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Speaker 2: A couple of stocks making big moves today. Shares an
Speaker 2: Apple fell as much as seven point three percent earlier
Speaker 2: in this session, the stock on track for its biggest
Speaker 2: three day sell off in decades. I mean, i'mgoing uncertainty
Speaker 2: about the Trump Administration's tariff policies. Look a lot can
Speaker 2: happen in the next ninety minutes, but that's how things
Speaker 2: were earlier. Today, Tesla shares fell as much as ten
Speaker 2: point five percent, extending losses, dropping below a price at
Speaker 2: which Howard Lutnik, the Commerce Secretary, predicted they'd never fall
Speaker 2: to again. Dan Ives is watching these moves closely. He's
Speaker 2: globe ahead of technology at Webbush Securities. Yesterday he cut
Speaker 2: his price targets on both of these stocks. He joins
Speaker 2: us here in the Bloomberg Business Week Studio, Dan, I
Speaker 2: want to start with Tesla because you are a longtime
Speaker 2: ball I never thought I would see the day where
Speaker 2: you became bearish on the stock. But this weekend you
Speaker 2: lowered your price target from five hundred and fifty dollars
Speaker 2: to three hundred and fifteen dollars. There are haircuts, and
Speaker 2: there are haircuts. This is a big haircut. Why'd you
Speaker 2: do it?
Speaker 3: I mean there's two reasons.
Speaker 4: One the political damage that Musk has self inflicted between
Speaker 4: Doge and obviously everything we're seeing play out, you know,
Speaker 4: along with the Trump administration. I believe it's destructed demand.
Speaker 4: Twenty percent in Europe, ten percent in the US. Net
Speaker 4: could be conservative, and I think that's something that's also
Speaker 4: starting to show up in China, which is ultimately look
Speaker 4: that's if you look at our new estimates, it's really
Speaker 4: taken a huge haircut to what China growth is going
Speaker 4: to look like. The second thing is when you look
Speaker 4: at the tariff, tariff's ahead one, there's no way as
Speaker 4: sure code and the reality that the US Car Company
Speaker 4: makes cars in the US with all US parts. That's
Speaker 4: a fairy tale, it's Pinocchio story. And I think for Tesla,
Speaker 4: and for Musk, it's a moment of truth because you
Speaker 4: can't be three percent CEO ninety percent Doge and the
Speaker 4: brand issues. It's created Tesla into a political symbol and
Speaker 4: that that is a very, very bad thing, and I
Speaker 4: think it speaks to what's happened to stop.
Speaker 5: Do you see any hope that that image could be
Speaker 5: turned around? And I asked that not so much in
Speaker 5: terms of what mus can do, but maybe the question
Speaker 5: that investors aren't going to start having to ask is
Speaker 5: whether the company just needs new leadership altogether.
Speaker 4: Look, I mean, in the next four to six weeks,
Speaker 4: he makes a choice, you step out of Doge. You
Speaker 4: literally now back to CEO of Tesla. You could still
Speaker 4: be some sort of you know, official unofficial advisor or
Speaker 4: whatever it may be. But the reality is then the
Speaker 4: brand damage would be contained.
Speaker 3: It would be stitches a black eye? Will it though?
Speaker 5: Because it's on him. I mean, it's not just people saying, oh,
Speaker 5: we think Tesla is a bad car. They're looking at
Speaker 5: the CEO and they're saying, you know, we think you're
Speaker 5: you know, from not my words, you're a fascist, you're
Speaker 5: a Nazi. These are things. These are and this is
Speaker 5: a taint that you just don't scrub off overnight.
Speaker 4: And I don't think you scrib it all. There's no
Speaker 4: way that you scrub it all. Like you said, there's
Speaker 4: a permanent brand damage up tire. But here's the key.
Speaker 4: You continue down this road, then that permanent brand damage
Speaker 4: it becomes something much bigger. And the shame is that
Speaker 4: and it's Look, the reason we kept the rating and
Speaker 4: then downgrade is because I believe in one with Nvidia
Speaker 4: to the best disruptive technology companies in the world. But
Speaker 4: here's the thing. This is to fork in the road
Speaker 4: for Musk now to make the right decision.
Speaker 2: Maybe email him with that as the subject line and
Speaker 2: see if see if he replies, Hey, do you want
Speaker 2: to get some breaking news? Apple plants to source more
Speaker 2: iPhones from India over tariffs.
Speaker 3: We're going to talk about that.
Speaker 2: Andjustment at the Wall Street Journal is reporting that I
Speaker 2: want to go back to Tesla though and talk about
Speaker 2: China a little bit. Shaw me byd the technology that
Speaker 2: those car companies have among other car companies in China.
Speaker 2: You've spent a lot of time traveling around the world
Speaker 2: looking at this technology. Do Americans actually understand how innovative
Speaker 2: Chinese homegrown evs are no.
Speaker 4: And actually it almost speaks broader to even some of
Speaker 4: the issues that would tell aout in terms of like
Speaker 4: tariffs to constant that we can meet things here in
Speaker 4: the US. Look China when you look on the EV side,
Speaker 4: I mean, China's really front and center, because.
Speaker 3: That seems like a huge headwind for TESTAE well.
Speaker 4: Especially when it comes to BYD in terms of because
Speaker 4: thinking about it right now, BYD they're going after Europe,
Speaker 4: South America aggressively, going after rest of the world at
Speaker 4: a time where Tesla this should be the time that
Speaker 4: it's go time that you're going after the rest of
Speaker 4: the world. But the political damage, the brand damage that
Speaker 4: US is done self created has it's hurt that issue.
Speaker 4: So my whole point is is that the longer term
Speaker 4: for Tesla, this is it's one of those moments where
Speaker 4: its future will be determined. A lot of it how
Speaker 4: must handles next thirty sixty to ninety days.
Speaker 5: But this is still a company that gets pretty much
Speaker 5: happen if it's revenue from outside of the United States's
Speaker 5: a big chunk of that in China, at least based
Speaker 5: on the numbers that they end up last year. So
Speaker 5: if China goes or at least it starts to wither
Speaker 5: to a much smaller percentage of sales, can he make
Speaker 5: up those sales anywhere else in around the world.
Speaker 3: No?
Speaker 4: No, I mean that's why it's the hearts and wungs.
Speaker 4: There's no When you and I was like, when you
Speaker 4: look at what's happened in China, and we've talked about
Speaker 4: over the weekend, all the issues with tariffs and everything China,
Speaker 4: Whiz it do drives buy more domestic byd over Tesla,
Speaker 4: Huawei over Apple. It speaks to the broader issue that
Speaker 4: a lot what's happened here is that the companies that
Speaker 4: take a moost on the Chin, we'll be Tesla and Apple.
Speaker 3: But with Tesla.
Speaker 5: Just one last question on Tesla, though, is what's the
Speaker 5: alternative if I'm shopping for an electric vehicle? And this
Speaker 5: was the advantage Tesla had for years, Really was there
Speaker 5: really wasn't an alternative and not a viable alternative. Now
Speaker 5: I know there are a lot more vehicles out there,
Speaker 5: ev vehicles out there, but not necessarily at the scale
Speaker 5: of production. The Tesla had no one careerly for the
Speaker 5: pricing the Tesla.
Speaker 4: Price and look in that, but it speaks to what's
Speaker 4: so frustrating about what's going on If this was Intel. Look,
Speaker 4: these are disasters relatives like Okay, the stock is a
Speaker 4: cheap of fallen knife Tesla. It's about the massive opportunity ahead.
Speaker 4: But when Musk is doing in terms of it's a
Speaker 4: self inflicted wound that needs stitches now surgery.
Speaker 3: And that's our whole point. It's like, you got made
Speaker 3: the decision, let's get to Apple.
Speaker 2: Shares of Apple right now are lower by about four
Speaker 2: point two percent. You cut your price target on the
Speaker 2: stock to two hundred and fifty dollars from three hundred
Speaker 2: and twenty five dollars. I want to start with the
Speaker 2: headline that we're getting from the Wall Street Journal. The
Speaker 2: company plans to source more iPhones from India as a
Speaker 2: potential fix for tariffs. A big part of your note
Speaker 2: has to do with exposure to China. Maybe in the
Speaker 2: first Trump administration, this would be news that investors would
Speaker 2: cheer because okay, well, India hadn't been hit with tariffs.
Speaker 2: It was between the US and China during the first
Speaker 2: Trump administration with global tariffs, does anything matter?
Speaker 4: But that's the whole I mean think about Vietnam. You
Speaker 4: moved to Vietnam. Vnam's worse than China. And then like
Speaker 4: when you do about India, it would take years to
Speaker 4: even make that more than five percent, just given the
Speaker 4: logistics and the nature of India. You know, in terms
Speaker 4: of as Apple tries to move some stuff there, Look,
Speaker 4: no company in the world is hurt more from ones
Speaker 4: that came out of Trump's mouth in terms of Taiwan
Speaker 4: and China tariffs than Apple. Yeah, because you're talking about
Speaker 4: ninety percent iPhones are made in China, and the reality
Speaker 4: and even over the way what we got meeking you
Speaker 4: as it. Here's the deal. If you won thirty five
Speaker 4: hundred dollars iPhones, we should make them in New Jersey,
Speaker 4: maybe make them in California. If you like thousand dollar iPhones, yeah,
Speaker 4: you make them in China.
Speaker 3: And that's just the reality.
Speaker 5: Well, it raises the question too, is whether Apple really
Speaker 5: would try to move I mean, do they have enough
Speaker 5: pricing power where if they have to raise the cost
Speaker 5: of an iPhone by twenty thirty percent, I mean, I
Speaker 5: don't know they've convinced people somehow to pay one thousand
Speaker 5: bucks or more for it already.
Speaker 4: But that'd be massive demand destruction. And Okay, my whole
Speaker 4: point is is that it would take tens of billions
Speaker 4: of dollars to even move ten percent on the suppot chaet.
Speaker 4: That would take three years. So that's why the reality
Speaker 4: right now what's going on in terms of taffs and
Speaker 4: the reaction investors, Okay, it's untenable and it would be
Speaker 4: an economic army geddon to US tech industry, in my opinion,
Speaker 4: is set US tech industry back a decade.
Speaker 2: Do you think the White House understands the economic armageddon?
Speaker 4: Look, I think it's easy to stand in front of
Speaker 4: a microphone and I get it politicians talk. The reality
Speaker 4: is when you spend time walking through fabs in Taiwan
Speaker 4: Fox con in terms of China, you spend time there
Speaker 4: and then you come here and you actually think, given
Speaker 4: our labor for its manufacturing costs of weaver, that we're
Speaker 4: going to meet that here.
Speaker 3: That is just, in my.
Speaker 4: Opinion, it's massively unrealistic. And that's why it just speaks
Speaker 4: to what's happened with stocks because investors they're not this
Speaker 4: has none the Republican Democrat investors know math in the reality.
Speaker 5: Yeah, I'm kind of playing devil's advocate here. But with
Speaker 5: regards to Apple and its ability to find some transition
Speaker 5: through all of this, is there a way that they
Speaker 5: could maybe increase sales outside of the US. And I
Speaker 5: bring that up because Tim Cook was just over there
Speaker 5: in China for that big meeting. He obviously toured a
Speaker 5: lot of other facilities and universities for some reason or another.
Speaker 5: He seems to have a relatively decent relationship with the
Speaker 5: Chinese government politician ninety percent. Yeah, and he's done it right.
Speaker 5: He navigated the first Trump administration, and I do wonder
Speaker 5: if maybe we're counting him out that he might find
Speaker 5: a way to navigate through this.
Speaker 4: Look the five hundred billion they announced that getting some
Speaker 4: sort of exemption here and there. Look, and that's something
Speaker 4: that investors are holding out for. But the reality is,
Speaker 4: if you want a body blown an upper cut and
Speaker 4: cut the knees off of the it might be probably
Speaker 4: the best technology starward in the world in terms of Apple.
Speaker 3: This does it well?
Speaker 2: Forgive me, Dan, I want to go back to Tesla
Speaker 2: because I'm getting a question from a viewer right now
Speaker 2: who says that Elon's brand damage has been evident for months.
Speaker 2: Why Did you just downgrade the stock as a result
Speaker 2: of this?
Speaker 4: That's a great question because I believe from everything we're
Speaker 4: seeing in Europe and the US and deliveries going into
Speaker 4: two Q that it went from something that was containable
Speaker 4: five percent set to something much broader. And I believe
Speaker 4: it was also our view that he'd hold the line
Speaker 4: start to step back instead he hasn't. So the point
Speaker 4: is that brand damage, when we model that out into
Speaker 4: three Q and four QWO, that's us basically modeling out
Speaker 4: what we believe the brand damage is going to do
Speaker 4: to the next few quarters. And look, and I would
Speaker 4: also say, like it's something where it's become a life
Speaker 4: of its own and Tesla has become a political symbol
Speaker 4: and it's a very unfortunate situation. But on but look,
Speaker 4: it's self inflicted by musk.
Speaker 5: We're heading into earning season. At some point they're going
Speaker 5: to have to address investors directly. I think Tesla reports
Speaker 5: in mid April and then Apple not to May. First,
Speaker 5: what do you think the CEOs and the CFOs for
Speaker 5: that matter, can actually tell investors to sort of calm
Speaker 5: them down.
Speaker 4: No company is going to give guidance, in my opinion,
Speaker 4: during earning season. A guy, I'd be shocked if any
Speaker 4: company gives God, if you want to play blindfold the
Speaker 4: darts look, and I think the reality is actually blindfold
Speaker 4: dogs actually is pretty fun. Beside the point it's look,
Speaker 4: I think they're basically going to have to give some
Speaker 4: sort of guard rails. How they're going about it, How
Speaker 4: are these scenario planning? And that because invest want to
Speaker 4: unders in worst case bea'st case. Best case.
Speaker 2: Dan, i'ves Global head of Technology at Webbush Securities.
Speaker 3: Thanks so much for coming. Great to be here, Good
Speaker 3: to see you.
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Speaker 2: I got the HCPI function on the Bloomberg terminal fell
Speaker 2: as much as four point seven percent today rose as
Speaker 2: much as three point four percent. As we just heard
Speaker 2: from Charlie Pellett. We're down right now by about four
Speaker 2: tenths of one percent. Lots of volatility, to say the least,
Speaker 2: and that's exactly why we wanted to talk to Eric Wiener.
Speaker 2: He's Bloomberg News Equities Team America's team leader. He's the
Speaker 2: author of several books, including What goes Up, An oral
Speaker 2: history of Wall Street from the Great to Press through
Speaker 2: the Internet Bubble. In the nine to eleven attacks, he
Speaker 2: joins us from just outside, Well, no, you're here today.
Speaker 3: I'm here. Oh my gosh, he's back with us.
Speaker 2: On Friday, he was remote and we relied a lot
Speaker 2: on you, and we're doing that again because when you
Speaker 2: wrote that book What goes Up, that time span included
Speaker 2: Black Monday. A lot of people over the weekend. The
Speaker 2: chatter online was a little concern that what we're going
Speaker 2: to see on Monday is going to look a little
Speaker 2: bit like what we saw in nineteen eighty seven, the volatility. Yes,
Speaker 2: maybe the massive crash. No, I would say there was
Speaker 2: in eighty seven. There was a palpable sense of things
Speaker 2: coming on Glude and then on the Sunday before, well
Speaker 2: it was the Saturday and the Sunday before, Targery secretary
Speaker 2: at the time, Jim Baker came out and made a
Speaker 2: couple of remarks.
Speaker 3: That really scared the market. So when you came in
Speaker 3: on Monday morning, when the traders came in on Monday morning.
Speaker 3: They were looking at it going, oh my god, you know,
Speaker 3: things are going to blow up here. It was less clear.
Speaker 3: I mean, I remember I was looking at futures last night.
Speaker 3: They came down a lot, but they weren't down as
Speaker 3: much as say, China was, So there wasn't this sense
Speaker 3: that like the US was just going to bottom out.
Speaker 3: If anything, it was going to be like more of
Speaker 3: a global spread. So Black Monday was kind of a
Speaker 3: more predictable route, and then it had to be lifted
Speaker 3: out by the Fed. This was something where you know,
Speaker 3: it's it's kind of building.
Speaker 6: What does that tell us then about the sell off
Speaker 6: that we're in. If this is just gradually building, we
Speaker 6: don't have one Black Monday? Does that mean.
Speaker 3: That's exactly it? So the concern, bizarrely, the concern is
Speaker 3: that things are actually moving fairly normally, which means we
Speaker 3: haven't hit a bottom, which means we aren't seeing panic
Speaker 3: or capitulation, whatever word you really want to use. What
Speaker 3: you are seeing is people desperately wanting the President to
Speaker 3: back off of tariffs. So as soon as that rumor hit,
Speaker 3: we went up. You know, we moved, as you pointed out,
Speaker 3: you know, eight basis eight percentage points, so wham swing
Speaker 3: up and then it gets taken out because that's not
Speaker 3: exactly true. But there is a very simple cure. Like
Speaker 3: Black Monday was, there were systemic problems. There were people
Speaker 3: who were missing right, Yeah, there were people who were
Speaker 3: going to have This is what I was watching for
Speaker 3: last night, was like margin calls and situations where big
Speaker 3: hedge funds had been caught off sides weren't going to
Speaker 3: be able to make the payments, and now you have
Speaker 3: counterparties that are wondering where the money's going to come from.
Speaker 3: That is not the case. Now they're just begging in
Speaker 3: Trump to get rid of the tariffs. In other words,
Speaker 3: like you said on Friday, this is orderly. This is orderly.
Speaker 3: It's and the orderliness of it is what's scary to
Speaker 3: market pros because it's when things get disorderly you sort
Speaker 3: of have that catharist we're still waiting for the caiss
Speaker 3: The difference is that this was and you know, it's
Speaker 3: been pointed out by many, many Wall Street people other
Speaker 3: than me, that this is caused by one thing exactly.
Speaker 2: And I think, you know, one of the criticisms I've
Speaker 2: see of this h on TV. Our markets guests we
Speaker 2: speak to outside of the building online, is that they're
Speaker 2: saying this is self inflicted.
Speaker 3: Yeah, it's like shooting yourself in the foot. Now, what Trump?
Speaker 3: The question is what the goal is with these tariffs.
Speaker 3: So if the goal is to reshure industry, that's going
Speaker 3: to take a long time.
Speaker 2: We had Dan Ives from Red Bush sitting in that
Speaker 2: chair right there, telling us an hour ago that he
Speaker 2: spent time in Taiwan. He's seen the way that these
Speaker 2: devices are made, He's seen the factories. He said, that's
Speaker 2: not happening in New Jersey. No, and it's and it
Speaker 2: would take forever to do.
Speaker 3: I mean, there's a reason why they moved there in
Speaker 3: the first place as well. And so if we want
Speaker 3: cheaper goods, that's part of this. There are a bunch
Speaker 3: of different things that go into the creation of our
Speaker 3: you know, our economic flow. This is like, what are
Speaker 3: we what are we trying to do? Are we trying
Speaker 3: to change the behavior of other countries? Are we trying
Speaker 3: to behave change the financial system itself? What's the goal?
Speaker 6: I also think of you know, if I were running
Speaker 6: a business, what I necessarily start building a factory in
Speaker 6: the US and completely pull my operations from offshore, only
Speaker 6: to then have potentially these tariffs reversed slightly and then
Speaker 6: you already started building.
Speaker 3: Do you think that's a good point? Is that that's
Speaker 3: this is all in the this is going to all
Speaker 3: be in the earnings reports. Because what's going what you do,
Speaker 3: if you're a CEO right now is sort of stand
Speaker 3: pat So growth is going to be more challenging. The
Speaker 3: idea of expansion becomes should we or shouldn't we? I mean,
Speaker 3: you have to realize that there's a reason why manufacturing
Speaker 3: move to Malaysia, move to Vietnam, and that's because China
Speaker 3: has become more expensive. You know, because because as economies grow,
Speaker 3: their employees expect more pay so they go to the
Speaker 3: lowest producer. So the idea that like we're going to
Speaker 3: bring everything back here, that's a multi year project with
Speaker 3: dubious results and flies in the face of capitalism as
Speaker 3: we know it. If the idea is to get countries
Speaker 3: to change their behavior and negotiate with the president, then
Speaker 3: we'll see what we can do.
Speaker 2: So when Emily came over here twenty minutes ago, the
Speaker 2: S and P five hundred was in the green. It's
Speaker 2: now down eight tenths of one percent. Why is there
Speaker 2: such a lack of conviction directionally with today's trade.
Speaker 3: Because we don't really know what's going on. There was there.
Speaker 2: Conviction based on saving the white House port cold water
Speaker 2: on Oh yeah, there was, Well, there was conviction when
Speaker 2: we came in and we were down like four percent
Speaker 2: right away or whatever it was.
Speaker 3: And then there was conviction on the upside because what
Speaker 3: that leak was was something that the traders have kind
Speaker 3: of been expecting, so that kind of played into their
Speaker 3: priors and suddenly it just went whoosh, everything went up.
Speaker 3: But the right now, it's hard to know where we're
Speaker 3: going to go next.
Speaker 2: What you're referring to it is actually the most read
Speaker 2: story on the Bloomberg terminal in the last hour. I
Speaker 2: encourage everybody to go check it out. Jess Mett and
Speaker 2: Bailey Lipschultz, Eshra Day. It's called this is madness. The
Speaker 2: fifteen minutes that rock to stock market desks.
Speaker 6: We got to get these people on. At just after
Speaker 6: ten am, shouting erupted on the Seabert trading floor in
Speaker 6: downtown Manhattan. I won't read the rest of the story,
Speaker 6: but that is the tough it's kind of wild.
Speaker 3: We were going through it as on the team as
Speaker 3: it was happening. I mean it it was happening all
Speaker 3: around us, and it was wild. We were yeah, go ahead.
Speaker 3: Well I'm wondering.
Speaker 6: I mean, you've obviously seen a lot of market downturns,
Speaker 6: a lot of single day crashes. How does this one
Speaker 6: compare to history? When you think about this sell off
Speaker 6: seems to be all focused on one very specific event,
Speaker 6: whereas I don't know, I think the financial crisis obviously
Speaker 6: there wasn't just one headline that traders were all counting.
Speaker 3: On or waiting for.
Speaker 6: But this is so specific to just one.
Speaker 3: So the the scary thing with crashes is when credit
Speaker 3: is heavily involved, When you have your traders concerned that
Speaker 3: debts aren't going to get paid off, or that you know,
Speaker 3: rates are just you know, tumbling or rising. This is
Speaker 3: not a credit meltdown. It's it's an equity meltdown. And
Speaker 3: it's because stock prices went way up on AI speculation,
Speaker 3: and then if growth is going to be paired back,
Speaker 3: which is what tariffs would probably do, then you have
Speaker 3: to take out some of this. So it's not as
Speaker 3: scary I would say, as when you look at the
Speaker 3: global financial crisis in like eight nine, there was a
Speaker 3: sense like the knife was going to keep falling and
Speaker 3: if you grabbed it, you know, it was going to
Speaker 3: slide right through your hands and slice your hand off.
Speaker 3: This is not that kind of thing. This is more
Speaker 3: like it actually could be stopped by one guy. Like
Speaker 3: that's and that's different.
Speaker 2: A weird thing happened to me this weekend Eric and
Speaker 2: I was with. It was when I was with a
Speaker 2: lot of friends who are about my age. You know,
Speaker 2: we're kind of getting close to middle age. Think not
Speaker 2: thinking about retirement, but people who have kids saving for college,
Speaker 2: that sort of thing, and they started talking to me
Speaker 2: about the stock market. These are normal people who don't
Speaker 2: work in the industry. I have a good friend who's
Speaker 2: trying to sell everything right now because he is scared
Speaker 2: that something fundamentally is shifting in the economic landscape. He's
Speaker 2: the second person I've talked to who's expressed concern to
Speaker 2: me that those words this time is different. What would
Speaker 2: you say to those folks, having studied other crises, I.
Speaker 3: Would say that they're the contrarian indicators. That's actually what
Speaker 3: we want to hear. It's the same thing going up.
Speaker 3: The famous story is Sidney Weinberg, who at the time
Speaker 3: was the head of Goldman Sachs, getting tips from his
Speaker 3: shoeshine guy and he walks back into Goldman and he's like,
Speaker 3: sell everything because this is just going to be a nightmare.
Speaker 3: And so when you start seeing people who normally aren't
Speaker 3: engaged with this stuff having very strong convictions about where
Speaker 3: things are going to go, they tend to go and
Speaker 3: the other way. There really isn't a systemic problem here.
Speaker 3: That's the thing.
Speaker 2: It's not a systemic problem, he argues with the markets.
Speaker 2: He thinks it's a systemic problem with globalization and with
Speaker 2: the president changing the world order that he grew up with.
Speaker 3: I just don't think that Wall Street is ready to
Speaker 3: give up the global order. And the global order is
Speaker 3: global like, so it's not just Wall Street. China doesn't
Speaker 3: want to give it up, you know. So people want
Speaker 3: the financial markets. They want the financial markets to work,
Speaker 3: and the question is how and when that will start happening.
Speaker 3: But I don't see us reordering away from capitalism because
Speaker 3: even in the trade landscape, you have other countries that
Speaker 3: are trying to band together to create trade alliances. On
Speaker 3: their own without us, So this genie is out of
Speaker 3: the bottle.
Speaker 2: Ericquener, good to see you, Thanks so much for joining us.
Speaker 2: Really appreciate you taking the time today.
Speaker 3: Happy to be here.
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Speaker 3: Bloomberg eleven thirty.
Speaker 2: Lacross asset team spent all weekend working on it. It's
Speaker 2: about how Wall Street is just collateral damage in Trump's
Speaker 2: trade war. Bloomberg News Cross Asset reporter Isabelle Lee is
Speaker 2: part of the team that worked on the story. She
Speaker 2: joins us here in the Bloomberg Interactive Brokers Studio. Isabelle,
Speaker 2: congratulations on this story. I know a lot of work
Speaker 2: went into it. I just want to start a big
Speaker 2: picture the investor class. It was a class that I
Speaker 2: think was served well under the first Trump administration. It
Speaker 2: was optimistic that it would see the same this administration,
Speaker 2: and it's not at all happening.
Speaker 7: Yes, exactly. We actually missed Emily. If Emily was around her.
Speaker 7: She would have been part of this story. But Emily
Speaker 7: and I are our seatments, and I bug her way
Speaker 7: more than I should have. So exactly, and this is
Speaker 7: what you call the wealth effect. You know, the past
Speaker 7: two years, investors were all feeling flushed, would check your
Speaker 7: four oh one k every single day because markets were up.
Speaker 7: It's up twenty percent for back to back two years.
Speaker 7: And then now please don't check your four oh one
Speaker 7: k because we're seeing the reverse wealth effect. And a
Speaker 7: lot of the people that we talked to over the
Speaker 7: weekend we're saying that this has real implications. It will
Speaker 7: ripple throughout the economy because if you see your stock,
Speaker 7: stocks or whatever your investments edging lower, it will really
Speaker 7: impact how you behave. You won't spend enough, maybe you'll
Speaker 7: hold off from that appliance, you'll hold off from that vacation.
Speaker 7: And companies will also maybe lower their capex. And at
Speaker 7: the same time, there could be an argument that you know,
Speaker 7: only fifty percent of Americans own stocks, but that still
Speaker 7: half of the country, and for those average Americans, their
Speaker 7: portfolios on average are just around the retirement especially around
Speaker 7: two hundred plus thousand. There was a study on that
Speaker 7: and twenty percent of that is still significant. It's forty thousand,
Speaker 7: and that is your entire nest egg. We're not even
Speaker 7: talking about billionaires like Elon Musk. It's the normal, average American.
Speaker 7: So it affects you.
Speaker 6: What was the general vibe of the portfolio manager's hedge
Speaker 6: fund investors that you spoke to over the weekend. Were
Speaker 6: they were they angry? Were they confused? Were they looking
Speaker 6: for opportunities in the marketplace?
Speaker 7: Definitely angry, definitely frustrated. And one Jay Hatfield, CEO of
Speaker 7: Infrastructure Capital, was saying actually that he wasn't that much
Speaker 7: frustrated with Trump. It was more Scott Besson because they
Speaker 7: were expecting more from him, given that, you know, he
Speaker 7: came from the industry. But some were also really shocked
Speaker 7: because I think this was above what a lot of
Speaker 7: people expected. This was so called worse than what they expected.
Speaker 7: And then what do you do? They say, you get
Speaker 7: over it, and then you adjust your portfolio.
Speaker 2: In terms of assets that the president watches, we know
Speaker 2: he used to like to talk about the Dow and
Speaker 2: the S and P five hundred and equity market records.
Speaker 2: You and the team write about different assets that he's
Speaker 2: got his eye on bonds, especially or treasury, I should say,
Speaker 2: and then also on commodities.
Speaker 7: Yes, there's that, and actually that's new because usually before
Speaker 7: it was just the doubt that he was really looking at.
Speaker 7: And there were reports over the weekend that even Fox
Speaker 7: News removed the doubt ticker, which was a first in history.
Speaker 7: I've read that, but I need to fact check, so
Speaker 7: I probably shouldn't have shared it. But it's out there.
Speaker 7: But now Trump is also looking at ten year treasuries
Speaker 7: and oil. So as stocks creator those also moved violently,
Speaker 7: they sank basically, and he's also looking at that. But
Speaker 7: we also have him saying that the patient has lived.
Speaker 7: You know, this is short term pain, but you can
Speaker 7: interpret that phrase in many different ways.
Speaker 6: It's well, you've done a lot of work over the
Speaker 6: years about the wealth effect and how it's this idea
Speaker 6: that when the stock market goes up, people see that
Speaker 6: their portfolios are doing well, so they feel good and
Speaker 6: then they go out and spend. And you wrote in
Speaker 6: this piece the rich who own most of the shares
Speaker 6: most of the stocks, that ten percent class that you
Speaker 6: mentioned him also count for roughly half of the country's
Speaker 6: consumer spending. And I thought that was really interesting that,
Speaker 6: like these people that wanted Trump in office because he
Speaker 6: would support Wall Street also are a big part of consumption.
Speaker 6: And now I gues see economies getting a double whammy exactly.
Speaker 7: I mean, not to get into politics. Also, I can't vote.
Speaker 7: I always tell Emily that. But it's interesting because these
Speaker 7: people are the ones who are driving much of the
Speaker 7: consumer spending. I mean, maybe the average American they're finding
Speaker 7: it tough. Every time I go to the grocery, I'm
Speaker 7: just shocked at my bill. But the rich people still buy.
Speaker 7: I mean, they still buy jewelry, they still buy gold.
Speaker 7: You see them still buying Lambeau, which is a joke
Speaker 7: we say in the crypto world. But they're still out
Speaker 7: there spending. But maybe after this weekend they may not.
Speaker 7: But yes, you're right, America is largely a consumer drive
Speaker 7: an economy, and one can't really doubt whether, like I
Speaker 7: feel like you can't ignore this anymore. They will be
Speaker 7: affected no matter how rich you are. Probably, or I
Speaker 7: mean maybe I wouldn't known.
Speaker 2: Isabelle Bloomberg news cross After reporter always great when you
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Speaker 2: read on the Bloomberg terminal. It is today's big take
Speaker 2: Wall Street. It's just collateral damage in Trump's trade war.
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