WEBVTT - Trump China Tariffs Set to Unleash Supply Jolt on US Economy 0:00:02.720 --> 0:00:10.560 Bloomberg Audio Studios, Podcasts, radio news. You're listening to the 0:00:10.560 --> 0:00:14.520 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.560 --> 0:00:18.479 Eastern on Applecarplay and Android Auto with the Bloomberg Business App. 0:00:18.600 --> 0:00:21.840 Listen on demand wherever you get your podcasts, or watch 0:00:21.920 --> 0:00:23.040 us live on YouTube. 0:00:23.320 --> 0:00:25.439 Let's get back to the trade story, which remains front 0:00:25.440 --> 0:00:27.200 and center here. It seems like we're in a period 0:00:27.240 --> 0:00:30.480 where negotiations are happening between the Trump administration and a 0:00:31.400 --> 0:00:35.240 number of different countries over a number of different teriff 0:00:35.280 --> 0:00:37.879 measures here. So it's important to try to stay on 0:00:37.920 --> 0:00:39.280 top of kind of where we are, and we have 0:00:39.320 --> 0:00:42.000 a good team doing that. Brenda Murray joins US Global 0:00:42.120 --> 0:00:46.400 Trade editor for Bloomberg News. He's in London, Brendan, it 0:00:46.479 --> 0:00:50.560 seems like the president over the next several weeks, is 0:00:50.600 --> 0:00:52.839 it fair to expect that we'll get some announcements on 0:00:52.920 --> 0:00:56.400 trade deals with some of our major trading partners. 0:00:57.400 --> 0:00:59.200 Yeah, well, it depends on what you mean by a 0:00:59.280 --> 0:01:02.160 deal to say that we're likely to get a number 0:01:02.200 --> 0:01:05.760 of announcements laying out the path for talks for an 0:01:05.760 --> 0:01:10.399 eventual deal. Trade deals are very complicated. They take a 0:01:10.440 --> 0:01:13.720 long time to hammer out and to get anything meaningful, 0:01:13.840 --> 0:01:15.360 it's going to take a lot of time. But what 0:01:15.480 --> 0:01:19.360 you could see are some sort of interim proposals, interim 0:01:19.800 --> 0:01:23.399 agreements that would would set the US and the trading 0:01:23.440 --> 0:01:26.720 partner on that course. Some of those who are sort 0:01:26.720 --> 0:01:31.280 of have an early lead would be India, South Korea, Japan. 0:01:31.400 --> 0:01:34.920 These are big export economies that the US wants to 0:01:36.080 --> 0:01:39.560 trade more with to reduce the tariff and non tariff 0:01:39.560 --> 0:01:42.840 barriers that they have with the US economy. So we 0:01:42.880 --> 0:01:45.240 could see we could see some action along those lines. 0:01:45.280 --> 0:01:49.920 But again, to expect anything major, anything fundamentally changing the 0:01:49.960 --> 0:01:53.480 picture of the US trade imbalances like Donald Trump would 0:01:53.480 --> 0:01:55.840 like to see, is probably a bit of wishful thinking. 0:01:56.160 --> 0:01:58.480 Now, Bertie, you said Treasury Secretary Scott bet And said, 0:01:58.520 --> 0:02:01.000 the administration working on them by lateral trade deal with 0:02:01.080 --> 0:02:05.000 seventeen key partners, but not including China. So where does 0:02:05.240 --> 0:02:06.160 China stand in all this? 0:02:07.400 --> 0:02:08.840 Yeah, well this is the big you know, this is 0:02:08.880 --> 0:02:11.639 the big This is the big prize, right, is some 0:02:11.680 --> 0:02:14.480 sort of deal with China. And if if the US 0:02:14.560 --> 0:02:18.720 and China aren't even talking and by all accounts according 0:02:18.720 --> 0:02:22.160 to that they've not really having any sort of formal 0:02:22.160 --> 0:02:26.359 discussions that would lead in the right direction toward a 0:02:26.600 --> 0:02:30.799 formal sit down discussion that you know, you're leaving out 0:02:30.800 --> 0:02:33.520 a big part of the imbalance, the big, you know, 0:02:33.560 --> 0:02:36.639 the biggest imbalance that the US has. So you can 0:02:36.639 --> 0:02:39.720 talk trade deals with Japan and South Korea and India 0:02:39.919 --> 0:02:44.000 and other countries, but the real prize is that Donald 0:02:44.040 --> 0:02:45.920 Trump wants is a trade deal with China, and so 0:02:46.000 --> 0:02:47.000 far they're going nowhere. 0:02:47.000 --> 0:02:50.040 I'm that, you know, David Rosenberg, a frequent guest on 0:02:50.040 --> 0:02:54.400 Bloomberg Surveillance formerly Merrill Lynch. He's and he's a Canadian, 0:02:54.440 --> 0:02:57.520 and out with a tweet saying basically, hey, everybody, I 0:02:57.560 --> 0:02:59.800 know you're focused on China, but you need to figure 0:02:59.840 --> 0:03:03.000 out something with Canada because Canada is the big trading 0:03:03.040 --> 0:03:05.560 partner with the US, as is Mexico. 0:03:06.080 --> 0:03:08.240 Where do we stand. Do you think with Canada and Mexico? 0:03:09.400 --> 0:03:12.160 Yeah, well, the Canadians don't sound like they're of course 0:03:12.200 --> 0:03:13.799 they're in there. You know, they're in the middle of 0:03:13.800 --> 0:03:16.720 an election right now, and they don't they don't sound 0:03:16.760 --> 0:03:19.000 like they're in any big hurry to do a deal. 0:03:19.880 --> 0:03:23.200 The Prime Minister Mark Karney said the other day we'd 0:03:23.320 --> 0:03:26.720 rather have a good deal rather than a fast deal. 0:03:26.840 --> 0:03:29.720 So we'll see how that election plays out. That could 0:03:30.040 --> 0:03:33.720 that could dictate the course of of of any negotiations. 0:03:33.760 --> 0:03:36.640 But you know, in the meantime, the Canadian economy is 0:03:36.680 --> 0:03:40.000 going to suffer. American auto companies are going to suffer 0:03:40.040 --> 0:03:43.280 because they rely so much on Canadian suppliers. So you 0:03:43.320 --> 0:03:46.280 could look for a lot more disruption the longer that 0:03:46.400 --> 0:03:49.640 drags out with the cloud of uncertainty hanging over it, 0:03:49.800 --> 0:03:51.120 as it has for several weeks. 0:03:51.440 --> 0:03:54.280 And but what about the big company. Let's say Walmarts 0:03:54.280 --> 0:03:57.280 and Targets are retailers. They have to replenish their inventories. 0:03:57.320 --> 0:03:58.400 Where do they stand in all this? 0:03:59.600 --> 0:04:01.400 Yeah, so this is a big story we have out 0:04:01.400 --> 0:04:05.480 today is that retailers like Walmart and Target, the big 0:04:05.480 --> 0:04:09.400 ones and small companies are looking at those one hundred 0:04:09.440 --> 0:04:12.600 and forty five percent tariffs on goods from China and saying, 0:04:12.840 --> 0:04:15.000 we can't do that, we can't afford that. That's twice, 0:04:15.200 --> 0:04:17.200 well more than twice what we could pay. So we're 0:04:17.240 --> 0:04:19.799 just canceling orders from China. And so what we're seeing 0:04:20.279 --> 0:04:23.560 is in a couple of weeks when those orders would 0:04:23.600 --> 0:04:26.960 have already gotten here. We're going to see volumes through 0:04:27.120 --> 0:04:29.720 US ports go down. We're going to see inventories through 0:04:29.839 --> 0:04:33.400 warehouses go down, and in the big retailers have even 0:04:33.440 --> 0:04:36.480 said privately to President Trump, according to our reporting, that 0:04:36.680 --> 0:04:39.200 you know, this could be this could mean shortages and 0:04:39.279 --> 0:04:44.760 price hikes. So the wave of decoupling that is underway 0:04:44.839 --> 0:04:48.200 between China and the US hasn't really hit the real economy. 0:04:48.279 --> 0:04:52.120 Right now, we hear the administration say, oh, well, you know, 0:04:52.360 --> 0:04:54.120 Wall Street has had a good run. It's time for 0:04:54.200 --> 0:04:56.839 us to focus on Main Street. We'll main streets about 0:04:56.880 --> 0:04:59.960 ready to get hit with some of this, and unless 0:05:00.120 --> 0:05:03.800 things change fast, then we're going to start seeing it 0:05:04.279 --> 0:05:07.160 in in a lot of in some layoffs in in 0:05:07.160 --> 0:05:11.839 industries like trucking and logistics and warehousing where really the 0:05:12.000 --> 0:05:15.400 rubber meets the road between trade and the US economy. 0:05:16.000 --> 0:05:17.720 Are we past the point of no return? 0:05:17.760 --> 0:05:20.480 Brendan, in terms of some of the economic damage that 0:05:20.560 --> 0:05:24.479 could be done, you know, in terms of supply chain 0:05:24.560 --> 0:05:27.839 not getting the stuff that we typically get. 0:05:28.720 --> 0:05:30.800 Well in the short in the short run. 0:05:31.120 --> 0:05:34.560 If President Trump announced later today that which nobody would 0:05:34.600 --> 0:05:37.400 expect this, that he was he was freezing all tariffs 0:05:37.440 --> 0:05:39.240 and we were gonna this was gonna be he was 0:05:39.279 --> 0:05:40.720 going to try to do this another way. If he 0:05:40.800 --> 0:05:44.920 kind of backpedaled on everything, we'd still have a supply whiplash. 0:05:44.960 --> 0:05:48.000 All those canceled orders would be placed again, and we 0:05:48.040 --> 0:05:52.239 would have, you know, the volumes surging through US ports. 0:05:52.240 --> 0:05:55.279 And we saw during the pandemic what happens when when 0:05:55.560 --> 0:05:59.920 the the nodes of of supply change get bogged down. 0:06:00.440 --> 0:06:02.760 Is we had one hundred and twenty ships parked outside 0:06:02.760 --> 0:06:06.599 the port of Long Beach in Los Angeles. So that's 0:06:06.600 --> 0:06:08.400 the kind of thing. Most people don't think it's going 0:06:08.440 --> 0:06:11.560 to happen on that kind of scale, but the system 0:06:11.680 --> 0:06:16.680 can't handle big declines or surges in volumes, and that's 0:06:16.800 --> 0:06:19.600 what we're looking at over the next several weeks or 0:06:19.600 --> 0:06:20.360 a few months. 0:06:20.600 --> 0:06:22.800 All right, Brendan, thank you so much for joining us Avius. 0:06:22.839 --> 0:06:26.440 Appreciate getting your reporting. That's Brendan Murray, a Global trade 0:06:26.520 --> 0:06:29.360 editor for Bloomberg News joining us from London. And again 0:06:29.400 --> 0:06:32.279 there's some reporting out of Bloomberg and others over the weekend, 0:06:32.400 --> 0:06:37.360 just simply the volume of ships leaving Chinese ports setting 0:06:37.400 --> 0:06:40.440 sail for presumably the west coast of the US, and 0:06:40.440 --> 0:06:42.920 we often talk to Gene Soroca, who runs the Port 0:06:43.279 --> 0:06:46.840 of Los Angeles on Long Beach. We'll search to get 0:06:46.880 --> 0:06:48.320 back in touch with them in the next couple of days. 0:06:48.360 --> 0:06:50.839 But some of those sailings have declined dramatically just in 0:06:50.839 --> 0:06:53.120 the last couple of weeks. So perhaps that's reflecting what 0:06:53.120 --> 0:06:56.479 was Brendan was suggesting, was maybe some canceled orders from 0:06:56.520 --> 0:06:58.560 some US wholesalers and retailers. 0:06:58.560 --> 0:06:59.960 Will stay on top of that story. 0:07:01.760 --> 0:07:05.440 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:07:05.520 --> 0:07:08.919 weekdays at ten am Eastern on Applecarclay, and Android Auto 0:07:09.000 --> 0:07:12.080 with the Bloomberg Business app. Listen on demand wherever you 0:07:12.120 --> 0:07:15.120 get your podcasts, or watch us live on YouTube. 0:07:15.560 --> 0:07:17.400 All right, big earnings week out there for the S 0:07:17.440 --> 0:07:20.080 ANDP five hundred. We have twenty trillion dollars in market cap. 0:07:20.480 --> 0:07:22.440 It's going to report earnings this week. That is big. 0:07:22.440 --> 0:07:23.920 We had about eleven billion last week. 0:07:23.920 --> 0:07:25.800 And some of the big companies that can report and 0:07:25.800 --> 0:07:27.720 are the technology companies, and you really want to get 0:07:27.760 --> 0:07:29.120 a handle on kind of how they're. 0:07:29.000 --> 0:07:30.800 Viewing the world these days. So we asked a couple 0:07:30.840 --> 0:07:32.520 of the smart folks that we know to to join 0:07:32.600 --> 0:07:32.840 us here. 0:07:32.880 --> 0:07:36.360 Anurag Rana Man Deep singing their senior technology channels for 0:07:36.440 --> 0:07:40.040 Bloomberg Intelligence. Honra joins us from Chicago, and Mandeep is 0:07:40.040 --> 0:07:42.680 in our Bloomberg Interactive Brokers studio Man Deal. 0:07:43.000 --> 0:07:43.920 Let me start with you here. 0:07:43.960 --> 0:07:45.840 I mean, just given what you've heard so far from 0:07:45.840 --> 0:07:48.280 some of the big tech companies and what you expect 0:07:48.440 --> 0:07:51.360 this week, how is how are some of the companies, 0:07:51.360 --> 0:07:53.760 these big technology companies, which had been real drivers for 0:07:53.840 --> 0:07:56.560 the stock market, how are they kind of saying they're 0:07:56.600 --> 0:07:58.000 seeing the world out there these days? 0:07:58.480 --> 0:07:58.680 Yeah? 0:07:58.760 --> 0:08:01.880 I think in the case of Meta, I mean clearly 0:08:02.560 --> 0:08:07.560 they are exposed to the deminimous rule where companies in 0:08:07.640 --> 0:08:12.440 China can't really ship any products below eight hundred dollars anymore. 0:08:12.760 --> 0:08:15.560 And that was a big driver of ad spending from 0:08:15.680 --> 0:08:19.440 Timu and Chain and some of these advertisers. So that's 0:08:19.480 --> 0:08:23.920 going to impact Meta. We saw in the case of Alphabet, 0:08:24.160 --> 0:08:28.920 the click ads grew only two percent, the pricing was 0:08:29.000 --> 0:08:32.520 relatively stable. So I think in the case of Meta, 0:08:32.600 --> 0:08:35.800 the ad pricing may come under more pressure compared to 0:08:36.040 --> 0:08:40.559 an alphabet, and the ad impressions may be better than alphabet. 0:08:40.679 --> 0:08:45.760 So because of the FTC case against Meta and similarly 0:08:45.800 --> 0:08:49.160 for Alphabet. These companies have regulatory pressures as well, but 0:08:49.200 --> 0:08:51.960 there is no doubt that the macro environment has changed 0:08:51.960 --> 0:08:55.360 for the worse. And I don't see, you know, even 0:08:55.400 --> 0:08:57.640 though the impact would show up more in two Q, 0:08:58.200 --> 0:09:01.080 I don't see how they guide better than they did 0:09:01.160 --> 0:09:02.360 in the fourth quarter. 0:09:02.600 --> 0:09:04.840 What about AI spend? How much of an impact is 0:09:04.880 --> 0:09:06.920 that going to have? Are the investors going to be 0:09:06.960 --> 0:09:07.559 looking to that? 0:09:08.640 --> 0:09:11.840 So Meta raised their CAPEX the last time they reported 0:09:12.000 --> 0:09:14.640 to sixty five billion, and in between there was news 0:09:14.679 --> 0:09:18.160 that Meta is looking for an Amazon and Microsoft to 0:09:18.280 --> 0:09:21.800 share some of that capex because they have an open 0:09:21.880 --> 0:09:26.400 source model. So I think they're under pressure to kind 0:09:26.440 --> 0:09:29.959 of cut back on the CAPEX or the reality lab spend. 0:09:30.360 --> 0:09:33.000 But so far no one has pulled back on AI 0:09:33.160 --> 0:09:36.280 capex given you are still in a supply constrained environment 0:09:36.280 --> 0:09:39.800 when it comes to the GPUs and overall AI infrastructure. 0:09:39.840 --> 0:09:41.840 So it'll be interesting to see what they end up doing. 0:09:41.920 --> 0:09:44.560 Hey, Anurag, you know, I kind of think with even 0:09:44.600 --> 0:09:47.200 within technology, which is such a great growth story and 0:09:47.960 --> 0:09:50.800 can batter some slowdowns, I think of the software companies 0:09:50.800 --> 0:09:52.240 that you cover is kind of maybe one of the 0:09:52.320 --> 0:09:55.520 safer places to be within technology. What do you expect 0:09:55.520 --> 0:09:57.400 to hear from the Microsoft's of the world. 0:09:59.440 --> 0:10:02.000 Yes, you know, on a relative basis, I think you're 0:10:02.080 --> 0:10:04.640 right about that. But at the same time, they do 0:10:04.760 --> 0:10:07.640 have an impact on the second degree demand. If the 0:10:08.080 --> 0:10:10.800 enterprise text spending starts to cut down, you know, that 0:10:10.880 --> 0:10:13.760 has an impact on software space as well. So so 0:10:13.880 --> 0:10:15.960 that's the something we will be looking for. But I 0:10:15.960 --> 0:10:18.680 would agree with Mandib that we are not anticipating a 0:10:18.760 --> 0:10:23.760 drop in capex either from Microsoft or AWS later this week, 0:10:23.800 --> 0:10:26.360 because that those are the names that dictate a lot 0:10:26.440 --> 0:10:28.800 in terms of, you know, how AI spend will shape 0:10:28.840 --> 0:10:30.880 up over the next twelve months. 0:10:31.480 --> 0:10:34.079 Where within the text act on a route do you 0:10:34.080 --> 0:10:36.800 think you could see maybe some of the biggest exposure 0:10:36.840 --> 0:10:40.240 to I guess just tariffs and maybe a slowing global economy. 0:10:41.080 --> 0:10:43.120 Yeah, so Apple is going to be in front and 0:10:43.200 --> 0:10:46.080 center over there. There's so much news about you know, 0:10:46.120 --> 0:10:49.000 their ability to move the supply chain that's not that easy. 0:10:49.360 --> 0:10:52.720 We do anticipate some pull forward and demand for them. 0:10:52.800 --> 0:10:55.319 We know the you know, Apple stores were really crowded 0:10:55.920 --> 0:10:58.320 before the tariff date, and you know that that will 0:10:58.320 --> 0:11:00.480 show up in some of the numbers. But the question 0:11:00.559 --> 0:11:02.360 is going to be what kind of guidance can they give, 0:11:02.400 --> 0:11:04.360 and in fact, if they can even give guidance at 0:11:04.400 --> 0:11:06.720 this point, and you know, how if there is a 0:11:06.760 --> 0:11:09.080 big number that goes up on tatifs can they even 0:11:09.160 --> 0:11:10.920 fulfill the demand. So there's going to be a lot 0:11:10.920 --> 0:11:14.000 of noise around that supply chain and what they're doing 0:11:14.040 --> 0:11:16.439 to offset that, both in the near term and in 0:11:16.480 --> 0:11:17.200 the long term. 0:11:17.600 --> 0:11:19.720 And the other big story for today IBM planning to 0:11:19.720 --> 0:11:21.600 invest one hundred and fifty billion in the US over 0:11:21.600 --> 0:11:23.880 the next five years. Mandy, can you break it down 0:11:23.920 --> 0:11:26.120 for us? What does that include? That's a pretty big number. 0:11:27.000 --> 0:11:29.720 Yeah, I mean, look in the case of five AM, 0:11:29.800 --> 0:11:34.000 they are not a big spender on AI capex, so clearly, 0:11:34.160 --> 0:11:37.880 you know, they are looking to expand in terms of 0:11:37.920 --> 0:11:41.520 their own investments, whether it's mainframe related or any other 0:11:41.600 --> 0:11:45.400 type of R and D around quantum. But we've heard 0:11:45.440 --> 0:11:48.680 that from Apple, you know, five hundred billion dollars over 0:11:48.720 --> 0:11:52.040 the next four years. So a lot of these tech 0:11:52.080 --> 0:11:56.720 companies are looking to appease the administration, which is keen 0:11:56.760 --> 0:12:01.400 to you know, bring manufacturing back. Interesting to see where 0:12:01.520 --> 0:12:06.640 IBM sort of thinks about investing the one hundred and 0:12:06.640 --> 0:12:08.920 fifty billion dollars because, as I said, they're not a 0:12:08.920 --> 0:12:12.360 big player when it comes to the AI infrastructure play 0:12:12.400 --> 0:12:14.400 that the other hyperscalers are involved in. 0:12:14.840 --> 0:12:16.920 Hey, an er, guessin you remember a lot of the 0:12:16.960 --> 0:12:20.280 CEOs that you and man deep cover making their way 0:12:20.280 --> 0:12:23.080 to Washington, DC over the last three four months having 0:12:23.160 --> 0:12:26.439 meetings with the President members of administration. Is there a 0:12:26.520 --> 0:12:29.559 sense that they're getting the benefit of that or is 0:12:29.600 --> 0:12:32.719 it having any impact because I'm not sure I see that. 0:12:34.040 --> 0:12:36.959 Well. One could argue that, you know, the smartphone exemptions 0:12:37.000 --> 0:12:39.400 that we got or the consumer electronics may have had 0:12:39.440 --> 0:12:41.679 something to do with it. But we'll find out if 0:12:41.679 --> 0:12:44.600 that can continue or not. But you know, frankly speaking, 0:12:45.040 --> 0:12:48.600 these companies are the ones that are really putting us 0:12:48.640 --> 0:12:51.480 at the forefront. I will be very surprised if we 0:12:51.559 --> 0:12:55.439 see a much more hostile behavior against them. The big 0:12:55.520 --> 0:12:58.160 question is Hasmond you mentioned there are a few antitrust 0:12:58.200 --> 0:13:00.840 cases going across them right now. For a bunch of 0:13:00.880 --> 0:13:04.600 these companies, we'll find out how the administration takes over 0:13:04.880 --> 0:13:08.520 or you know, puts their credibility or the backing behind 0:13:08.559 --> 0:13:09.160 those deals. 0:13:09.760 --> 0:13:12.480 Man, if you mentioned before quantum computing when we were 0:13:12.480 --> 0:13:14.440 talking about IBM, I mean, are we going to be 0:13:14.520 --> 0:13:18.000 hearing more and more of that come in the future, 0:13:18.000 --> 0:13:19.719 because we've been hearing so much about AI. But is 0:13:19.800 --> 0:13:21.520 quantum kind of going to move forward? 0:13:22.400 --> 0:13:25.200 I think at this point, you know, given the macro 0:13:25.320 --> 0:13:28.320 environment we are in, I would focus more on what 0:13:28.360 --> 0:13:32.400 the companies think, as you know, monetizable in the near term. 0:13:32.640 --> 0:13:35.600 Quantum would be further out. At the same time, I mean, 0:13:35.679 --> 0:13:39.080 could you know one to two percent of those CAPEX 0:13:39.160 --> 0:13:42.360 dollars go into quantum, Yes, but the big chunk would 0:13:42.400 --> 0:13:47.400 still be allocated towards AI and you know, specifically inferencing, 0:13:47.520 --> 0:13:50.839 because everyone seems to be quite bullish about the type 0:13:50.840 --> 0:13:54.200 of use cases that are emerging around AI agents and 0:13:54.240 --> 0:13:56.600 what it means for the overall enterprises. 0:13:57.240 --> 0:13:59.080 All Right, fellows, thank you so much for joining us. 0:13:59.080 --> 0:14:01.600 Always appreciate getting you guys, particularly when we get you 0:14:01.600 --> 0:14:04.760 guys together on rog Rana. Man deep seeing there to 0:14:04.800 --> 0:14:08.360 two folks that kind of run our global technology research 0:14:08.400 --> 0:14:11.640 effort at Bloomberg Intelligence, and like you have to do. 0:14:11.800 --> 0:14:15.920 Technology is a global business. Therefore you need to have 0:14:16.000 --> 0:14:18.600 expertise on the ground all around the world, and we 0:14:18.679 --> 0:14:22.440 do Asia, Europe, North America. We've got it covered for you, 0:14:22.440 --> 0:14:24.920 and man Deep and on rog run that business for us. 0:14:25.000 --> 0:14:27.080 We appreciate getting a couple of minutes of their time. 0:14:27.120 --> 0:14:29.840 It's gonna be a big week for earnings continued big 0:14:29.880 --> 0:14:32.520 week for technology companies to what extent is their business 0:14:32.560 --> 0:14:35.480 be impacted by some of the economic uncertainty that may 0:14:35.480 --> 0:14:37.760 be building out there as a result of maybe some 0:14:37.880 --> 0:14:41.880 uncertain tariff policy issues. So we'll see how that plays 0:14:41.880 --> 0:14:44.720 out this week when you get more again twenty trillion 0:14:44.760 --> 0:14:47.560 dollars in market cap those companies reporting this week. 0:14:49.200 --> 0:14:52.880 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:14:52.960 --> 0:14:56.440 weekdays at ten am Eastern on applecarcklay and Android Auto 0:14:56.480 --> 0:14:59.480 with the Bloomberg Business App. Listen on demand wherever you 0:14:59.520 --> 0:15:02.760 get your or watch us live on YouTube. 0:15:03.320 --> 0:15:05.720 And we've got a lot of economic data, and maybe 0:15:05.960 --> 0:15:07.520 the question is when are we can start seeing some 0:15:07.600 --> 0:15:10.800 of the uncertainty in some of the economic data, whether 0:15:10.800 --> 0:15:12.520 it's GDP or inflation. 0:15:12.160 --> 0:15:14.040 And that kind of thing. So we got attention to that. 0:15:14.200 --> 0:15:16.640 So if you're a professional money manager, there's plenty to 0:15:16.680 --> 0:15:19.440 keep you busy. Kim Farest, founder and chief investment officer 0:15:19.480 --> 0:15:22.920 Bouque Capital Partners Joints this year, Kim, kind of with 0:15:23.000 --> 0:15:25.440 that set up, what do you think is driving socks here? 0:15:25.440 --> 0:15:29.760 Do we earnings or some of this bigger I guess 0:15:29.800 --> 0:15:33.520 economic data issues or is it just what comes out 0:15:33.560 --> 0:15:37.080 of the Twitter account or ex account or of a 0:15:37.120 --> 0:15:37.840 certain president. 0:15:39.360 --> 0:15:41.840 I think all of the above. But here's what I've 0:15:41.920 --> 0:15:44.520 learned from doing this for the past. I can't believe 0:15:44.560 --> 0:15:48.440 that twenty six years of looking at markets is in 0:15:49.120 --> 0:15:52.320 a given day they can really only process one or 0:15:52.360 --> 0:15:56.000 two ideas. I kid you not. If you go back 0:15:56.480 --> 0:16:00.080 to what happened on Friday, you can suss out what 0:16:00.080 --> 0:16:02.960 what drove the market? What was and you look at 0:16:02.960 --> 0:16:05.320 the stocks, and you look at the data that comes 0:16:05.360 --> 0:16:08.240 out and you go, Aha, this is what drove the market. 0:16:08.560 --> 0:16:11.200 So I'm going to make a bold prediction that the 0:16:11.320 --> 0:16:14.880 thing that drove the markets last year clearly was in 0:16:14.960 --> 0:16:18.280 Nvidia and the AI trade. And this week we're going 0:16:18.360 --> 0:16:20.800 to get a little bit more information on whether or 0:16:20.880 --> 0:16:23.640 not the AI trade is dead, and I think the 0:16:23.680 --> 0:16:26.640 answer is no, because we got a sneak peek from 0:16:26.640 --> 0:16:29.960 what happened on Thursday. I think it was Thursday. Every 0:16:30.040 --> 0:16:35.600 day seems like a lifetime anyhow with Google, and Google 0:16:36.200 --> 0:16:39.840 reiterated that they are going to continue spending on their 0:16:39.880 --> 0:16:44.880 AI build out, and so we expect Microsoft, Meta, and 0:16:45.200 --> 0:16:47.560 Amazon to all say the same thing. 0:16:47.760 --> 0:16:51.520 It's actually a very good point. And Kim, I've been 0:16:51.520 --> 0:16:53.400 asking the question all morning are we going to see 0:16:53.440 --> 0:16:56.800 more cost cuts? Because there was a story in the 0:16:56.840 --> 0:17:03.080 Wall Street Journal that said corporate CEOs are like saying 0:17:03.080 --> 0:17:05.879 the market version of the serenity prayer right now. Costs 0:17:05.880 --> 0:17:08.679 are the only thing that they can really control, and 0:17:08.680 --> 0:17:11.520 in the face of total uncertainty, that's the lever they're pulling. 0:17:11.600 --> 0:17:14.960 But I was talking with Gargey chow Duri of Blackrock 0:17:15.000 --> 0:17:17.959 this morning and she said, well, you know what, Google 0:17:18.000 --> 0:17:21.800 didn't cut its capex, so maybe we won't see cutting 0:17:21.880 --> 0:17:25.080 capex from the other hyperscalers. And that's really what's driving 0:17:26.000 --> 0:17:28.560 this market, is that AI trade that that you know, 0:17:28.600 --> 0:17:32.880 we obviously saw so big last year. What about other 0:17:32.960 --> 0:17:35.119 companies though, Kim, are you worried that we're going to 0:17:35.160 --> 0:17:38.919 start seeing especially smaller companies start to fire our employees, 0:17:39.240 --> 0:17:43.080 start to you know, close down stores, start to reduce 0:17:43.160 --> 0:17:44.320 costs wherever they can. 0:17:46.000 --> 0:17:49.720 So the answer is always yes, right for the troubled, 0:17:50.119 --> 0:17:55.560 like Macy's is going to close a store in this 0:17:55.920 --> 0:17:58.159 I don't know how big. It was a huge, huge 0:17:58.200 --> 0:18:02.280 mall and there's only three things it now maybe four 0:18:02.320 --> 0:18:05.879 if you consider the collectibles shop that's in there as well. 0:18:06.040 --> 0:18:09.200 That's amazing business. That's like something it really doesn't. 0:18:09.240 --> 0:18:12.600 But that's I'm painting this right. Joanne Fabrics pulled the 0:18:12.640 --> 0:18:15.600 plug there, but we've got Macy's that is now going 0:18:15.600 --> 0:18:18.399 to pull the plug. Dick's Sporting Goods is going to 0:18:18.760 --> 0:18:21.360 pull the plug. But the township of Frasier has its 0:18:22.680 --> 0:18:25.840 township building in that building. But it's massive. It is 0:18:25.880 --> 0:18:28.359 the hugest, most empty building I've ever seen in my 0:18:28.520 --> 0:18:32.280 entire life. But that is what we get is companies 0:18:32.280 --> 0:18:35.160 that aren't succeeding are going to reshuffle the decks. 0:18:35.160 --> 0:18:35.800 Now Dixon is. 0:18:35.800 --> 0:18:38.840 Doing pretty well, but in that mall, nobody's going to 0:18:38.880 --> 0:18:41.199 the mall. They're going to move somewhere else, no kidding. 0:18:41.240 --> 0:18:43.840 So that goes on all the time. But the I 0:18:43.880 --> 0:18:47.240 would even say smaller companies that are successful are not 0:18:47.359 --> 0:18:51.520 going to just indiscriminately higher. What companies do have right 0:18:51.560 --> 0:18:54.560 now is technology that tells them what the pipeline is 0:18:54.600 --> 0:18:58.119 doing in real time. Most even small companies have a 0:18:58.200 --> 0:19:01.439 CRM system where they can see what demand looks like. 0:19:01.840 --> 0:19:05.200 And I think that is going to drive things, not tweets, 0:19:05.800 --> 0:19:09.920 not you know, headlines. It's going to be what's happening 0:19:09.960 --> 0:19:12.800 with our business. And if your business is sick, you're 0:19:12.800 --> 0:19:13.400 going to make some. 0:19:13.400 --> 0:19:16.200 Cuts, Kim. I mean looking at the S and P. 0:19:16.640 --> 0:19:18.840 I made the comment earlier that depends on kind of 0:19:18.920 --> 0:19:20.639 your glass half end to your half full kind of 0:19:20.640 --> 0:19:23.639 person that you know. The the bad news is that 0:19:24.040 --> 0:19:26.480 the S and p's down, you know, ten percent roughly from. 0:19:26.320 --> 0:19:27.720 Its peak earlier this year. 0:19:27.880 --> 0:19:29.960 The good news is that it's up ten percent from 0:19:30.320 --> 0:19:32.800 the bottom. How do you view kind of the what's 0:19:32.840 --> 0:19:35.919 going on out there in the stock market generally, Well. 0:19:35.760 --> 0:19:41.080 Again, I'm kind of a mathematician, that's my basic training 0:19:41.440 --> 0:19:43.800 was That's what I graduated with a degree in that 0:19:43.920 --> 0:19:46.840 and computer science. So I like to take apart the 0:19:46.880 --> 0:19:48.800 pieces of the S and P. And if I look 0:19:48.840 --> 0:19:51.520 at what was driving the S and P last year 0:19:51.920 --> 0:19:54.840 and pretty much through the end of the year was 0:19:54.960 --> 0:19:58.520 the AI trade. So that's the big mag seven. I 0:19:58.520 --> 0:20:01.720 was going to call them the Big seven mag seven 0:20:01.920 --> 0:20:05.159 and then you know, especially in Vidia. Now Nvidia has 0:20:05.200 --> 0:20:11.960 come down a lot, right, yeah, yeah, so that is 0:20:12.119 --> 0:20:14.919 overweight in the S and P or it was really 0:20:14.960 --> 0:20:18.080 overweight in the S and P five hundred calculation. So 0:20:18.160 --> 0:20:19.960 you have to look at that, and if you look 0:20:20.000 --> 0:20:23.200 at the rest of the S and P five hundred, 0:20:23.240 --> 0:20:27.000 they're really not going all that up or down. Right 0:20:27.440 --> 0:20:30.040 that most of that dip down and dip back up 0:20:30.320 --> 0:20:34.200 was the Magnificent seven and that was the blessing last 0:20:34.280 --> 0:20:37.720 year and it's the curse this year. So you index 0:20:37.800 --> 0:20:39.480 buyers are just going to have to put. 0:20:39.400 --> 0:20:39.760 Up with that. 0:20:40.920 --> 0:20:43.720 It's actually at one point it was down thirty seven percent, 0:20:43.840 --> 0:20:47.119