:08,439 Speaker 8: that they're only looking at Snapchat and me. They are 353 00:20:08,480 --> 00:20:14,800 Speaker 8: not inc the FP is and the competition has evolved meaningfully. 354 00:20:15,080 --> 00:20:18,359 Speaker 2: So the counter argument that Meta is giving is that 355 00:20:18,840 --> 00:20:22,840 Speaker 2: they focus on TikTok and YouTube. Now, if you forget 356 00:20:23,040 --> 00:20:25,320 Speaker 2: the context of a trial. If you were analyzing this 357 00:20:25,400 --> 00:20:29,800 Speaker 2: stock in this marketplace, how do you assess the competition 358 00:20:30,119 --> 00:20:32,080 Speaker 2: from TikTok and YouTube that comes Metas way. 359 00:20:32,240 --> 00:20:36,200 Speaker 8: Absolutely, TikTok and YouTube are competitive, and it's more than 360 00:20:36,240 --> 00:20:40,439 Speaker 8: TikTok and YouTube. It's TikTok, YouTube, Snapchat, Reddit, anywhere that 361 00:20:40,480 --> 00:20:45,000 Speaker 8: a user is spending their time. And what I think 362 00:20:45,080 --> 00:20:48,120 Speaker 8: is missed in this case is that the Metas platform 363 00:20:48,160 --> 00:20:51,480 Speaker 8: has evolved from connecting friends and family to how people 364 00:20:51,600 --> 00:20:55,960 Speaker 8: actually spend time for broader entertainment and over fifty percent 365 00:20:55,960 --> 00:20:58,639 Speaker 8: of time spend of users today is video, which is 366 00:20:58,640 --> 00:21:01,359 Speaker 8: competing with all these their platforms sweter. 367 00:21:01,480 --> 00:21:04,679 Speaker 2: Many people were confused Metas an AI. 368 00:21:04,520 --> 00:21:06,159 Speaker 5: Company, isn't it It is? 369 00:21:06,480 --> 00:21:08,720 Speaker 2: So why is that not taken into account in this case? 370 00:21:08,920 --> 00:21:13,840 Speaker 8: Absolutely, It's just that the monetization of the platform today 371 00:21:14,119 --> 00:21:18,560 Speaker 8: is predominantly ad based monetization and that's their bread and 372 00:21:18,600 --> 00:21:19,879 Speaker 8: butter that they're competing on. 373 00:21:19,960 --> 00:21:22,159 Speaker 2: So we just have thirty seconds. But with earning season 374 00:21:22,200 --> 00:21:24,080 Speaker 2: around the corner, what do you expect methods to tell 375 00:21:24,160 --> 00:21:25,160 Speaker 2: us that. 376 00:21:25,160 --> 00:21:28,240 Speaker 8: They are cautious around the macro that they are reiterating 377 00:21:28,280 --> 00:21:31,800 Speaker 8: their gapex for full year, and they'll probably give a 378 00:21:31,840 --> 00:21:35,000 Speaker 8: conservative guy for the second quarter without much visibility into 379 00:21:35,040 --> 00:21:36,200 Speaker 8: what's coming in the back half. 380 00:21:36,600 --> 00:21:39,439 Speaker 2: Oh thanks to Schweeder Cajuria of Wolf Research joining us 381 00:21:39,480 --> 00:21:51,200 Speaker 2: here in the San Francisco studio. Welcome back to Bloomberg Technology. 382 00:21:51,200 --> 00:21:54,400 Speaker 2: Amed Ludlow in San Francisco. This is what financial markets 383 00:21:54,400 --> 00:21:56,800 Speaker 2: look right now. Earlier in the session, the story was 384 00:21:57,119 --> 00:22:01,359 Speaker 2: outperformance from semiconductors, the socks for the healthier semiconductor index. 385 00:22:01,560 --> 00:22:04,560 Speaker 2: It's still there, but it's much more muted. One of 386 00:22:04,640 --> 00:22:07,760 Speaker 2: the big factors of the last hour was a headline 387 00:22:07,760 --> 00:22:12,080 Speaker 2: from the European Union explaining that the EU expects tariffs 388 00:22:12,080 --> 00:22:16,040 Speaker 2: to remain in place, but the talks between the EU 389 00:22:16,080 --> 00:22:19,080 Speaker 2: and the United States have made very little progress. Then 390 00:22:19,119 --> 00:22:22,480 Speaker 2: we think about the individual movers. Still in the headlines. 391 00:22:23,080 --> 00:22:27,159 Speaker 2: Is Nvidia, for example, because of that commitment to build 392 00:22:27,200 --> 00:22:30,919 Speaker 2: more AI infrastructure one hundred percent in America. Amazon is 393 00:22:31,119 --> 00:22:34,560 Speaker 2: big moving to the downside. In the broad context of things, 394 00:22:34,560 --> 00:22:38,760 Speaker 2: we have questions about capex around AI. Google also lower 395 00:22:39,160 --> 00:22:41,919 Speaker 2: as well. I want to get to the big picture 396 00:22:41,920 --> 00:22:44,240 Speaker 2: here on tech stocks and what's driving this morning session. 397 00:22:44,280 --> 00:22:47,199 Speaker 2: Let's bring in Rhyme Vasellca of Bloomberg News. So what 398 00:22:47,240 --> 00:22:48,520 Speaker 2: do you see out there? I think you know the 399 00:22:48,560 --> 00:22:51,000 Speaker 2: mag seven's a bit bifurcated at the moment. But what 400 00:22:51,080 --> 00:22:52,680 Speaker 2: are the main drivers of this market? 401 00:22:53,600 --> 00:22:57,320 Speaker 9: Well, again, as always, the focuses almost entirely on trade 402 00:22:57,320 --> 00:22:59,840 Speaker 9: policy on tier obviously mentioned the headline out of the 403 00:23:00,000 --> 00:23:03,480 Speaker 9: European Union. There is still so much uncertainty, so much 404 00:23:03,520 --> 00:23:06,120 Speaker 9: back and forth. People are really having a hard time 405 00:23:06,560 --> 00:23:09,080 Speaker 9: gaming out with the ultimate teri freights are going to be, 406 00:23:09,200 --> 00:23:11,800 Speaker 9: what everything is going to look like, how companies are 407 00:23:11,800 --> 00:23:13,960 Speaker 9: going to react. There's still so much uncertainty in that 408 00:23:14,040 --> 00:23:16,879 Speaker 9: strive and volatility in both directions that we're seeing the 409 00:23:16,880 --> 00:23:17,479 Speaker 9: same today. 410 00:23:18,840 --> 00:23:22,640 Speaker 2: One of the big outperformers is Netflix up more than 411 00:23:22,680 --> 00:23:25,119 Speaker 2: five percent. There was a report in the journal I 412 00:23:25,119 --> 00:23:29,080 Speaker 2: think about some of their financial targets long term, some 413 00:23:29,160 --> 00:23:32,199 Speaker 2: of them eyewatering on market cap, target on what they 414 00:23:32,200 --> 00:23:35,280 Speaker 2: want to do with the top line. What's the story there? 415 00:23:36,119 --> 00:23:38,119 Speaker 9: Yeah, so, like you said, Wall Street Journal reported there 416 00:23:38,119 --> 00:23:42,000 Speaker 9: are twenty thirty targets expecting the double revenue, triple operating income, 417 00:23:42,359 --> 00:23:45,399 Speaker 9: have a lot more subscribers, and reach one trillion in 418 00:23:45,520 --> 00:23:48,280 Speaker 9: market cab joining that very elite club. This is a 419 00:23:48,280 --> 00:23:50,960 Speaker 9: stock that's been performing pretty well this year. They had 420 00:23:51,080 --> 00:23:54,280 Speaker 9: very strong results in January. They report again on Thursday 421 00:23:54,320 --> 00:23:57,680 Speaker 9: afternoon ahead of the holiday. There's a lot of optimism 422 00:23:57,760 --> 00:24:00,400 Speaker 9: because this is not really eight stock that is at 423 00:24:00,480 --> 00:24:02,800 Speaker 9: risk from tariffs. It's also a start that has seen 424 00:24:02,840 --> 00:24:06,640 Speaker 9: as pretty resilient in the face of an economic contraction 425 00:24:06,880 --> 00:24:09,120 Speaker 9: or a recession. If you're going to cut back onto 426 00:24:09,119 --> 00:24:11,200 Speaker 9: your spending, I think your Netflix subscription is going to 427 00:24:11,200 --> 00:24:13,320 Speaker 9: be one of the last things you've cut because you know, 428 00:24:13,359 --> 00:24:14,720 Speaker 9: the argument goes that you get a lot of being 429 00:24:14,720 --> 00:24:15,120 Speaker 9: for your buck. 430 00:24:15,200 --> 00:24:18,280 Speaker 2: As far as the breath of their library versus the 431 00:24:18,320 --> 00:24:22,760 Speaker 2: monthly b blombo's Ryan Blastellika with his finger on the 432 00:24:22,760 --> 00:24:25,399 Speaker 2: pulse of tech stocks this morning, Thank you very much. Okay, 433 00:24:25,840 --> 00:24:30,200 Speaker 2: time to diversify. That's the words of recent reflections from 434 00:24:30,200 --> 00:24:33,479 Speaker 2: Gerber Kawasaki quote. One of the key themes of this 435 00:24:33,560 --> 00:24:37,080 Speaker 2: year has been the value of diversification. While US stocks 436 00:24:37,280 --> 00:24:40,880 Speaker 2: have recently pulled back, many of the diversified strategies we've 437 00:24:40,880 --> 00:24:44,760 Speaker 2: implemented are proving providing balance. And that's all in the 438 00:24:44,760 --> 00:24:47,840 Speaker 2: context of course of trade, tariffs and technology. For more, 439 00:24:48,080 --> 00:24:51,800 Speaker 2: let's bring in Ross Gerber Gerber Kawazaki's CEO, and I 440 00:24:51,840 --> 00:24:54,480 Speaker 2: find that point interesting because you are someone that I've 441 00:24:54,560 --> 00:24:57,639 Speaker 2: enjoyed having on the program with a very sort of 442 00:24:57,840 --> 00:25:02,160 Speaker 2: high conviction thesis on specific technol loogy names. In this environment, 443 00:25:02,480 --> 00:25:05,560 Speaker 2: What does diversifying mean for you? Good morning US. 444 00:25:06,280 --> 00:25:09,159 Speaker 10: Well, for US, it's you know, firstly, just you know, 445 00:25:09,280 --> 00:25:12,560 Speaker 10: I'm traditionally just a US based investor, and we get 446 00:25:12,560 --> 00:25:15,640 Speaker 10: our international exposure through like big cap tech and other 447 00:25:15,960 --> 00:25:20,080 Speaker 10: consumer companies that are global, like Apple. So we've always 448 00:25:20,080 --> 00:25:24,080 Speaker 10: done substantially better for our clients investing in US companies 449 00:25:24,119 --> 00:25:26,679 Speaker 10: than foreign companies. But for the first time in like 450 00:25:27,160 --> 00:25:31,760 Speaker 10: at least five no, it's maybe eight ten years, I'm 451 00:25:31,760 --> 00:25:34,760 Speaker 10: investing in Europe and in Asia, and I think there's 452 00:25:34,800 --> 00:25:37,280 Speaker 10: a lot of opportunities globally, and if you actually look 453 00:25:37,280 --> 00:25:38,640 Speaker 10: at the global markets. 454 00:25:38,280 --> 00:25:40,480 Speaker 5: They're all pretty much up except. 455 00:25:40,160 --> 00:25:42,840 Speaker 10: For for the United States. So this has been a 456 00:25:42,880 --> 00:25:46,520 Speaker 10: good way to diversify assets if you want to own stocks. 457 00:25:46,520 --> 00:25:50,159 Speaker 10: But in general, stocks as an asset I think have 458 00:25:50,359 --> 00:25:53,280 Speaker 10: a much higher risk level for the return that you 459 00:25:53,320 --> 00:25:55,840 Speaker 10: can earn than it's had in the last five years, 460 00:25:56,119 --> 00:25:59,160 Speaker 10: and so investors need to look at diversifying in other 461 00:25:59,240 --> 00:26:03,200 Speaker 10: areas like gold and bitcoin from the sense of having 462 00:26:03,240 --> 00:26:07,399 Speaker 10: alternative assets. Real estate and reads look interesting to me 463 00:26:07,520 --> 00:26:10,679 Speaker 10: here as well as you know, private investments. 464 00:26:12,119 --> 00:26:15,240 Speaker 2: Let's talk about Europe and the equity market if we can, 465 00:26:15,359 --> 00:26:18,400 Speaker 2: because I think like ASML is a really interesting example, right. 466 00:26:18,800 --> 00:26:21,439 Speaker 2: It is this sort of darling of Europe, but it 467 00:26:21,560 --> 00:26:24,240 Speaker 2: is right at the center of what is happening with 468 00:26:24,480 --> 00:26:28,160 Speaker 2: tariffs and the adjustment of global supply chains. I also 469 00:26:28,200 --> 00:26:31,040 Speaker 2: ask the team to show SAP because like, right, there 470 00:26:31,119 --> 00:26:33,760 Speaker 2: isn't much big, big tech out there in Europe, and 471 00:26:34,080 --> 00:26:35,800 Speaker 2: I kind of have a right to say that, having 472 00:26:35,840 --> 00:26:38,320 Speaker 2: spent most of my life and career in Europe. 473 00:26:38,400 --> 00:26:40,720 Speaker 10: And you have Semens too, So we looked at SAP 474 00:26:40,880 --> 00:26:44,400 Speaker 10: and Semens recently, which are excellent companies. And you know, 475 00:26:44,840 --> 00:26:46,879 Speaker 10: the way we're playing it right now, because I'm not 476 00:26:47,440 --> 00:26:50,560 Speaker 10: really an expert in European securities like US securities, is 477 00:26:50,560 --> 00:26:53,280 Speaker 10: really just through the indexes, which I think give you 478 00:26:53,320 --> 00:26:57,840 Speaker 10: exposure because SAP and Semens Novo, which is really cheap 479 00:26:57,880 --> 00:27:01,320 Speaker 10: as well, are are, you know, all big components of 480 00:27:01,320 --> 00:27:03,879 Speaker 10: the European indexes. So that's one way to play it. 481 00:27:03,960 --> 00:27:06,680 Speaker 10: I own ASML in my fun GK and for clients, 482 00:27:06,800 --> 00:27:09,119 Speaker 10: and we just trimmed it a little bit because I 483 00:27:09,600 --> 00:27:12,159 Speaker 10: kind of feel like they're just in this crossroads of 484 00:27:12,200 --> 00:27:14,920 Speaker 10: the trade board because they make the most important machines 485 00:27:15,160 --> 00:27:17,880 Speaker 10: for chips. But it's also like we don't want this 486 00:27:17,920 --> 00:27:19,600 Speaker 10: person to get it. We don't want that person to 487 00:27:19,600 --> 00:27:23,159 Speaker 10: get it. So, you know, ASML has some challenges that 488 00:27:23,200 --> 00:27:27,000 Speaker 10: are political, but their product is crucial to the development 489 00:27:27,040 --> 00:27:28,600 Speaker 10: of advanced chips. You know. 490 00:27:30,520 --> 00:27:32,840 Speaker 2: Bitcoin, You mentioned the moment ago. Is there a kind 491 00:27:32,840 --> 00:27:36,800 Speaker 2: of Goerba Kawasaki thesis and strategy around bitcoin? Uss? 492 00:27:37,160 --> 00:27:40,080 Speaker 10: Well, I've been investing in bitcoin for over a decade, 493 00:27:40,160 --> 00:27:43,800 Speaker 10: so for me, bitcoin is a long term, highly volatile 494 00:27:43,880 --> 00:27:48,240 Speaker 10: asset that's related to risk, and so when risk on 495 00:27:48,359 --> 00:27:51,119 Speaker 10: bitcoin goes up, when risk off bitcoin goes down. But 496 00:27:51,200 --> 00:27:53,919 Speaker 10: we look at it very similar to gold. But gold 497 00:27:54,080 --> 00:27:58,280 Speaker 10: acts opposite of bitcoin, you know, with inflation, and it's 498 00:27:58,280 --> 00:27:59,520 Speaker 10: a risk off asset. 499 00:28:00,000 --> 00:28:00,560 Speaker 2: Do you like them? 500 00:28:00,640 --> 00:28:03,119 Speaker 10: Kind of here in my fund, I own, you know, 501 00:28:03,200 --> 00:28:05,880 Speaker 10: a much higher percentage of gold now than bitcoin because 502 00:28:05,920 --> 00:28:08,480 Speaker 10: I think gold is a better that today than bitcoin. 503 00:28:09,720 --> 00:28:12,199 Speaker 10: But I think having alternative assets like this in your 504 00:28:12,240 --> 00:28:14,320 Speaker 10: portfolio makes a lot of sense, and we have it 505 00:28:14,359 --> 00:28:17,159 Speaker 10: in my ETF GK, and we're the only ETF that 506 00:28:17,240 --> 00:28:20,600 Speaker 10: actually owns gold and Bigcoin Ross. 507 00:28:20,600 --> 00:28:23,200 Speaker 2: I'm going to ask you about Tesla, but first I 508 00:28:23,400 --> 00:28:26,080 Speaker 2: just observed that historically, when you've come on the program, 509 00:28:26,359 --> 00:28:29,560 Speaker 2: we've talked about Tesla, because you have been a vocal 510 00:28:29,760 --> 00:28:32,800 Speaker 2: Tesla shareholder, and when I posted on social media you 511 00:28:32,800 --> 00:28:35,240 Speaker 2: were coming on. There are many that point out, well, 512 00:28:35,240 --> 00:28:38,000 Speaker 2: why are you getting him on? He is too emotional. 513 00:28:38,040 --> 00:28:40,680 Speaker 2: I'm quoting others just hear me out, he's too emotional 514 00:28:40,720 --> 00:28:44,320 Speaker 2: about Tesla. He is anti Elon. There are those that 515 00:28:44,440 --> 00:28:46,880 Speaker 2: sort of think you're too combative with this sort of 516 00:28:47,360 --> 00:28:51,400 Speaker 2: retail Tesla shareholder and audience. That's the context, but actually 517 00:28:51,440 --> 00:28:54,120 Speaker 2: there are some specific questions in that, which is how 518 00:28:54,160 --> 00:28:58,600 Speaker 2: focused are you on Elon's involvement at DOGE and the 519 00:28:58,640 --> 00:29:01,240 Speaker 2: assumption that you probably want him to stop doing that 520 00:29:01,520 --> 00:29:02,960 Speaker 2: and focus back on Tesla. 521 00:29:04,160 --> 00:29:06,200 Speaker 10: Well, there's a couple of things to unpack there. First 522 00:29:06,240 --> 00:29:10,240 Speaker 10: of all, I understand why retail investors at Tesla are 523 00:29:10,320 --> 00:29:13,760 Speaker 10: frustrated with me for voicing my views as a retail 524 00:29:14,240 --> 00:29:18,440 Speaker 10: Tesla investor and a cyber truck driver. I find it 525 00:29:18,600 --> 00:29:22,160 Speaker 10: horrible the fact that people are worried about having their 526 00:29:22,240 --> 00:29:27,200 Speaker 10: vehicles vandalized, including me, because of Elon. You know, so 527 00:29:27,840 --> 00:29:30,520 Speaker 10: I don't know why I'm getting attacked when I'm the 528 00:29:30,520 --> 00:29:34,600 Speaker 10: one I'm actually really getting attacked because of Elon's behavior. 529 00:29:34,680 --> 00:29:37,720 Speaker 10: So I think you'd have to be a blind person 530 00:29:37,800 --> 00:29:40,920 Speaker 10: not to see that Elon's behavior is, you know, highly 531 00:29:40,920 --> 00:29:43,680 Speaker 10: political and highly damaging to the brand, and all the 532 00:29:43,760 --> 00:29:45,840 Speaker 10: numbers are showing that. So I'm a shareholder, and if 533 00:29:45,840 --> 00:29:49,880 Speaker 10: you go back to twenty twenty one, that was the 534 00:29:49,960 --> 00:29:53,480 Speaker 10: high of Tesla around four hundred dollars until that brief 535 00:29:53,560 --> 00:29:55,960 Speaker 10: rally during the election, So nobody's made any money in 536 00:29:56,000 --> 00:29:59,640 Speaker 10: Tesla for a long time. Tesla stock is down forty 537 00:29:59,640 --> 00:30:04,680 Speaker 10: percent this year. The performance is I think directly related 538 00:30:04,720 --> 00:30:07,280 Speaker 10: to the CEO A not working at the company and 539 00:30:07,320 --> 00:30:10,320 Speaker 10: be his outside activities. I guess you could call it. 540 00:30:10,960 --> 00:30:16,000 Speaker 10: I don't like Elon's personal the way he does things. 541 00:30:16,280 --> 00:30:20,000 Speaker 10: That's true, and I don't align with him morally, but 542 00:30:20,040 --> 00:30:23,800 Speaker 10: that is irrelevant of my investment in Tesla, which I 543 00:30:23,840 --> 00:30:26,360 Speaker 10: have a substantial amount of money, and for my clients 544 00:30:26,640 --> 00:30:31,000 Speaker 10: that deserve correct representation by their CEO and the board 545 00:30:31,000 --> 00:30:35,640 Speaker 10: of director's responsibility to running the company as every other company. 546 00:30:35,280 --> 00:30:36,240 Speaker 5: In America is run. 547 00:30:36,720 --> 00:30:39,400 Speaker 10: We all know that this is a reality, and I'm 548 00:30:39,440 --> 00:30:41,040 Speaker 10: just the one willing to say it. So people can 549 00:30:41,120 --> 00:30:43,080 Speaker 10: attack me all they want, But what I really care 550 00:30:43,120 --> 00:30:46,280 Speaker 10: about is what's best for Tesla and Tesla's shareholders. And 551 00:30:46,320 --> 00:30:47,960 Speaker 10: if these people don't get it, they don't get it, 552 00:30:48,040 --> 00:30:48,760 Speaker 10: what am I going to do? 553 00:30:50,040 --> 00:30:53,880 Speaker 2: Another question is, well, what happens if Tesla outperforms one user? 554 00:30:53,920 --> 00:30:55,560 Speaker 2: And X gave the example of what if it ten? 555 00:30:55,760 --> 00:30:59,760 Speaker 2: X is I think a more modest model, but you'll 556 00:31:00,360 --> 00:31:04,000 Speaker 2: mindedness to add to the position and continue to see 557 00:31:04,000 --> 00:31:06,200 Speaker 2: the long term story around AI and energy. 558 00:31:07,000 --> 00:31:11,320 Speaker 10: I still own Tesla, like you know, we own a 559 00:31:11,320 --> 00:31:13,400 Speaker 10: lot of Tesla at my firm, a lot less in 560 00:31:13,480 --> 00:31:15,920 Speaker 10: my fund because I think the short term and the 561 00:31:15,960 --> 00:31:18,720 Speaker 10: medium to look pretty bad for Tesla right now. But 562 00:31:18,800 --> 00:31:20,800 Speaker 10: we still even own it in my fund, and I 563 00:31:20,840 --> 00:31:23,880 Speaker 10: can't really even justify owning it. But for clients, we 564 00:31:23,880 --> 00:31:26,920 Speaker 10: own Tesla because I do think something fixes itself at 565 00:31:26,920 --> 00:31:29,320 Speaker 10: some point, and they have the best products. I was 566 00:31:29,360 --> 00:31:32,520 Speaker 10: just in the new model. Why it's a great upgrade, 567 00:31:32,600 --> 00:31:35,880 Speaker 10: it's way better than the old model. Why and why 568 00:31:35,920 --> 00:31:39,200 Speaker 10: they're not advertising to consumers that they have a new 569 00:31:39,240 --> 00:31:42,520 Speaker 10: product is mind blowing to me. So I've had enough 570 00:31:42,560 --> 00:31:45,120 Speaker 10: of the bs that Elon knows what he's doing at Tesla. 571 00:31:45,320 --> 00:31:47,920 Speaker 10: It's clear that he just doesn't care. And his next 572 00:31:47,920 --> 00:31:50,000 Speaker 10: move is Xai. And by the way, I'm invested in 573 00:31:50,040 --> 00:31:54,880 Speaker 10: that too, so you know I own Xai stock. And 574 00:31:55,040 --> 00:31:57,760 Speaker 10: the truth of the matter is Elon's going back to Xai. 575 00:31:57,920 --> 00:32:00,320 Speaker 10: So if you have any confusion that he's come back 576 00:32:00,360 --> 00:32:03,760 Speaker 10: to Tesla, he's not. That's not what his passion or 577 00:32:03,800 --> 00:32:06,200 Speaker 10: focus is. And there's a great article from I think 578 00:32:06,200 --> 00:32:09,480 Speaker 10: the information that came out today about basically just doesn't 579 00:32:09,480 --> 00:32:12,160 Speaker 10: care and I believe that. So I'm sorry. I'm going 580 00:32:12,160 --> 00:32:14,120 Speaker 10: to stand up for Tesla because I care about climate. 581 00:32:14,400 --> 00:32:17,200 Speaker 10: I just survived a horrible fire that was created by 582 00:32:17,200 --> 00:32:20,280 Speaker 10: climate and I can tell you firsthand after seeing it 583 00:32:20,400 --> 00:32:22,880 Speaker 10: fighting it myself, that if you're not concerned about what 584 00:32:22,920 --> 00:32:25,040 Speaker 10: climate change is going to do to you, you're just 585 00:32:25,120 --> 00:32:27,640 Speaker 10: being foolish here. And Tesla's one of the most important 586 00:32:27,640 --> 00:32:31,120 Speaker 10: companies to solving climate. So I want to see Tesla succeed. 587 00:32:31,320 --> 00:32:33,720 Speaker 10: And that is the whole purpose of why I say 588 00:32:33,800 --> 00:32:35,400 Speaker 10: these things and get criticized. 589 00:32:36,000 --> 00:32:37,560 Speaker 2: I don't mean to cut you off. Were just short 590 00:32:37,560 --> 00:32:39,360 Speaker 2: on sus and I want to get to Netflix, and 591 00:32:39,360 --> 00:32:39,960 Speaker 2: I want to get to that. 592 00:32:40,040 --> 00:32:44,120 Speaker 10: I am emotional about it because I love Tesla. 593 00:32:43,160 --> 00:32:47,840 Speaker 2: Noted you've been a holder of Disney. We talked about 594 00:32:47,840 --> 00:32:49,720 Speaker 2: it a lot. But that Netflix news on their twenty 595 00:32:49,800 --> 00:32:51,840 Speaker 2: thirty targets. How do you see both names? 596 00:32:52,760 --> 00:32:54,840 Speaker 10: You know, it's funny because I fight about Disney all 597 00:32:54,840 --> 00:32:58,600 Speaker 10: the time with my coworkers because I still think Disney 598 00:32:58,680 --> 00:33:02,600 Speaker 10: is wildly undervalell you and after the Netflix announcement, you know, 599 00:33:02,600 --> 00:33:04,480 Speaker 10: we own Netflix as a top holding in my fund 600 00:33:04,480 --> 00:33:06,000 Speaker 10: and at my firm, and we've owned it for a 601 00:33:06,040 --> 00:33:08,160 Speaker 10: long time and it's been a great investment. And the 602 00:33:08,200 --> 00:33:10,920 Speaker 10: team there is incredible and their goals are I think 603 00:33:10,960 --> 00:33:13,520 Speaker 10: great and accurate, and it's a great stock to own. 604 00:33:13,720 --> 00:33:15,360 Speaker 2: But then you look at Disney. 605 00:33:15,160 --> 00:33:18,960 Speaker 10: Trading at this like discount with Hulu really doing well. 606 00:33:19,320 --> 00:33:22,560 Speaker 10: You know, Hulu has great content. ESPN is about to 607 00:33:22,600 --> 00:33:25,360 Speaker 10: become a free agent from the cable companies this year 608 00:33:25,480 --> 00:33:27,600 Speaker 10: where it can be a standalone service. They have these 609 00:33:27,600 --> 00:33:31,600 Speaker 10: sports services coming out. They've done very well I think 610 00:33:31,640 --> 00:33:34,200 Speaker 10: with movies, not as good as i'd wish, but much 611 00:33:34,240 --> 00:33:38,600 Speaker 10: better than before and then theme parks, and I think 612 00:33:38,640 --> 00:33:41,600 Speaker 10: there's this global uncertainty with travel, which is why we've 613 00:33:41,640 --> 00:33:43,920 Speaker 10: lowered our position a little bit. And I'm not sure 614 00:33:43,960 --> 00:33:46,520 Speaker 10: how this shakes out with China because Disney and China 615 00:33:46,560 --> 00:33:49,640 Speaker 10: have a very close relationship. So there are some headwinds 616 00:33:49,640 --> 00:33:52,400 Speaker 10: with Disney that Netflix doesn't have because they don't have physical, 617 00:33:52,760 --> 00:33:56,000 Speaker 10: you know, locations. But with Disney and the cruise ships, 618 00:33:56,040 --> 00:33:58,720 Speaker 10: I see this as a cash cow. So I'm really 619 00:33:58,760 --> 00:34:01,800 Speaker 10: bullish on Disney. I think the evaluation, okay, is way chip, 620 00:34:02,440 --> 00:34:04,840 Speaker 10: way cheap. But I'm also very bullish on netflite. 621 00:34:06,160 --> 00:34:09,600 Speaker 2: Ross Gerba of Gerber Kawasaki, thank you very much. Now 622 00:34:09,640 --> 00:34:13,200 Speaker 2: coming up on the show, as Taiwan braces for digital threats, 623 00:34:13,600 --> 00:34:17,200 Speaker 2: one US space startup has a bold plan that starts 624 00:34:17,239 --> 00:34:20,320 Speaker 2: in orbit. A Strata CEO John Gedmark joins us next. 625 00:34:20,640 --> 00:34:35,520 Speaker 2: This is Bloomberg Technology. Taiwan is teaming up with US 626 00:34:35,600 --> 00:34:38,879 Speaker 2: startup as Strantis to launch a satellite that could keep 627 00:34:38,920 --> 00:34:43,040 Speaker 2: its Internet online no matter what. For example, a satellite 628 00:34:43,120 --> 00:34:46,319 Speaker 2: link would likely be crucial for Taiwan to maintain its 629 00:34:46,320 --> 00:34:50,840 Speaker 2: communications if a possible Chinese attack were to disrupt its networks. 630 00:34:50,920 --> 00:34:53,960 Speaker 2: Joining US now is John Gedmark, a Straanti CEO here 631 00:34:54,000 --> 00:34:57,160 Speaker 2: in the San Francisco studio. Let's start with the basics 632 00:34:57,200 --> 00:35:00,319 Speaker 2: of the technology. What is a micro geo satellite, what 633 00:35:00,400 --> 00:35:02,239 Speaker 2: does it do and how is it going to get 634 00:35:02,320 --> 00:35:02,600 Speaker 2: up there? 635 00:35:03,040 --> 00:35:03,239 Speaker 5: Yeah? 636 00:35:03,280 --> 00:35:03,839 Speaker 2: Absolutely so. 637 00:35:03,920 --> 00:35:07,960 Speaker 11: This is the first time that Taiwan has had a 638 00:35:08,120 --> 00:35:12,600 Speaker 11: satellite dedicated just to them for broadband connectivity. And we're 639 00:35:12,640 --> 00:35:15,120 Speaker 11: able to do that because we're in this special orbit 640 00:35:15,239 --> 00:35:16,800 Speaker 11: called geostationary orbit. 641 00:35:16,920 --> 00:35:18,800 Speaker 2: So this is a very high. 642 00:35:18,760 --> 00:35:22,200 Speaker 11: Orbit, much higher than lower orbit satellite networks you might 643 00:35:22,200 --> 00:35:25,960 Speaker 11: have heard about. And this special orbit allows us to 644 00:35:25,960 --> 00:35:29,480 Speaker 11: park a single satellite over a country or multiple satellites 645 00:35:29,920 --> 00:35:33,320 Speaker 11: and provide NonStop service with just that one. 646 00:35:33,200 --> 00:35:34,719 Speaker 2: Asset and the launch provider. 647 00:35:35,520 --> 00:35:38,279 Speaker 11: We'll be launching this satellite along with a number of 648 00:35:38,280 --> 00:35:41,160 Speaker 11: other of our satellites, on a SpaceX rocket later this year. 649 00:35:41,640 --> 00:35:43,480 Speaker 2: One of the questions I got from the audience was 650 00:35:43,520 --> 00:35:47,600 Speaker 2: about the orbit, and a question was about the vulnerability. 651 00:35:47,960 --> 00:35:50,799 Speaker 2: So you kind of went through the benefits of that 652 00:35:50,960 --> 00:35:55,240 Speaker 2: jacing from this orbit, but what are the risks involved 653 00:35:55,320 --> 00:35:56,840 Speaker 2: in that level? 654 00:35:58,200 --> 00:36:01,400 Speaker 11: Well, I'm not going to go into details on techniques 655 00:36:01,440 --> 00:36:03,640 Speaker 11: to counter the kinds of things I think you're talking. 656 00:36:03,719 --> 00:36:05,280 Speaker 2: I think that is at the reason of that question. 657 00:36:05,400 --> 00:36:08,399 Speaker 11: Yes, what I would say is that resiliency comes from 658 00:36:08,760 --> 00:36:12,520 Speaker 11: strengthen numbers. So this satellite is actually just the beginning. 659 00:36:12,719 --> 00:36:14,600 Speaker 11: We're gonna be launching many satellites. But this is why 660 00:36:14,600 --> 00:36:18,200 Speaker 11: we're spooling up production out of our factory here in 661 00:36:18,239 --> 00:36:21,719 Speaker 11: San Francisco to launch many dozens of these satellites in 662 00:36:21,760 --> 00:36:25,719 Speaker 11: the years to come. And then you can relocate those satellites, 663 00:36:25,760 --> 00:36:27,840 Speaker 11: you can move them around, you can bring more to 664 00:36:27,880 --> 00:36:31,640 Speaker 11: bear on a particular issue, regardless of what happens. I 665 00:36:31,680 --> 00:36:34,840 Speaker 11: think the other thing i'd add is space is actually 666 00:36:35,040 --> 00:36:37,799 Speaker 11: a much better visime to be in than on the 667 00:36:37,800 --> 00:36:39,840 Speaker 11: ground or under the seat. If you think about how 668 00:36:39,840 --> 00:36:43,640 Speaker 11: difficult it is to replace, say an undersea cable that 669 00:36:43,800 --> 00:36:47,600 Speaker 11: might get cut, space is a very different, very different question. 670 00:36:47,680 --> 00:36:50,239 Speaker 11: Actually much easier for us to bring in one or 671 00:36:50,239 --> 00:36:51,720 Speaker 11: more additional satellites if needed. 672 00:36:52,040 --> 00:36:55,040 Speaker 2: This seems like a really big commercial development for you. 673 00:36:55,280 --> 00:36:58,800 Speaker 2: The contract value with Taiwan is worth an excess of 674 00:36:58,800 --> 00:37:00,160 Speaker 2: one hundred million dollars. 675 00:37:01,200 --> 00:37:04,719 Speaker 11: How do you execute on a Yeah, so this is 676 00:37:04,760 --> 00:37:08,520 Speaker 11: a contract with Chungwa Telecom, the largest tolco and Taiwan. 677 00:37:08,520 --> 00:37:11,640 Speaker 11: They have about a thirty billion dollar market cap. This 678 00:37:11,880 --> 00:37:17,080 Speaker 11: is a total value over the service life of the satellite. 679 00:37:17,280 --> 00:37:19,920 Speaker 11: So you know, what we're finding is that a certain 680 00:37:19,960 --> 00:37:23,759 Speaker 11: type of customer they really want this dedicated satellite and 681 00:37:23,840 --> 00:37:29,400 Speaker 11: really it's a dedicated network. So they get the security, 682 00:37:29,440 --> 00:37:33,880 Speaker 11: they get this enterprise grade connectivity, and they get insight 683 00:37:33,960 --> 00:37:37,160 Speaker 11: and transparency into exactly what's happening in their network. 684 00:37:37,480 --> 00:37:38,000 Speaker 2: And this is. 685 00:37:37,960 --> 00:37:42,319 Speaker 11: Something that we found customers really are looking for now 686 00:37:42,680 --> 00:37:47,399 Speaker 11: in sort of this age of heightened geopolitical tensions, will 687 00:37:48,200 --> 00:37:49,280 Speaker 11: and they're willing to pay a premium. 688 00:37:49,440 --> 00:37:51,719 Speaker 2: Well, that's why we sided the conversation, right, like the 689 00:37:52,480 --> 00:37:56,880 Speaker 2: communication satellite that what happens if Taiwan is subject to 690 00:37:57,040 --> 00:38:01,080 Speaker 2: aggression from China in the possible that, right, Is a 691 00:38:01,120 --> 00:38:04,320 Speaker 2: Stratus a communication satellite company or is it a defense 692 00:38:04,680 --> 00:38:05,680 Speaker 2: technology company? 693 00:38:06,760 --> 00:38:09,600 Speaker 11: Well, certainly, I would say we're a little bit of both. 694 00:38:10,080 --> 00:38:14,560 Speaker 11: We are definitely a communications service provider, and we now 695 00:38:14,680 --> 00:38:18,080 Speaker 11: have a number of contracts actually with the US military 696 00:38:18,440 --> 00:38:21,919 Speaker 11: as they have become interested in our technology as well. 697 00:38:22,000 --> 00:38:24,880 Speaker 11: So it is a true dual use technology and that's 698 00:38:25,120 --> 00:38:27,520 Speaker 11: I think to the benefit of both our commercial customers 699 00:38:27,560 --> 00:38:30,560 Speaker 11: and to the US military. We get to benefit from 700 00:38:30,640 --> 00:38:33,080 Speaker 11: that shared investment and shared infrastructure. 701 00:38:33,160 --> 00:38:35,480 Speaker 2: I think there is a lot of interest in America's 702 00:38:35,480 --> 00:38:38,520 Speaker 2: commercial space industry. Could you just explain the basics of 703 00:38:38,560 --> 00:38:41,480 Speaker 2: your supply chain and your footprint where all of your 704 00:38:41,520 --> 00:38:42,799 Speaker 2: center activity is here. 705 00:38:43,640 --> 00:38:47,440 Speaker 11: Yeah, We're an American company with the vast, vast majority 706 00:38:47,480 --> 00:38:51,600 Speaker 11: of our supply chain in the United States. We have 707 00:38:51,680 --> 00:38:57,520 Speaker 11: very little international footprint on that actually, and none out 708 00:38:57,520 --> 00:39:01,239 Speaker 11: of China if I suspect that's where you're going with that. So, yeah, 709 00:39:01,239 --> 00:39:03,480 Speaker 11: this is something we've been thinking about for many years now. 710 00:39:03,960 --> 00:39:06,280 Speaker 2: John Denmark has straying a CEO on the big deal 711 00:39:06,600 --> 00:39:18,279 Speaker 2: with one of Taiwan's leading telecommunications companies, Thank you. We're 712 00:39:18,280 --> 00:39:20,840 Speaker 2: about to find out how tariffs and doubts about AI 713 00:39:20,960 --> 00:39:24,520 Speaker 2: demand are hitting the chip industry. TSMC, the world's biggest 714 00:39:24,520 --> 00:39:29,280 Speaker 2: contract manufacturer of chips, and ASML, the leading chip making 715 00:39:29,320 --> 00:39:32,720 Speaker 2: equipment maker, both report earnings in the next thirty six hours. 716 00:39:32,920 --> 00:39:35,800 Speaker 2: Both have borne the brunt of the broader market selloff 717 00:39:35,840 --> 00:39:39,440 Speaker 2: that's focused on trade wars and AI. Wall Street expects 718 00:39:39,520 --> 00:39:43,000 Speaker 2: sales and income to rise sharply at both companies. However, 719 00:39:43,360 --> 00:39:46,080 Speaker 2: it's the outlooking guidance you want to focus on as 720 00:39:46,120 --> 00:39:50,719 Speaker 2: investors assess how hard trade tensions and macroeconomic concerns put 721 00:39:50,719 --> 00:39:53,399 Speaker 2: off key customers. The main metric to watch. Analysts see 722 00:39:53,440 --> 00:39:57,680 Speaker 2: TSMC actually withdrawing its guidance and ASML missing estimates on 723 00:39:57,760 --> 00:39:59,840 Speaker 2: quarterly bookings. A right, let's take a look at shares 724 00:39:59,880 --> 00:40:03,520 Speaker 2: of HPE. The stock popped after use the Elliott Investment 725 00:40:03,560 --> 00:40:06,439 Speaker 2: Management built a position worth more than one point five 726 00:40:06,480 --> 00:40:09,640 Speaker 2: billion dollars into the company, that's according to sources. But 727 00:40:09,760 --> 00:40:11,960 Speaker 2: the best ready forward is back with more. So this 728 00:40:12,040 --> 00:40:15,560 Speaker 2: is an activist play. What does Elliott want from and 729 00:40:15,640 --> 00:40:16,440 Speaker 2: with Hpe? 730 00:40:17,080 --> 00:40:19,719 Speaker 4: What does any activists want? They want more money? Right? 731 00:40:19,800 --> 00:40:23,160 Speaker 4: I mean appears that Elliott notices that HPE has had 732 00:40:23,160 --> 00:40:27,000 Speaker 4: a pretty rough year. You know, it's share prices down 733 00:40:27,080 --> 00:40:30,719 Speaker 4: quite a bit, it's underperformed peers like a Dell or 734 00:40:30,760 --> 00:40:34,000 Speaker 4: a super micro, and it appears that they see it's 735 00:40:34,000 --> 00:40:36,799 Speaker 4: a good time to invest in agitate for changes. Now 736 00:40:36,840 --> 00:40:39,720 Speaker 4: we haven't heard from Elliott, we haven't heard from HPE. 737 00:40:40,360 --> 00:40:43,200 Speaker 4: But generally the playbook here is to find a company 738 00:40:43,239 --> 00:40:46,120 Speaker 4: that has some pretty good kind of bones to it, 739 00:40:46,600 --> 00:40:49,640 Speaker 4: but is you know, apparently being misrun or it's not 740 00:40:49,960 --> 00:40:53,400 Speaker 4: you know, really living up to its potential is generally 741 00:40:53,400 --> 00:40:57,160 Speaker 4: how activists see it. Often that means things as drastic 742 00:40:57,200 --> 00:40:59,960 Speaker 4: as let's get a new CEO or switch up the ball, 743 00:41:00,360 --> 00:41:02,560 Speaker 4: let's do some layoffs, things of that nature. 744 00:41:02,560 --> 00:41:05,480 Speaker 2: That this tariff's in the equation right, Like I think 745 00:41:05,600 --> 00:41:07,719 Speaker 2: HPU said last month that profit this year will be 746 00:41:07,719 --> 00:41:10,239 Speaker 2: below what people hope. But I'm like one of those 747 00:41:10,280 --> 00:41:12,279 Speaker 2: few people that's ripped apart a server. I know that 748 00:41:12,480 --> 00:41:15,200 Speaker 2: HPE is deeply involved in the AI infrastructure build out. 749 00:41:15,200 --> 00:41:17,440 Speaker 2: Why do they not get that credit from Elliott? 750 00:41:17,880 --> 00:41:19,960 Speaker 4: Well, they could be I mean, part of the calculation 751 00:41:20,120 --> 00:41:22,719 Speaker 4: could be that, you know, the market's really beat up 752 00:41:22,760 --> 00:41:25,200 Speaker 4: this name, but they actually have a pretty good position 753 00:41:25,280 --> 00:41:28,560 Speaker 4: with their networking and with their servers. I think a 754 00:41:28,600 --> 00:41:31,440 Speaker 4: big question for investors right now with all the hardware 755 00:41:31,560 --> 00:41:34,840 Speaker 4: names is how much will they be impacted by teriffs? 756 00:41:34,880 --> 00:41:38,400 Speaker 4: And it's not totally clear. HPE has a lot of 757 00:41:38,440 --> 00:41:41,680 Speaker 4: manufacturing in Mexico. I don't believe they have quite the 758 00:41:41,760 --> 00:41:45,160 Speaker 4: level of Asia exposure, so that could be a benefit, 759 00:41:45,200 --> 00:41:47,239 Speaker 4: But these terriffs keep changing every day, so it's hard 760 00:41:47,280 --> 00:41:47,600 Speaker 4: to say. 761 00:41:48,520 --> 00:41:48,600 Speaker 5: So. 762 00:41:48,680 --> 00:41:50,480 Speaker 2: To Brodie's point, the stock is down like more than 763 00:41:50,520 --> 00:41:53,600 Speaker 2: thirty percent year today again of four percent is kind 764 00:41:53,600 --> 00:41:56,760 Speaker 2: of not really registering in the context of reccessions. Bluembogs 765 00:41:56,800 --> 00:41:59,400 Speaker 2: Brady Ford, big shift on the show today. Thank you 766 00:41:59,520 --> 00:42:02,920 Speaker 2: very much. That does it for this edition of Bloomberg Technology. 767 00:42:02,960 --> 00:42:05,120 Speaker 2: Don't forget check out the podcast. You can find it 768 00:42:05,160 --> 00:42:08,680 Speaker 2: on the terminal as well as online on Apple, Spotify, 769 00:42:09,040 --> 00:42:11,719 Speaker 2: and iHeart Wow. A lot going on in the world 770 00:42:11,760 --> 00:42:14,560 Speaker 2: of technology. Thanks to everyone watching. This is Bloomberg Technology.