Speaker 1: Bloomberg Audio Studios, podcasts, radio news from the heart of
Speaker 1: where innovation, money and power collide in Silicon Valley and beyond.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2: Live from New York. I'm Caroline Hyde, and this is
Speaker 2: Bloomberg Technology. Tariffs They hit global tech stocks again today
Speaker 2: as China retaliates and imposes tariffs on all American imports
Speaker 2: and withholds crucial rare earths. Two trillion dollars wiped off
Speaker 2: the naspat one hundred and two days alone. That's as
Speaker 2: the benchmark is set to enter a bear market. Investors
Speaker 2: now expecting the Federal Reserve to cut interest rates four
Speaker 2: times this year. We will hear the Fed chair Jerome
Speaker 2: Power later this hour, but we've got to dive into
Speaker 2: the NAZA one hundreds Move round, VLAs Selica is here extraordinary.
Speaker 2: We haven't seen this sort of sell off since twenty twenty.
Speaker 3: Absolutely, the scale of the weakness has been pretty breath taking,
Speaker 3: the size of the drops, just the broad based nature
Speaker 3: of the selloff, it's been pretty pretty remarkable.
Speaker 2: What's also remarkable is how much we start to see
Speaker 2: the ongoing retaliation, whether it be from countries such as
Speaker 2: China and the impact that we'll have on being able
Speaker 2: to make technology products here in the United States. But
Speaker 2: individual companies later will be shining a light on Nintendo
Speaker 2: reports that they're going to be delaying, they're switched to
Speaker 2: pre orders to the US all of this Is it
Speaker 2: yet priced in? Ryan? What are analysts telling you?
Speaker 3: Well, what I've heard so far is that there's just
Speaker 3: so much uncertainty out there that few people are really
Speaker 3: willing to jump in right now. I mean, some people
Speaker 3: remain positive on a longer term basis. They say, if
Speaker 3: you have a three to five year time horizon, maybe
Speaker 3: you can take advantage of some of the drops in
Speaker 3: some of these names. But we don't really know what
Speaker 3: to expect. I mean, yesterday things were really bad. They're
Speaker 3: even worse today. We had China retaliate. Is there going
Speaker 3: to be a response to that, some kind of back
Speaker 3: and forth. We just don't know, And that makes it
Speaker 3: extremely difficult for companies to know how to plan, and
Speaker 3: that makes it extremely difficult for investors to know how
Speaker 3: to position.
Speaker 2: And at the moment, just where in particular are the
Speaker 2: pain most acute. It's hardware rather than software, but software
Speaker 2: still in the eye the storm, if indeed the EU
Speaker 2: decides to respond from a digital services tax perspective.
Speaker 3: Yeah, absolutely. So far, we saw a little bit of
Speaker 3: relative outperformance in software. Especially yesterday, some people were telling
Speaker 3: me maybe this is too much, too fast for software
Speaker 3: because they're not as directly exposed to tariffs as other
Speaker 3: part of the market. But certainly hardware, like you mentioned,
Speaker 3: very much getting hit with this. It's extremely you know,
Speaker 3: there's a lot of manufacturing exposure to China, to Vietnam,
Speaker 3: to places that really got hit with tariffs. This place
Speaker 3: is really suffering.
Speaker 1: You know.
Speaker 3: Over the past couple of days, particular chips have really
Speaker 3: come in quite a bit. There's still, like I said,
Speaker 3: a lot of uncertainty. People were already concerned about what
Speaker 3: is the outlook for AI spending. People were already talking
Speaker 3: about valuations maybe being elevated. All of these things are
Speaker 3: just dovetailing, and it's just you have a lot of
Speaker 3: reasons to be selling right now and very few reasons
Speaker 3: to be buying.
Speaker 2: Worst case scenario is the lead quote in your story
Speaker 2: coming from a particular investment in the CIO of Granite
Speaker 2: Bay Wealth Management. Do we think there's a movement back
Speaker 2: from this worst case scenario. There have been many calling
Speaker 2: for the fact that Apple might get some sort of
Speaker 2: exclusion from the taris longer term on many bracing for
Speaker 2: just headline risks going forward.
Speaker 3: I think there's a lot of bracing for headline risks.
Speaker 3: There's been a lot of hope that Apple would get
Speaker 3: an exemption the way it did in the first Trump administration.
Speaker 3: But this is a very different kind of trade, where
Speaker 3: a very different tear of policies than we saw in
Speaker 3: the first administration. So there's not really much of a
Speaker 3: playbook that you can use here in the same way.
Speaker 3: You know, you might have thought, well, it wasn't that bad,
Speaker 3: you know, eight years ago or whatever that was. It's
Speaker 3: looking like a lot more severe right now, and that
Speaker 3: again just makes it harder for people to know how
Speaker 3: to allocate, how to position if they should be bracing
Speaker 3: for more short term pain, if this looks like a
Speaker 3: long term buying opportunity. There's just so many questions right now.
Speaker 3: It's hard to know really what to do. That's what
Speaker 3: people are telling me.
Speaker 2: Get back to the phones, I'm sure, and the email.
Speaker 2: Ryan La Seleka, thank you so much for spending time
Speaker 2: with US. Now, let's turn to individual stocks. Tesla, for example,
Speaker 2: trading lower unsurprisingly. In fact, it's down fifteen percent in
Speaker 2: the last two days following tariff news. It's own deliveries missed. Interestingly,
Speaker 2: JP Morgan want to shine a light on their perspective.
Speaker 2: They've cut their estimates further on the stock, quoting what
Speaker 2: they see is unprecedented brand damage. Nimberg's Cretudell joins us
Speaker 2: for more and we'd been deciding whether this was production issues,
Speaker 2: whether this was the lack of a new model, But
Speaker 2: for JP Morgan this is brand damage.
Speaker 4: Yeah, and I do think it's both right. But of
Speaker 4: course JP Morgan is one of the more bearish analysts
Speaker 4: or bearish brokers on the street. They have very much
Speaker 4: sort of leaned into this idea that this is more
Speaker 4: than just the model why changeover which you know, we
Speaker 4: we should note is a significant issue in the first quarter,
Speaker 4: and it remains to be seen just how much, you know,
Speaker 4: Tesla can sort of overcome any brand damage that that
Speaker 4: you know is an issue here, but it is, you know,
Speaker 4: hard to sort of think of of an equivalent moment
Speaker 4: for a car brand where you see people you know
Speaker 4: throwing paint onto showrooms and lighting cars on fire. This
Speaker 4: is just you know, very unusual for any product, but
Speaker 4: particularly for cars, where you know, this is the second
Speaker 4: most valuable thing that people buy right after their home.
Speaker 4: So you know, to to you know, buy a Tesla
Speaker 4: now means something a lot different than it did, you know,
Speaker 4: only months ago. And you know, there are real questions
Speaker 4: about just how much sort of lasting impact musks, you know,
Speaker 4: entry into politics is going to have on this brand
Speaker 4: you site.
Speaker 2: Of course, JP Morgan being one of the more bearish
Speaker 2: on the street and they've got a price target just
Speaker 2: one hundred and twenty. But you go to the more optimistic,
Speaker 2: the bullish on the street. Dan ives the Webbush five
Speaker 2: hundred and fifty dollars price target on Tesla, even he
Speaker 2: is saying the recent report the delivery is one a
Speaker 2: disaster on every metric. Is there any of you that
Speaker 2: Elon must potentially starting to ease out of what the
Speaker 2: White House in his day to day roles as has
Speaker 2: been reported. Of course they push back against that, but
Speaker 2: whether or not he will come back to the fold.
Speaker 2: We focus on Tesla and that being an optimistic.
Speaker 4: Light, I think if we listen to what Musk is saying,
Speaker 4: and what even you know jd Vance has said, I
Speaker 4: just you know, have a hard time sort of seeing
Speaker 4: you know, Elon sort of heading to the back seat,
Speaker 4: if you will. That's not very much his nature, right
Speaker 4: He has has very much, you know, sort of gotten
Speaker 4: in deep with this administration. You know, just in the
Speaker 4: last few days he was pictured with a you know Trump,
Speaker 4: you know, everything said was right had I maybe you know,
Speaker 4: getting the verbiage a little off, but he is very
Speaker 4: much you know, behind the president and you know sort
Speaker 4: of one and the same with this administration. And even
Speaker 4: if he does, you know, take a step back officially,
Speaker 4: I think, you know, it's it's hard to sort of
Speaker 4: fathom how he could really sort of separate himself after
Speaker 4: he's thrown himself in so emphatically the last you know,
Speaker 4: six months.
Speaker 2: Tre Cretudell, he's been following this for six months and
Speaker 2: then some we thank you. The market onslaught. It continues
Speaker 2: for other names. Let's look at Apple, their market cat
Speaker 2: slipping now below three trillion dollars. Let's get to a
Speaker 2: key analyst on the stock Apple, Gil Luria Da Davidson,
Speaker 2: managing director joining us. Now you look at so many names,
Speaker 2: and I'm excited to talk to you about all of them, Gil,
Speaker 2: But let's just focus in on Apple at the moment
Speaker 2: and what extent is being priced in the supply chain
Speaker 2: uphending and indeed the tariff impact. Will they get some
Speaker 2: sort of exclusion?
Speaker 5: Do you think less likely now that they'll get an
Speaker 5: exclusion than last time? I think that commentary is probably correct.
Speaker 5: The market is doing its best to assess the impact
Speaker 5: on Apple. It's right now. It's just doing the rough math.
Speaker 5: A third of the revenue being impacted, about a third
Speaker 5: tariffs higher one time's another the stock is down about
Speaker 5: ten to fifteen percent. That's as good as the market
Speaker 5: can do right now. We're going to have a few
Speaker 5: days and weeks to refine that math as we see
Speaker 5: how this plays out. But the structural change to the
Speaker 5: United States role in the global economy has already happened now,
Speaker 5: and every day and week that we proceed in this direction,
Speaker 5: it's going to be cemented as a different world order,
Speaker 5: and therefore we have to get better at doing the
Speaker 5: math about how that impacts companies like Apple, but also
Speaker 5: a lot of other technology and other companies.
Speaker 2: There are so many headlines coming out minute by minute,
Speaker 2: gil and one of them, we understand President Trump is
Speaker 2: saying that Vietnam wants to cut their taris down to zero. Now,
Speaker 2: Vietnam has become a relatively new hub for Apple. How
Speaker 2: are they able to in this moment where the news
Speaker 2: can change from day to day, able to stomach the
Speaker 2: higher costs because they have a healthy margin of about
Speaker 2: forty six to forty nine percent.
Speaker 5: That's right. So Apple has a few levers. One it
Speaker 5: can push cost increases to its suppliers, Two, it can
Speaker 5: pass through price increases to its consumers. And then three
Speaker 5: it can absorb some of the of the margin degradation.
Speaker 5: So it has all three levers. In the short term,
Speaker 5: it's going to use all of those. But to your point,
Speaker 5: in the medium to long term, it has the ability
Speaker 5: to shift production. It's already started shifting production from China
Speaker 5: to India and Vietnam, who are far likely to arrive
Speaker 5: at beneficial agreement with the United States about tariffs and
Speaker 5: trade than China is. So the fact that Apple's already
Speaker 5: manufacturing in Indian Vietnam gives them medium term and definitely
Speaker 5: longer term flexibility to offset some of the tariff increases
Speaker 5: and reduce the impact on prices and margins.
Speaker 2: GIL that's the hardware perspective, and I can understand why
Speaker 2: an in Nvidia that you also look at is feeling
Speaker 2: the pain on a hardware perspective and getting products out
Speaker 2: of Asia. Meta under significant pressure. Why is that more
Speaker 2: about the EU response mechanism.
Speaker 5: That's part of it. Part of it is that in
Speaker 5: an economic recession, there's less advertising dollars, which will mean
Speaker 5: less digital advertising, which is really all of Meta's business.
Speaker 5: So that's part of the reaction. Part of the reaction
Speaker 5: is Europeans have a habit of drawing funds out of
Speaker 5: our large technology companies through non tariff barriers. So they'll
Speaker 5: decide that Meta isn't doing a good job, good enough
Speaker 5: job on privacy, so they'll limit Meta. They'll find them
Speaker 5: billions of dollars. They've done the same to Google, They've
Speaker 5: done the same to Apple, and so the more we
Speaker 5: get in conflict with Europe, that's a lot of the
Speaker 5: lever that the Europeans have. It's not just tariffs on goods,
Speaker 5: it's the Europeans inclination to put in regulation that restricts
Speaker 5: these companies and allows the Europeans to find them billions
Speaker 5: of dollars.
Speaker 2: Talking of levers, President Trump thinks he's got a level
Speaker 2: when it comes to TikTok and China tariffs. Just you
Speaker 2: cover Oracle in any capacity, do you want to see
Speaker 2: Oracle become a minority holder of future shares in a
Speaker 2: US TikTok If indeed that deal that seems to be
Speaker 2: being discussed with the White House goes.
Speaker 5: Through, somebody's going to get a windfall from this. The
Speaker 5: TikTok us business is incredibly valuable, and to the extent
Speaker 5: we can accomplish the national security goal of not allowing
Speaker 5: our data to be sent to the Communist Party in China,
Speaker 5: that business is incredibly valuable, and whoever gets to participate
Speaker 5: in it is going to get a windfall. It looks
Speaker 5: like Oracle may be in the running to do that,
Speaker 5: but everybody else is running for that too. It's incredibly
Speaker 5: valuable because if you think about it, there's only really
Speaker 5: three venues for social media where you can access consumers.
Speaker 5: Google's YouTube, Meta's properties, and by Dance's TikTok And whoever
Speaker 5: owns TikTok in the US will have a very valuable
Speaker 5: asset and to extend. Oracle can expand its business. Already
Speaker 5: has a TikTok business in hosting. If it can expand
Speaker 5: more into an operations role with TikTok, that would be
Speaker 5: a windfall to Oracle.
Speaker 2: There's going to be some people winning in certain circumstances.
Speaker 2: Gilia of DA Davison, We thank you for your real expertise.
Speaker 2: Let's just go to more breaking headlines right now. Because
Speaker 2: President Trump is indeed speaking, we understand that he says
Speaker 2: it's perfect time for Chair of the Fed Powell to
Speaker 2: cut interest rates. Remember we're hearing from Fed chairman in
Speaker 2: but ten fifteen minutes time. He is speaking at an
Speaker 2: event in Arlington, Virginia among other journalists, and we understand
Speaker 2: that Trump is saying that Powell is always late, but
Speaker 2: this is the perfect time for Power to cut interest rates.
Speaker 2: The market currently factors in four interest rates cuts for
Speaker 2: this year. Let's take a look at some other companies
Speaker 2: that are being moved around via tarras. Nintendo, for example,
Speaker 2: check in on its usadrs. The stock as you see,
Speaker 2: falling currently three point three percent intra day. There are
Speaker 2: reports out there that the company is set to delay
Speaker 2: it's US pre orders of the Nintendo switch to because
Speaker 2: of TARIS, the product launch date is still set to
Speaker 2: remain on June fifth. Coming up, Vice president j d
Speaker 2: Vance says a deal for TikTok will come out before
Speaker 2: the deadline for its potential ban. That deadline is tomorrow.
Speaker 2: We'll discuss that next. This is Bluemog Technology breaking news
Speaker 2: in response to the market termol news on Klana. The
Speaker 2: company is said to be delaying its planned IPO after
Speaker 2: the implementation of Trump's TARIS. That's all, according to the
Speaker 2: Wall Street Journal, will bring you any more breaking news
Speaker 2: on Klana and it's planned in IPO, but as we
Speaker 2: understand from the Wall Street Journal, it's pausing its planned
Speaker 2: for initial public offering. Meanwhile, Saturday is the deadline for
Speaker 2: byte Dance to find a buyer for its US TikTok
Speaker 2: holding or be banned. President Trump and Vice President jad
Speaker 2: Vance have both signaled that a deal is within reach.
Speaker 2: Plumo's Kirk Wagner joins us for more and maybe a
Speaker 2: deal even before Saturday the fifth.
Speaker 6: I would be surprised if we don't have something before Saturday.
Speaker 6: It's either going to be an announcement of a deal
Speaker 6: or a proposed deal. I should say, because again, this
Speaker 6: requires buy and from the Chinese government and buy Dance,
Speaker 6: which I don't believe we have yet, or an extension
Speaker 6: to continue discussing deal, right, but we know that this
Speaker 6: week the Trump administration was meeting to talk about a
Speaker 6: specific deal that involves Oracle Blackstone and a handful of
Speaker 6: other investors. I think we're really circling around something that
Speaker 6: looks like that, and I expect we'll have something before
Speaker 6: midnight Eastern tonight, which, as you pointed out, is when
Speaker 6: this band is supposed to kick in. If they don't
Speaker 6: do something, the deal.
Speaker 2: Is all very well and good, depending on who's agreed
Speaker 2: on it. And I suppose that the US investors might
Speaker 2: be aligned. But do we understand if Byte Dance and
Speaker 2: the Chinese government might be aligned, considering they've just unfailed
Speaker 2: or further taris in response to the US ones.
Speaker 6: Yeah, that time mean is not necessarily a strong sign
Speaker 6: that everyone is working together here. We have not heard
Speaker 6: from Bye Dance, We have not heard from the Chinese government.
Speaker 6: My understanding is that the US side of this equation
Speaker 6: is working to propose something that then they hope will
Speaker 6: be accepted on the other side of the fence there.
Speaker 6: But as you point out, we're in the middle of
Speaker 6: this global trade war right now, particularly with China, and
Speaker 6: so Trump has suggested, well, hey, maybe the tariffs come
Speaker 6: into you know, our a negotiating bargaining ship in this
Speaker 6: whole thing. But it is a complicated situation because of
Speaker 6: what you just mentioned.
Speaker 2: And what's also complicated is what happens to the algorithm
Speaker 2: and what oversight Oracle and indeed US investors ultimately have
Speaker 2: and whether that's in line with a letter of the law.
Speaker 2: Twenty twenty four law passed well, didn't have much way
Speaker 2: in which the algorithm could be kept in Chinese hands.
Speaker 6: That's right. So by the letter of the law, the
Speaker 6: Chinese tech company, by Dance or the Chinese government should
Speaker 6: have essentially zero influence or control over this algorithm. The
Speaker 6: deal that has been proposed seems to suggest that that
Speaker 6: they would, and so the deal that is being discussed
Speaker 6: may not follow the law. Now, the question is is
Speaker 6: there someone who's going to challenge President Trump on that?
Speaker 5: Right?
Speaker 6: If he just simply says this is acceptable to me,
Speaker 6: We're going to do it. Is Congress going to step
Speaker 6: in and say, hey, look, you know this doesn't follow
Speaker 6: the law we're going to challenge you or are they
Speaker 6: going to let slide? And I don't know the answer
Speaker 6: to that, but I think you bring up the stickiest
Speaker 6: point in this whole thing, which is the actual control
Speaker 6: over this key technology. Both sides want it, and I'm
Speaker 6: not sure how they're going to rectify that.
Speaker 2: Most Kurt Wagner, staying on top of a very timely conversation,
Speaker 2: we thank you. Let's focus now in on what advertisers
Speaker 2: marketers do in this moment. Do they go to TikTok
Speaker 2: or not. Rachel Typograph is with uspanra SEO of Mike
Speaker 2: mag You have the data and since January nineteenth, which
Speaker 2: was the first deadline when we were worried it was
Speaker 2: going to be banned and it went black for a moment,
Speaker 2: traffic has recovered to TikTok.
Speaker 7: Right absolutely so January nineteenth, I was here with you.
Speaker 7: We saw TikTok traffic go to zero. It took about
Speaker 7: until March first for TikTok traffic for major advertisers to
Speaker 7: reach Q four levels. Why there was a lot of
Speaker 7: confusion if it was still legal to advertise on TikTok
Speaker 7: and if you've been following TikTok did a lot of
Speaker 7: advertising themselves to communicate this is a safe place for
Speaker 7: you to advertise are and we're now seeing TikTok traffics
Speaker 7: surpass Q four levels. So Mickmac tracks twenty three hundred
Speaker 7: of the biggest brands in the world, and our traffic
Speaker 7: on TikTok right now is twenty percent higher than Q
Speaker 7: four levels.
Speaker 2: That's pretty phenomenal considering the level of uncertainty going into
Speaker 2: this Saturday. Is the likelihood that people are pairing back
Speaker 2: just into this one off event.
Speaker 7: We haven't seen that yet. And the reality is TikTok
Speaker 7: is a very unique asset. It's why we have the
Speaker 7: US and China fighting over it. You can build brand
Speaker 7: and drive conversion all at once. So until US advertisers
Speaker 7: here that they shouldn't be advertising on that platform, I
Speaker 7: believe that they will continue to do so. That being said,
Speaker 7: they all have contingency plans. They have contingency plans for tariffs,
Speaker 7: and now they have contingency plans for advertising. And what
Speaker 7: we saw around January nineteenth is how easy it is
Speaker 7: to move dollars from one platform to another.
Speaker 2: Why did it go, why did it shift?
Speaker 7: Who benefited so the two big beneficiaries were Alphabet. So
Speaker 7: Alphabet is paid search, YouTube dB three sixty and Pinterest.
Speaker 7: In both of those platforms you can drive conversion and
Speaker 7: brands consider it a brand safe environment.
Speaker 2: Is that why they're not going to Meta? Why did
Speaker 2: Instagram not become the automatic place you put yet more
Speaker 2: advertising dollars? There's everyone already there.
Speaker 7: So the interesting thing about Meta is it is the gorilla.
Speaker 7: It's the giant. On any given day at mcmacket's our
Speaker 7: number one source of traffic and it remains to be.
Speaker 7: So that being said, when we compare Q one to
Speaker 7: Q four meta traffic, we've seen a three percent decline.
Speaker 7: And when we look at the timing of this, it's
Speaker 7: all around Zuckerberg's announcement of removing fact checking from the platform.
Speaker 7: So it goes back to many of the things that
Speaker 7: brands are balancing right now, and one of them is
Speaker 7: concerns around brand safety.
Speaker 2: That's really interesting and I'm wondering Therefore, also at this moment,
Speaker 2: we're seeing MetaStock under pressure significantly because people are worried
Speaker 2: the advertiser is going to pair back because of economic uncertainty,
Speaker 2: let alone brand certainty and safety is that something you
Speaker 2: preparing a cell phone.
Speaker 7: Absolutely, I mean this is a whole other curve ball.
Speaker 7: This isn't about TikTok or Meta or the trade desk.
Speaker 7: This is about terrariffs and consumer goods. And the reality
Speaker 7: is consumer good companies are in a really tough spot.
Speaker 7: Their margins are getting squeezed, and they really only have
Speaker 7: three options. Raise prices, which retailers and consumers don't want that.
Speaker 7: The second is reduced supply chain, so essentially produce fewer SKUs.
Speaker 7: I can tell you advertisers are not going to want that.
Speaker 7: Why what creates advertising revenue to rise auction gensity? You
Speaker 7: need more SKUs. And then finally, the worst thing, which
Speaker 7: is what I think the markets are reacting to, is
Speaker 7: removing working media spent altogether. And I can tell you,
Speaker 7: if you're a student of brand the way that I am,
Speaker 7: if you stop investing in brand, you will lose market share.
Speaker 7: And every CMO and CFO across the world right now
Speaker 7: is having this conversation what.
Speaker 2: About tarris going back to TikTok though, in thirty seconds,
Speaker 2: if TikTok isn't bought by the oracle contingent and we
Speaker 2: don't see the algorithm come to us hands. Do people
Speaker 2: stick with it?
Speaker 7: I think that you're going to start to see dollars
Speaker 7: shift very quickly then, and they'll shift into platforms like
Speaker 7: alphabet and Pinterest.
Speaker 2: Always great having makepacs data Rachel Tipograph, I joyed to
Speaker 2: have you on. Thank you. Look, we've got more breaking
Speaker 2: news and response to the tariffs. This one is stub
Speaker 2: Hub's IPO. We understand according to the Wall Street Journal
Speaker 2: that stub hub has also delayed its plans for initial
Speaker 2: public offering. Remember there's likes of stub hub or we're
Speaker 2: in potentially coming to the market. We also have Klana
Speaker 2: delaying according to the Wall Street Journal, the ripple effects
Speaker 2: being felt far and wide. Coming up, we're going to
Speaker 2: be hearing from the fedschede your own power in the
Speaker 2: midst of this market uncertainty following widespread tariffs reaction from China.
Speaker 2: That's next, and this is Bloomberg Technology