WEBVTT - Intel's Chips Grant, California Vs. Tesla 0:00:01.480 --> 0:00:05.120 From Mahart where Innovation of Money and Power Collie in 0:00:05.240 --> 0:00:06.720 Silicon Valley NBN. 0:00:07.080 --> 0:00:11.600 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:25.440 --> 0:00:26.239 Live from New York. 0:00:26.400 --> 0:00:29.840 This is Blomberg Technology coming up. Intel's secures an eight 0:00:29.920 --> 0:00:32.880 billion dollar grant for its US chip factory expansion of 0:00:32.960 --> 0:00:35.640 the months of trying to convince Washington and Wall Street 0:00:35.840 --> 0:00:37.360 that it can execute on its vision. 0:00:37.720 --> 0:00:39.880 Plus California, it proposes. 0:00:39.440 --> 0:00:44.120 State in centers for EV buyers, which could exclude Tesla's models, 0:00:44.720 --> 0:00:48.199 and social media companies push back against new legislation in 0:00:48.280 --> 0:00:51.960 Australia that's going through the courts that could limit team usage. 0:00:52.000 --> 0:00:54.480 But first that's checking on these markets. 0:00:54.600 --> 0:00:56.760 Because we're currently hired to the tune of four tenths 0:00:56.760 --> 0:00:58.920 of a percent, we're managing to shrug off some of 0:00:58.920 --> 0:01:01.400 that anxiety once again being built in around geopolitics and 0:01:01.480 --> 0:01:03.840 remid tariffs that we're going to break it down for 0:01:03.920 --> 0:01:04.920 you a little bit later. 0:01:05.000 --> 0:01:07.640 But still big tech managing to lead us higher. 0:01:07.680 --> 0:01:09.200 And in fact, the S and P five hundred on 0:01:09.280 --> 0:01:11.600 track for yet another set of records, and the NASUC 0:01:11.720 --> 0:01:12.800 is up for four straight days. 0:01:12.800 --> 0:01:14.600 Move on and look at some of the individual movers. 0:01:14.400 --> 0:01:17.640 Because we have still got some drip feed around earnings 0:01:17.680 --> 0:01:19.400 that have come after the bell. I want to look 0:01:19.400 --> 0:01:21.000 at what's of course been happening in the world of 0:01:21.080 --> 0:01:24.040 Zoom and another key chip maker. Zoom down some seven 0:01:24.080 --> 0:01:27.039 point nine percent, didn't live up to expectations in terms 0:01:27.040 --> 0:01:28.720 of its growth for its fiscal third quarter, and I 0:01:28.760 --> 0:01:31.280 think most notably is because this stock has run up 0:01:31.319 --> 0:01:34.479 hard since it's bottoming out in August some sixty percent higher. 0:01:34.560 --> 0:01:36.000 Many alis saying like it went. 0:01:36.920 --> 0:01:39.520 It showed solid numbers, but not as good as a 0:01:39.560 --> 0:01:42.880 market been pricing in analog devices down a percentage point, 0:01:42.920 --> 0:01:45.640 had been rallying earlier in the trade after they showed 0:01:45.640 --> 0:01:48.320 some strength in terms of auto sales and chips, but 0:01:48.400 --> 0:01:50.120 now just taking a turn into the red. 0:01:50.120 --> 0:01:51.440 But let's stick with chips now. 0:01:51.520 --> 0:01:55.080 Because Intel securing seven point nine billion dollars in federal 0:01:55.120 --> 0:01:58.080 grants from the Biden administration. The deal is actually marking 0:01:58.120 --> 0:02:01.320 the largest ever direct subsidy from a program, and this 0:02:01.360 --> 0:02:04.040 is a course to boost US chip production, sources telling 0:02:04.080 --> 0:02:06.680 Bloomberg Intel will get the money for projects in Arizona, 0:02:06.720 --> 0:02:10.360 in Oregon, in New Mexico. Bloomberg's Mackenzie Hawkins joins US 0:02:10.400 --> 0:02:14.480 now in Mackenzie, Ohio. Not on tap for this particular 0:02:14.560 --> 0:02:17.720 area of money because it's not far down the road 0:02:17.800 --> 0:02:21.120 enough in terms of well digging in and breaking ground. 0:02:21.200 --> 0:02:23.080 Where do we stand in terms of actually building. 0:02:24.639 --> 0:02:27.239 So Intel seven point nine billion dollar ward from the 0:02:27.320 --> 0:02:30.720 hips AP supports projects across four US states through between 0:02:30.760 --> 0:02:33.600 now and twenty thirty, by which time Intel plans to 0:02:33.639 --> 0:02:37.680 send ninety billion of a total one hundred billion CAPEX. 0:02:37.240 --> 0:02:38.320 On US projects. 0:02:38.720 --> 0:02:39.920 But projects have. 0:02:39.840 --> 0:02:42.680 To meet certain benchmarks and milestones to qualify for a 0:02:42.720 --> 0:02:45.240 funding dispersement, so it'll take a while for the money 0:02:45.240 --> 0:02:47.400 to actually go out the door and make it into 0:02:47.440 --> 0:02:50.920 Intel's hands. The first roughly one billion of that will 0:02:50.919 --> 0:02:53.960 happen this year because Intel has already made progress on 0:02:54.080 --> 0:02:58.400 projects in Arizona, New Mexico, and Oregon, Ohio. Construction was 0:02:58.400 --> 0:03:00.919 supposed to finish by late twenty twenty six. Now one 0:03:00.960 --> 0:03:03.480 of the facilities won't be online until the next decade. 0:03:03.840 --> 0:03:07.720 Paq Helsinger has joined Bloomberg Technology and sort of vented 0:03:07.720 --> 0:03:10.200 some frustration at how slow it's been to get the 0:03:10.240 --> 0:03:11.720 money from the US government. 0:03:11.960 --> 0:03:13.079 And also you note. 0:03:12.840 --> 0:03:15.760 That this is a little bit less than previously estimated. 0:03:16.840 --> 0:03:19.799 So it's been a very long process for Intel and 0:03:19.880 --> 0:03:23.320 for all of the other companies. Intel's award was announced 0:03:23.320 --> 0:03:25.920 at a preliminary stage in March for eight point five 0:03:25.960 --> 0:03:27.919 billion dollars, and since then the company has. 0:03:27.880 --> 0:03:29.240 Been going through due diligence. 0:03:29.280 --> 0:03:32.639 There have been disagreements about how much information Intel has 0:03:32.680 --> 0:03:36.320 to disclose to the government, and also about terms specifying 0:03:36.360 --> 0:03:39.800 what happens if Intel stands off at manufacturing business. 0:03:39.560 --> 0:03:41.640 Or is acquired in part or in whole. 0:03:42.000 --> 0:03:44.480 That's obviously a pretty tense discussion with Intel when they're 0:03:44.480 --> 0:03:47.120 going through some serious financial problems, and there have been 0:03:47.200 --> 0:03:50.960 conversations with other players in industry about potential m and a. 0:03:51.960 --> 0:03:54.720 The haircut that Intel took on its award is actually 0:03:54.760 --> 0:03:57.840 not because of those business problems. It's because the company 0:03:57.880 --> 0:04:00.560 is separately getting three billion dollars to make chips for 0:04:00.560 --> 0:04:03.600 the Pentagon. That program was originally supposed to be mostly 0:04:03.600 --> 0:04:06.640 funded by the Defense Department, but after a big funding 0:04:06.680 --> 0:04:10.000 stat involving various departments in the Biden administration and lawmakers 0:04:10.000 --> 0:04:12.880 on Capitol Hill, the Commerce Department had to use its 0:04:12.880 --> 0:04:15.440 own ship sacked money to support that program, and some 0:04:15.480 --> 0:04:17.880 of that came from the money already set aside for Intel. 0:04:19.080 --> 0:04:21.040 Breaking down the numbers and some of the M and 0:04:21.080 --> 0:04:23.760 A rumors. Mackenzie Hawkins really appreciate it, thank you. Look 0:04:23.800 --> 0:04:27.880 sticking with those M and A reports previously, Colcom's takeover 0:04:27.920 --> 0:04:31.400 interest in the company is actually cooling now, sources are 0:04:31.400 --> 0:04:35.600 telling Bloomberg the complexities associated with acquiring Intel have made 0:04:35.640 --> 0:04:37.839 it less attractive to Coalcom. A deal would likely have 0:04:37.920 --> 0:04:43.400 been one of the largest ever in technology. Meanwhile, more 0:04:43.400 --> 0:04:46.400 on chips and tech more broadly, as bringing in Nancy Curtain, 0:04:46.520 --> 0:04:49.560 chief investment Officer and ULTI team and global Nazi. It's 0:04:49.560 --> 0:04:51.679 always so important to have your voice on the show 0:04:51.720 --> 0:04:55.000 talking about the global context here, just dig in on 0:04:55.240 --> 0:04:58.520 for example, M and A hopes around this new administration 0:04:58.600 --> 0:05:01.960 coming in twenty twenty five and deals getting done, chips 0:05:02.040 --> 0:05:04.719 being supported or not supported as a sector. 0:05:04.800 --> 0:05:05.520 What do you make of it? 0:05:06.880 --> 0:05:09.440 Well, let's start with M and A first, and we 0:05:09.520 --> 0:05:12.320 do think that M and A will increase. You know, 0:05:12.360 --> 0:05:17.440 you have pretty rigorous merger guidelines passed by President Biden 0:05:17.480 --> 0:05:21.200 in twenty twenty three. We reckon those will be undone 0:05:21.680 --> 0:05:25.840 under President elect Trump. And remember they had lowered the 0:05:25.880 --> 0:05:30.480 guidance threshold at a company being seen as anti competitive. 0:05:30.600 --> 0:05:32.960 So we do think it's going to be a friendlier 0:05:33.040 --> 0:05:36.520 environment for regulation, a friendlier environment for M and A, 0:05:37.200 --> 0:05:40.720 and expect that animal spirits M and A and IPOs 0:05:40.760 --> 0:05:43.479 will pick up in twenty twenty five. So we think 0:05:43.520 --> 0:05:47.039 this is one of the positives coming from Trump. Just 0:05:47.120 --> 0:05:51.240 quickly on the Chips Act and Intel, are we back 0:05:51.279 --> 0:05:54.719 in their own horse there? I mean, this is supposed 0:05:54.720 --> 0:05:57.840 to create jobs. They just laid off fifteen percent of 0:05:57.880 --> 0:06:00.479 the workforce, and I kind of look at and think 0:06:00.600 --> 0:06:03.720 in Video didn't get any money from the CHIPSAC and 0:06:03.760 --> 0:06:07.440 it's actually doing a pretty dark good job of actually 0:06:07.520 --> 0:06:11.440 supplying the chips industry. So I think this is a program. 0:06:11.560 --> 0:06:16.080 It's hard to change and remove these legislative programs. It's 0:06:16.160 --> 0:06:20.000 not a program the president Electron favors very much. I 0:06:20.040 --> 0:06:22.480 think he called it a really bad program. 0:06:22.560 --> 0:06:25.360 Yeah, so stay tuned on in Video. 0:06:25.440 --> 0:06:29.480 Though they basically get TSMC and other chip makers to 0:06:29.760 --> 0:06:33.520 produce this is all about on shoring and making sure 0:06:33.560 --> 0:06:35.559 that chips can be made in the United States. 0:06:35.600 --> 0:06:36.920 When you're looking at in Video, and. 0:06:36.920 --> 0:06:40.560 Indeed, it's exposure, whether it be selling into China or 0:06:40.600 --> 0:06:42.960 indeed depending on a supply chain that is in many 0:06:42.960 --> 0:06:44.200 ways related to Taiwan. 0:06:44.640 --> 0:06:46.719 How does that factor into an investment thesis. 0:06:48.440 --> 0:06:51.120 Well, as you know, Trump has said Tara's the most 0:06:51.120 --> 0:06:54.960 beautiful word in the English language. So you know, maybe 0:06:55.040 --> 0:06:59.360 Trump just used some tariffs here on TSMC because that 0:06:59.400 --> 0:07:02.640 would incur coourage them to think about And by the way, 0:07:02.680 --> 0:07:04.479 they were part of the Chips Act as well, so 0:07:05.080 --> 0:07:07.640 they did receive some subsidies there. But you know that 0:07:07.720 --> 0:07:12.120 might encourage them to accelerate production in the United States. Now, 0:07:12.160 --> 0:07:15.120 how will in Vidia respond, I don't know. With seventy 0:07:15.160 --> 0:07:20.040 four percent gross margins and it seems like insane demand 0:07:20.440 --> 0:07:23.680 in Jensen Wayne's words, it seems like they're just going 0:07:23.720 --> 0:07:27.200 to raise prices. So you know, if we get some 0:07:27.840 --> 0:07:32.360 tariffs on TSMC, which I wouldn't be surprised, I just 0:07:32.400 --> 0:07:35.080 think in Video will end up passing that on to 0:07:35.160 --> 0:07:37.600 its demand hungry customers. 0:07:38.040 --> 0:07:41.239 It feels like you've got some nues about which horses 0:07:41.280 --> 0:07:44.240 you should back. But more broadly, the winners I likely 0:07:44.360 --> 0:07:47.200 to continue winning into the next administration is that we 0:07:47.240 --> 0:07:49.880 are articulating. Is it's still good to be longing tech here? 0:07:51.280 --> 0:07:53.480 I mean, let's just talk about a little bit of 0:07:53.480 --> 0:07:56.120 the winners and semiconductor. You know, at the end of 0:07:56.160 --> 0:08:00.480 the day, Nvidia is clearly in poll position monopoly position, 0:08:00.600 --> 0:08:03.840 I mean, more demand than supply. But competition is coming. 0:08:03.920 --> 0:08:07.760 Remember forty percent of their data center customers are also 0:08:07.800 --> 0:08:11.480 trying to compete with them. Amazon's coming pretty close here 0:08:11.800 --> 0:08:15.160 in developing a chip. Now I understand it's forty percent cheaper. 0:08:15.520 --> 0:08:19.400 Not really sure the performance benchmarks with respect to training 0:08:19.400 --> 0:08:23.000 an inference, they haven't been published and it's not clear 0:08:23.040 --> 0:08:24.480 it's in production. 0:08:24.120 --> 0:08:26.720 Mode, so to speak. So let's see what happens. 0:08:26.720 --> 0:08:29.760 And of course, to a certain extent, AMD and Intel 0:08:30.240 --> 0:08:33.239 are fast trying to be competitors as well. So competition 0:08:33.480 --> 0:08:36.400 is on the way and we should expect to see 0:08:36.480 --> 0:08:40.000 more of that. You know, people are looking at the 0:08:40.120 --> 0:08:42.800 price of Nvidia chips, the fact that they can't get 0:08:42.840 --> 0:08:47.200 access and are trying to diversify their supply sources, and 0:08:47.280 --> 0:08:51.080 that makes sense, right, So we do expect competition to 0:08:51.120 --> 0:08:53.280 come as we look forward. Now, I don't say this 0:08:53.360 --> 0:08:56.400 is a Q one. I think Nvidia should have another 0:08:56.480 --> 0:08:59.640 blockbuster quarter. Certainly they were pretty clear about it. They 0:08:59.679 --> 0:09:02.680 expect revenues to be up seventy percent in the next quarter, 0:09:02.880 --> 0:09:05.040 and they normally beat that number. So let's see where 0:09:05.040 --> 0:09:05.600 that comes out. 0:09:06.040 --> 0:09:08.679 Customers look at the price of the chips, Investors look 0:09:08.720 --> 0:09:11.400 at the price of the stock. With an Nvidia trading 0:09:11.440 --> 0:09:15.280 at forty six times future earnings, many have been perhaps 0:09:15.320 --> 0:09:17.360 taking a bit of profit. When you're looking at Tesla 0:09:17.400 --> 0:09:19.440 that's trading at one hundred and forty. 0:09:19.160 --> 0:09:20.680 One times future earnings. 0:09:20.880 --> 0:09:23.080 What do you make about the optimism beaked into that 0:09:23.160 --> 0:09:24.040 stock post election? 0:09:25.880 --> 0:09:28.840 WILLD Tesler is clearly a special child at the moment 0:09:29.400 --> 0:09:33.240 given the relationship between Eli Musk, you know, and Trump, 0:09:33.280 --> 0:09:36.680 and you know, in these stocks, these magnificent. 0:09:36.160 --> 0:09:38.760 Seven you know, on average there at about thirty five 0:09:38.840 --> 0:09:41.640 times forward earnings at the moment, and that means makes 0:09:41.679 --> 0:09:44.319 them very vulnerable to disappointment. 0:09:44.440 --> 0:09:44.560 Right. 0:09:44.640 --> 0:09:46.680 So one of the themes that we've had on this 0:09:46.840 --> 0:09:49.960 year is, you know, tech is fine. We believe in 0:09:50.040 --> 0:09:53.400 jen Ai, but you need to diversify beyond just those 0:09:53.480 --> 0:09:58.360 magnificent seven technology shares that have fueled the market's advanced 0:09:58.480 --> 0:10:01.840 and we think MidCap and particular trading at about thirteen 0:10:01.880 --> 0:10:05.760 fourteen times earnings up close to ten percent already this 0:10:05.840 --> 0:10:11.840 month is an excellent beneficiary OMAGA, potentially corporate tax rate cuts, 0:10:12.320 --> 0:10:16.079 manufacturer renaissance, and a better outlook for growth in the 0:10:16.160 --> 0:10:18.600 United States. So there are other things you can do 0:10:18.880 --> 0:10:22.000 and diversify away from tech. By the way, where earnings 0:10:22.000 --> 0:10:25.959 are expected to decelerate in the so called Magnificent seven 0:10:25.960 --> 0:10:28.400 as we head into twenty twenty five, where they're supposed 0:10:28.400 --> 0:10:31.000 to accelerate in the rest of the market, and so 0:10:31.040 --> 0:10:34.600 I think that's a really way nice way to still 0:10:34.640 --> 0:10:39.520 learn a return, participate, but protect some of that valuation potential, 0:10:39.600 --> 0:10:41.119 downside risk and tech. 0:10:41.240 --> 0:10:44.320 Massacatain always great to catch up. Thank you, Chief Investment 0:10:44.320 --> 0:10:47.679 Officer for an ltteam and Global I. Meanwhile, let's just 0:10:47.720 --> 0:10:51.000 talk about globally. China's shaw Me preparing a self design 0:10:51.040 --> 0:10:54.000 mobile processor for its upcoming smartphones. This comes as an 0:10:54.000 --> 0:10:57.320 effort to actually reduce its reliance on foreign suppliers Qualcom 0:10:57.400 --> 0:11:00.880 Media Tech. According to sources, massuction of the chip is 0:11:00.880 --> 0:11:05.120 expected to begin in twenty twenty five. Coming up, well, 0:11:05.679 --> 0:11:08.959 deja vu, President elect Donald Trump rattling markets across the 0:11:09.000 --> 0:11:11.880 world with more tariff threats. We discussed the potential impact 0:11:11.920 --> 0:11:15.240 on the tech sector next and we were just looking 0:11:15.360 --> 0:11:18.520 at Tesla with Nancy Nestwell on it a little bit 0:11:18.520 --> 0:11:20.679 more upper percentage point. We will recover from some of 0:11:20.760 --> 0:11:22.840 yesterday's sell off. Will going to dig in on what 0:11:23.000 --> 0:11:26.480 California is currently threatening, how they could be excluding them 0:11:26.800 --> 0:11:30.240 from any future support for EVS if indeed federal support 0:11:30.320 --> 0:11:30.880 is taken away. 0:11:31.080 --> 0:11:32.199 This is BlueBag technology. 0:11:43.559 --> 0:11:46.880 President's elect Donald Trump took to truth Social to vow 0:11:46.920 --> 0:11:50.160 additional tariffs on Mexico, Canada, and China, and the comment 0:11:50.240 --> 0:11:53.200 marks his first specific threat to the top trading partners 0:11:53.240 --> 0:11:55.800 of the United States since his election win just three 0:11:55.840 --> 0:11:56.240 weeks ago. 0:11:56.280 --> 0:11:58.960 Now, Bloomberg's Michael Shepherd joins us or for more. 0:11:59.240 --> 0:12:02.200 He promised it on campaign trail, and now he's once 0:12:02.240 --> 0:12:03.640 again reconfirming. 0:12:04.400 --> 0:12:07.640 He's taking a step closer. Caroline, this is what the 0:12:08.080 --> 0:12:11.920 president elect have been telling his voters all along, that 0:12:12.080 --> 0:12:15.160 he would try to bring manufacturing back to the US 0:12:15.400 --> 0:12:19.840 using tariffs as his primary weapon. Now he is threatening 0:12:19.840 --> 0:12:22.960 to use tariffs for something else, and this is to 0:12:23.000 --> 0:12:28.240 extract policy concessions from America's key trading partners. With Canada 0:12:28.240 --> 0:12:31.480 and Mexico. It's his concern about the border and with China. 0:12:31.559 --> 0:12:34.319 He is really trying to get Beijing to cooperate more 0:12:34.360 --> 0:12:37.120 in his view to stem the flow of fentanyl in 0:12:37.160 --> 0:12:40.160 the US, which has been blamed for a surge in 0:12:40.320 --> 0:12:45.000 overdose deaths in recent years. So we're seeing tariffs being 0:12:45.040 --> 0:12:48.480 applied in a different since, not purely economically, but to 0:12:49.160 --> 0:12:53.120 actually get a policy goal out of a key US counterpart. 0:12:53.240 --> 0:12:55.800 Yeah, and some of those policy goals the ones we 0:12:55.880 --> 0:12:59.160 heard in the previous administration too. The market more broadly 0:12:59.240 --> 0:13:02.120 is sort of it in its stride, and I'm wondering 0:13:02.120 --> 0:13:04.559 whether people feel that they'll be carve outs, whether or 0:13:04.640 --> 0:13:06.960 not this will specifically hit certain industries. 0:13:07.040 --> 0:13:12.080 Mike, Well, there's so many unanswered questions around this, Caroline 0:13:12.120 --> 0:13:15.000 right now, because he really just kind of dropped it 0:13:15.040 --> 0:13:18.600 on truth Social less than twenty four hours ago and 0:13:18.679 --> 0:13:22.600 walked away, and his transition team has not answered any 0:13:22.679 --> 0:13:25.959 further questions about just as you say, will there be carveouts? 0:13:26.280 --> 0:13:28.839 Is this in addition to the Tarasi had already been 0:13:28.880 --> 0:13:32.920 threatening a sixty percent level against goods coming in from China? 0:13:33.280 --> 0:13:37.479 And likewise, what does this mean for the USMCA agreement 0:13:37.559 --> 0:13:40.840 that he forged to replace NAFTA during his first term 0:13:40.920 --> 0:13:43.840 in office? In any case, this will have a major 0:13:43.960 --> 0:13:48.520 ripple effect on the economy and on supply chains. If enacted, 0:13:49.040 --> 0:13:52.800 it would affect autos, It would affect very significantly the 0:13:53.280 --> 0:13:55.960 tech trade with China. We do a huge amount of 0:13:55.960 --> 0:14:01.280 business with Chinese companies, sending them legacy semiconduct, getting finished 0:14:01.280 --> 0:14:04.720 computers back, and all of that would be royal by this, 0:14:04.880 --> 0:14:07.200 and we would have to watch for these trading partners 0:14:07.400 --> 0:14:11.480 to assess, as Mexico warned it might do today, whether 0:14:11.559 --> 0:14:13.040 they would retaliate in kind. 0:14:13.920 --> 0:14:16.920 Michael Sheppard always such a thorough setup. We really appreciate 0:14:17.040 --> 0:14:19.320 taking us through what is at the moment just a 0:14:19.320 --> 0:14:22.240 statement on truth social but let's try and extrapolate it out. 0:14:22.240 --> 0:14:24.920 With Mary Lovely, senior fellow at the Peterson Institute for 0:14:24.960 --> 0:14:28.720 International Economics and Mike there was discussing how this will 0:14:28.760 --> 0:14:31.920 affect auto's immediately In the tech industry, we think evs. 0:14:32.000 --> 0:14:34.200 But Mary, what are the ramifications on the auto sector 0:14:34.240 --> 0:14:34.680 do you think? 0:14:36.240 --> 0:14:36.520 Yeah? 0:14:36.840 --> 0:14:37.760 It's great to be with you. 0:14:39.200 --> 0:14:43.240 Well, first of all, when we're talking trade with Canada 0:14:43.280 --> 0:14:45.960 and Mexico, the first job has to be the auto sector. 0:14:46.040 --> 0:14:52.240 It's the most important export other than fuel from Canada 0:14:52.800 --> 0:14:53.800 that comes. 0:14:53.480 --> 0:14:56.000 From our two USMCA partners. 0:14:56.880 --> 0:15:01.360 Production is fully integrated between the United States, Canada, and Mexico. 0:15:01.760 --> 0:15:03.120 Cars go back and forth. 0:15:03.200 --> 0:15:06.440 By some accounts, certain vehicles can go back and forth 0:15:06.560 --> 0:15:09.840 across the border seven or more times before they're sent 0:15:09.920 --> 0:15:14.080 to an auto dealer. So this would be extremely disruptive. 0:15:14.360 --> 0:15:18.760 We would imagine that auto companies would be lining up 0:15:18.920 --> 0:15:22.800 to tell the new administration how harmful this would be 0:15:23.080 --> 0:15:26.800 not only to the two countries involved in this, Canada Mexico, 0:15:27.080 --> 0:15:29.280 but to the United States and to the plants that 0:15:29.360 --> 0:15:31.960 are in the United States waiting for those parts. So 0:15:32.360 --> 0:15:36.440 undoubtedly it would lead to disruptions of US production and. 0:15:36.960 --> 0:15:40.080 Increase costs, as many would anticipate from a consumer perspective. 0:15:40.160 --> 0:15:42.920 What about the supply chain when it affects China and 0:15:43.400 --> 0:15:44.760 US technology companies? 0:15:44.800 --> 0:15:46.000 Here how intertwined? 0:15:46.040 --> 0:15:49.480 How dependent does the US remain on Chinese pots and goods? 0:15:50.760 --> 0:15:55.200 Yeah, since the First Trade War, US has depended less 0:15:55.240 --> 0:15:58.560 strongly on China. But we have to remember that many 0:15:58.600 --> 0:16:02.760 of the electronic devices that we know and love were 0:16:02.800 --> 0:16:07.520 not actually tax under the First Trade War. So final 0:16:08.760 --> 0:16:14.680 items like laptops, nip notebooks, smart watches, cell phones, none 0:16:14.680 --> 0:16:16.840 of those were actually hit with the first trade war, 0:16:16.960 --> 0:16:22.080 tariffs peripherals were things that we may use with these devices. 0:16:22.520 --> 0:16:27.640 So that's you know, he has already proposed or promised 0:16:27.680 --> 0:16:30.960 a flat sixty on China. We don't know if this 0:16:31.800 --> 0:16:36.840 extra ten percent that he sent out last night is 0:16:37.000 --> 0:16:38.960 by a social media post, is on top of that 0:16:39.280 --> 0:16:41.840 or part of that. Either way, it's going to be 0:16:41.880 --> 0:16:45.720 extremely disruptive because our companies have not had time to 0:16:45.880 --> 0:16:48.520 move these vast supply chains out of China. 0:16:48.960 --> 0:16:51.000 Take Apple for a case study. 0:16:51.240 --> 0:16:53.680 They have been trying to depend more on India, for example, 0:16:53.840 --> 0:16:56.920 of the Southeast Asian countries, and we've seen him just 0:16:56.960 --> 0:17:00.280 in China over the weekend, trying to ensure the relationships 0:17:00.280 --> 0:17:03.600 remain strong with the government there. But also many understand 0:17:03.640 --> 0:17:07.800 that Tim Cook has a decent relationship with the incoming administration. 0:17:08.359 --> 0:17:11.879 Do you think CEOs are anticipating CoV outs? Do you 0:17:11.920 --> 0:17:15.199 think CEOs are able to manage this without passing it 0:17:15.200 --> 0:17:16.040 on to a consumer. 0:17:17.760 --> 0:17:22.120 I think they understand how disruptive this would be, and 0:17:22.119 --> 0:17:26.239 that if we know that there are constitutional limits on 0:17:26.320 --> 0:17:29.600 what the president can do, he's shown a pension for 0:17:29.880 --> 0:17:31.800 trying to blow past a lot of the limits that 0:17:31.840 --> 0:17:34.640 people have tried to place on him, but he can't 0:17:34.680 --> 0:17:38.240 revoke the law of economics, and there's economics limits to 0:17:38.320 --> 0:17:41.240 what he can do, or at least economic constraints. They're 0:17:41.240 --> 0:17:43.640 going to cause him a lot of trouble, not only 0:17:43.680 --> 0:17:47.440 in individual sectors, but on the macro front. Inflation will 0:17:47.520 --> 0:17:50.600 kick up again, for example, something which voters have shown 0:17:50.600 --> 0:17:54.240 that they dislike intensely. So I think it would be 0:17:54.359 --> 0:17:58.320 wise that C suites are anticipating. 0:17:57.880 --> 0:18:03.000 That this will be either set up with carve outs. 0:18:03.000 --> 0:18:05.520 Or it will be rolled back in terms of the 0:18:05.760 --> 0:18:07.880 absolute tex amount. 0:18:08.200 --> 0:18:09.600 That he is going to levy. 0:18:10.840 --> 0:18:12.560 So I think we have a long way to go 0:18:12.680 --> 0:18:18.080 before this social media quote becomes new taxes on US trade? 0:18:18.880 --> 0:18:24.919 How effective in the first iteration were tariffs on changing 0:18:25.200 --> 0:18:27.879 the flow of goods out of China in the US, 0:18:28.119 --> 0:18:34.000 reducing perhaps dependence or indeed the overall trade excess or 0:18:34.119 --> 0:18:34.639 lack thereof. 0:18:36.640 --> 0:18:38.679 I think we saw the value of trade dropped by 0:18:38.720 --> 0:18:43.320 about thirty percent between well US and China. Remember, China 0:18:43.359 --> 0:18:46.919 also retaliated against the US. We would certainly expect to 0:18:46.960 --> 0:18:51.160 see some retaliation again, not just from China but also 0:18:51.200 --> 0:18:55.520 from our other partners. So it had a significant effect 0:18:55.560 --> 0:18:57.040 on trade flows. 0:18:57.560 --> 0:19:00.800 That said, a lot of that trade was diverted to countries. 0:19:01.080 --> 0:19:04.160 There's very little evidence that any of that activity came 0:19:04.200 --> 0:19:07.440 back to the United States. Some of it flowed to Vietnam, 0:19:07.600 --> 0:19:09.720 some of it flowed to other parts of East and 0:19:09.800 --> 0:19:12.880 Southeast Asia, and of course some of it went into Mexico, 0:19:13.000 --> 0:19:17.160 which is why we've seen our trade, particularly in electronics 0:19:17.160 --> 0:19:22.040 and electrical devices increase with Mexico. 0:19:22.160 --> 0:19:24.640 Very lovely and the vets and Institute breaking it all down. 0:19:25.119 --> 0:19:36.119 Thank you, Meta TikTok Google. They're taking aim in Australia's 0:19:36.160 --> 0:19:40.120 legislation to ban children under sixteen from accessing such social 0:19:40.200 --> 0:19:43.320 media platforms. The government in Australia is pushing to pass 0:19:43.359 --> 0:19:44.720 the bill through parliament this week. 0:19:45.200 --> 0:19:46.480 Under the proposed bill, the. 0:19:46.480 --> 0:19:49.200 Social Media Chance would be responsible for policing that ban 0:19:49.520 --> 0:19:51.640 under threats of fines of up to thirty two point 0:19:51.840 --> 0:19:55.000 five million dollars. Let's bring in bring those, Kurt Wagner 0:19:55.040 --> 0:19:57.480 and look, thirty two and a half million dollars is 0:19:57.520 --> 0:20:00.000 but a drop in the ocean for any of these companies. 0:20:00.600 --> 0:20:03.400 But what is to fear here for them? 0:20:04.000 --> 0:20:04.200 Yeah? 0:20:04.200 --> 0:20:07.000 I think the bigger concern here is that this serves 0:20:07.040 --> 0:20:10.280 as some kind of a blueprint or template that other 0:20:10.359 --> 0:20:13.320 countries are going to adopt. Right, I mean, the last 0:20:13.359 --> 0:20:17.879 thing these companies want, these services want is for teenagers 0:20:18.560 --> 0:20:21.320 young people to not be able to use their services 0:20:21.440 --> 0:20:23.320 because that's how they get that next. 0:20:23.080 --> 0:20:24.320 Generation and users. 0:20:24.359 --> 0:20:27.000 And so if this ends up working in Australia, or 0:20:27.000 --> 0:20:31.480 it ends up getting passed and sort of effectively ending 0:20:31.560 --> 0:20:35.680 that connection, there would be real concern that other countries, 0:20:35.760 --> 0:20:39.080 especially those in Europe where regulation around these big tech 0:20:39.080 --> 0:20:41.560 companies has been much tighter, that other countries would try 0:20:41.560 --> 0:20:43.280 to maybe follow in their footsteps. 0:20:43.600 --> 0:20:46.479 It's interesting that we've had a spate of activity around 0:20:46.520 --> 0:20:49.879 protecting young people, whether it's in gaming with roadblocks, but 0:20:49.920 --> 0:20:53.120 also Instagram for example, they have their teen accounts rolled out. 0:20:53.680 --> 0:20:56.840 What is it then when instagram parent company Metro is 0:20:56.840 --> 0:20:58.480 coming out and saying that this is going to be 0:20:58.560 --> 0:21:00.680 really hard to enforce. We had a statement from Meta 0:21:00.760 --> 0:21:03.119 saying that the approach will require each app provider to 0:21:03.160 --> 0:21:08.560 collect personal identification or biometric data from all Australians. Are 0:21:08.560 --> 0:21:10.439 they trying to make out that this is you know, 0:21:10.480 --> 0:21:14.040 this is an issue of free speech and identity here? 0:21:15.359 --> 0:21:18.160 Yeah, I mean this is kind of an old playbook 0:21:18.160 --> 0:21:20.400 from them, right, which is to really push back and say, hey, 0:21:20.400 --> 0:21:22.960 this is impossible technologically, we can't do this, right and 0:21:23.000 --> 0:21:25.240 Meta is not the only company to say those kinds 0:21:25.280 --> 0:21:28.679 of things. At the same time, those team accounts you mentioned, 0:21:28.680 --> 0:21:31.480 Caroline are exactly the type of thing that you would 0:21:31.480 --> 0:21:33.679 think they could roll out in Australia, right, which is 0:21:33.720 --> 0:21:37.880 they automatically put teens into two more strict settings. They 0:21:37.920 --> 0:21:41.600