Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day
Speaker 2: for insight from the best in markets, economics, and geopolitics
Speaker 2: from our global headquarters in New York City. We are
Speaker 2: live on Bloomberg Television weekday mornings from six to nine
Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or
Speaker 2: anywhere else you listen, and as always on the Bloomberg
Speaker 2: Terminal and the Bloomberg Business App. Francis Donald of RBC writing,
Speaker 2: US tariffs in the size that they have been floated,
Speaker 2: or even a fraction of that size, could filter into
Speaker 2: the Canadian economy immediately, significantly and then persistently for many years.
Speaker 2: Francis joins us now for more and Francis, maybe we've
Speaker 2: avoided them, maybe they happen in one month's time. I
Speaker 2: don't know. But what I'd love to hear from you
Speaker 2: is the price of the uncertainty? What is the price
Speaker 2: that we have to pi.
Speaker 1: Well, even though this trade shock that we look to
Speaker 1: have avoided would have been the largest in one hundred
Speaker 1: years for the North American economy. We do have some
Speaker 1: things that we know about terriffs and the threat of
Speaker 1: tariffs from the twenty eighteen twenty nineteen experiences, and one
Speaker 1: of them is even just the existence that they may
Speaker 1: occur has historically stalled business investment, household decisions. It creates
Speaker 1: an uncertainty tax on the entirety of these economies that
Speaker 1: businesses lack clarity on what will happen next. So it
Speaker 1: wouldn't surprise me if we see a pause in business activity,
Speaker 1: a hit to business competence in the United States, Canada,
Speaker 1: and in other countries, and we see this distorting more
Speaker 1: of the Q one data on top of a period
Speaker 1: which historically we have a lot of trouble understanding the
Speaker 1: data from for seasonly adjusted reason.
Speaker 3: Francis.
Speaker 4: The way that John put it earlier was the some
Speaker 4: anti growth measures were being floated and dealed with, dealt
Speaker 4: with now by Donald Trump, and later there'll be the
Speaker 4: pro growth measures.
Speaker 3: Are these hits to.
Speaker 4: Potential growth offset with tax cuts and some of the
Speaker 4: other proposals.
Speaker 1: We haven't been able to make the math work on
Speaker 1: tariff revenue matching tax cut needs. But what's really critical
Speaker 1: here in Lisa I think you nailed it is the
Speaker 1: sequence of these events. Trade shocks, tariffs, they're saxflationary. We
Speaker 1: know that to be true. They limit growth, they create inflation.
Speaker 1: But then you might see, for example, tax cuts that
Speaker 1: come through deregulation that tends to be pro growth, pro inflation.
Speaker 1: And I think what's key here is that almost all
Speaker 1: of the policies that we've floated from Washington do have
Speaker 1: an inflationary element, but markets will care less about that,
Speaker 1: and the US will be able to absorb more of
Speaker 1: that inflation if it comes with a side of growth.
Speaker 1: And that's why I think you're seeing a lot more
Speaker 1: concern about the inflationary elements of tariffs than you are,
Speaker 1: for example, the inflationary elements of corporate tax cuts now
Speaker 1: underlying the surfaces. I think the real inflationary story, and
Speaker 1: the one that should be concerning us most of all,
Speaker 1: is that the US lacks workers jobs. It is heading
Speaker 1: into a period where it's going to experience real demographic challenges.
Speaker 1: We expect the labor participation rate to decline in twenty
Speaker 1: twenty five. We have the least amount of workers ever
Speaker 1: working in the United States right now, the most amount
Speaker 1: of retirees if we see a change to immigration policy,
Speaker 1: in fact we're already seeing some of that. We're going
Speaker 1: to see more challenges to labor supply. That's going to
Speaker 1: be the most nefarious form of inflation as it pushes
Speaker 1: up way just good but flows through the economy more broadly. So,
Speaker 1: inflation is one word, but there's all different types of inflation,
Speaker 1: and all these policies carry different variations of good inflation
Speaker 1: and bad inflation.
Speaker 4: Francis, there's so much uncertainty that FED officials are saying
Speaker 4: very little and a lot of people are cheering that
Speaker 4: and saying nobody knows. Have you seen enough to change
Speaker 4: your outlook for the year when it comes to growth,
Speaker 4: when it comes to inflation in the United States.
Speaker 1: Well, we were prepared to downgrade our US growth forecast
Speaker 1: if we had seen those twenty five percent tariffs on
Speaker 1: Canada and Mexico come through. Those would have shocked to
Speaker 1: US growth by a full percentage point in twenty twenty
Speaker 1: five and lifted inflation by half. As of right now,
Speaker 1: there's not enough even with the Chinese terces, to really
Speaker 1: make a meaningful change in that outlook. But our US
Speaker 1: rate strategist, Blake Gwynn has a really good line. He says,
Speaker 1: the set is going to be watchful, not reactive. Of course,
Speaker 1: the fet is filled with a lot of economists, and
Speaker 1: I think economists on the street are going to be
Speaker 1: doing something very similar to that.
Speaker 2: How much has changed, Francis in the last three months.
Speaker 2: I was listening to some comments from the Chicago Fed
Speaker 2: President Ustin Goilsby the same amount of sync with what
Speaker 2: I heard from him at the end of last year.
Speaker 5: That's for sure.
Speaker 2: Before Trump got into power, We've got to be more
Speaker 2: careful with how fast to cut rights.
Speaker 5: What has changed for them?
Speaker 1: Well, we may feel a huge sense of relief over
Speaker 1: the news from the past twenty four hours, but remember
Speaker 1: this massive trade shock. And I got to be clear here,
Speaker 1: this trade shock, twenty five percent tariffs on Mexico and
Speaker 1: China would have brought the average import terror for Americans
Speaker 1: up to almost eleven percent. It currently sits at three.
Speaker 1: It's a quadrupling of the trade pressure that would exist
Speaker 1: within the US economy. It didn't disappear. It's been paused
Speaker 1: for one month. We still have the April First America
Speaker 1: April first America first trade policy negotiations. We have USMCA
Speaker 1: being negotiated. We're hearing a lot of chatter about European tariffs,
Speaker 1: and then we have Chinese tariffs that came on that,
Speaker 1: as you mentioned at the start of the segment, is
Speaker 1: still a massive economic shock, and it would have to
Speaker 1: have you reevaluate how you're looking at the economy in
Speaker 1: twenty twenty five, especially if you're a central banker, because
Speaker 1: if you're a central banker in that situation, you're having
Speaker 1: to model growth down, inflation up. Some central banks only
Speaker 1: have an inflation target. This central bank has a dual mandate,
Speaker 1: and those mandates would go in the opposite direction.
Speaker 2: A rockin' haant place and somewhere in between. Francis, appreciate
Speaker 2: your time, soys Francis down.
Speaker 5: With a Bomby c.
Speaker 2: Find Saxon words join us now for more. If all
Speaker 2: of Wall Street's horses and all of Wall Street's men
Speaker 2: can't put the globalized economy back together again, how do
Speaker 2: we think about where best to allocate assets?
Speaker 5: What a question. Sarah Johns' is now for more, Serah,
Speaker 5: good morning.
Speaker 6: Good morning.
Speaker 2: I'm going to talk about red wine from that way,
Speaker 2: as much as I'd love to. Let's talk about this
Speaker 2: the policy mix that we're going to see from this administration.
Speaker 2: Does it a track capital or push it away.
Speaker 7: I think that that's a million dollar question right now,
Speaker 7: and it's certainly something that's been talked about for the
Speaker 7: first week in a way that it wasn't talked about
Speaker 7: in the first Trump one point er, right, There wasn't
Speaker 7: an argument about capital then, And I think that that
Speaker 7: what we're going to see is what we've seen so far,
Speaker 7: which is, you know, going this way, going that way.
Speaker 7: There's going to be a zigzag back and forth, and
Speaker 7: I think it is hard to pin those things down.
Speaker 7: So I don't know what the answer is yet, but
Speaker 7: the big fear is that it does have a negative
Speaker 7: effect on capital.
Speaker 2: The consensus view seems to be that this is still
Speaker 2: a pro growth administration, that it will attract capital. The
Speaker 2: S and P five hundred is still around six thousand,
Speaker 2: but there has been some damage done, particularly to the
Speaker 2: auto makers. How investible do you think certain industries with
Speaker 2: this cloud hanking over them?
Speaker 7: Well, the tough thing for the automakers is that that's
Speaker 7: a tough industry anyway, because it's so capital intensive and
Speaker 7: things change so fast. So I think that there is
Speaker 7: I mean, you obviously have seen on the semiconductor side,
Speaker 7: those stocks have not really recovered, even though the market
Speaker 7: seem to recover some of the issues from the deep seaks.
Speaker 7: So I think that there's a variety of different things
Speaker 7: going on at the moment, and people will start to
Speaker 7: have more enthusiasms or less, either for different sectors or
Speaker 7: different areas. But I think that this adding into the
Speaker 7: tariff thing absolutely puts you a little bit more of
Speaker 7: a question mark on going too deep into anything without
Speaker 7: recognizing that there's possible issues that are coming.
Speaker 4: We started the show with Steve Chivun of Federated and
Speaker 4: he came on and he does his typical Monday morning
Speaker 4: although it is Tuesday morning, he did his typical look,
Speaker 4: does all of your horses look at the fundamentals. There
Speaker 4: are a lot of good things going on out there,
Speaker 4: and he's generally bullish, and he's looking to buy on
Speaker 4: the dips, whether it's semiconductors or some of these other
Speaker 4: spaces that have been disrupted by tariffs.
Speaker 3: At what point do agree with that?
Speaker 7: Well, I think that there have been already areas where
Speaker 7: you have reasonably good value. I mean the discussion prior
Speaker 7: to a lot of this was that the SMP equal
Speaker 7: weight was going to start to catch up to the
Speaker 7: S and P because the SMP was so heavy in
Speaker 7: those top mag seven names. And so I think that
Speaker 7: there are areas where you can look at the valuations
Speaker 7: and go, you know, this is completely reasonable. You know,
Speaker 7: you look at things like some of the materials food.
Speaker 7: Some of the food stocks have gotten absolutely crushed. There
Speaker 7: are a couple of different things that we like in
Speaker 7: that area that have good dividend yields and reasonable valuations
Speaker 7: ten thirteen, fourteen times earnings. That's not crazy given where
Speaker 7: the SMP is right now. So there are obviously areas
Speaker 7: that you can look at, but it is definitely more
Speaker 7: of a nimbleness and you have to be watching things
Speaker 7: much more closely.
Speaker 4: We've seen the NASDAC underperform pretty considerably in text talks
Speaker 4: in general for the past more than a month. Actually,
Speaker 4: as you mentioned, they really haven't recovered at the same
Speaker 4: time that you have seen this broadening out. Yesterday was
Speaker 4: instructive in terms of what stocks would get most beaten
Speaker 4: up as some of the trade tensions really picked up
Speaker 4: small caps. So how much does the tariff talk threaten
Speaker 4: the broadening out that a lot of people have been
Speaker 4: hoping for.
Speaker 7: Well, I think that it's I mean, yes, you're going
Speaker 7: to get those reactions, and then you have to see
Speaker 7: where that data comes in and your discussion earlier about
Speaker 7: the FED there, I mean to the extent that they
Speaker 7: may not want to do anything. This sort of gives
Speaker 7: them cover not to do very much for some period
Speaker 7: of time as they sort out what's going on. It
Speaker 7: really is going to depend on where the economic data go,
Speaker 7: and that's going to matter for the small caps enormously
Speaker 7: as well as interest rates. And I think that that
Speaker 7: right now is one of those vulnerabilities that that's an
Speaker 7: economically sensitive area. Not that the rest of the market
Speaker 7: is an economically sensive but it's more so and it's
Speaker 7: more tuned to what's going on in the US economy.
Speaker 7: So I think for those companies, what really matters is
Speaker 7: how things are going on the earnings and the economic front.
Speaker 3: At that point.
Speaker 4: There's a real important message coming from the bond market yesterday,
Speaker 4: where we didn't see a huge rally in the ten
Speaker 4: year yield. We didn't see a huge sell off either
Speaker 4: from some of the inflationary impacts of potential play stry
Speaker 4: impacts of tariffs.
Speaker 3: What was the message to you?
Speaker 4: Was there one or was it just people paralyzed because
Speaker 4: they had no idea how to came it out.
Speaker 7: I think yesterday was It's interesting because I think that
Speaker 7: yesterday the equity markets obviously had a big reaction in
Speaker 7: the morning, but I think that there was some of
Speaker 7: a wait and see attitude about where is this really
Speaker 7: going to go by the end of the day, because
Speaker 7: we know that there is the possibility. I'm having phone calls,
Speaker 7: so that's telling you there's a possibility for this not
Speaker 7: to be as harsh as it sounds at the get go.
Speaker 7: So I think that on the bond market, people were
Speaker 7: more waiting to go. We're not really sure which way
Speaker 7: this is going to go, and it's until you know.
Speaker 7: If it had gone through to today and nothing had
Speaker 7: changed yesterday, I think you would have seen the bigger reaction.
Speaker 7: But I think because that reaction was muted within the
Speaker 7: same day it changed, I think that gave people enough
Speaker 7: time to go it's okay, we can wait before we
Speaker 7: make any major decision.
Speaker 2: I won't debate how much move, but I think on
Speaker 2: this stress test, I think we could take something Awhite
Speaker 2: directionally from what happened. The fact that yields dropped back
Speaker 2: at the long end, it didn't rise. There is something
Speaker 2: to be set. There be mostly and think can make
Speaker 2: that point. We discussed it earlier. The certain parts of
Speaker 2: this market, certain investors have begun to talk about the
Speaker 2: growth risk associated with tariffs, and not exclusively the inflation risk.
Speaker 4: Francis Donald mentioned that it would take about a percent
Speaker 4: off growth in the US if some of these tariffs had.
Speaker 3: Gone into effect. I think you're right on the long end.
Speaker 4: The fact that you saw yield curve flattening, it shows
Speaker 4: that people have a very clear sense of what kind
Speaker 4: of disinflationary hit it could have over the lot.
Speaker 2: I don't know what these tarifts would do. We've talked
Speaker 2: about this repeatedly. By definition, the import paces the tariff,
Speaker 2: how the cost gets distributed. It's going to depend on
Speaker 2: what the goods are. I know this though. You can't
Speaker 2: replace Ferrari. Ferrari coming out with earnings moments ago. Okay,
Speaker 2: FIE sales rising fourteen percent, one in four vehicles sold.
Speaker 2: Guess where in the United States? The stock is up
Speaker 2: this morning by a little more than three percent.
Speaker 4: You can't replace Ferrari, but some of us can't afford it,
Speaker 4: so it would be really nice to, you know, share
Speaker 4: it once.
Speaker 7: In a while.
Speaker 3: Let me have the keys.
Speaker 4: So obviously, you know you can enjoy it.
Speaker 3: I can't.
Speaker 5: Not many people can afford Opus one either.
Speaker 4: Brand I know, you know, it's sort of the perception is,
Speaker 4: you know that it's a really wonderful car, and I
Speaker 4: just wonder if any of this will dep that perception.
Speaker 2: Yes, agreed, going to see it, Sarah, Thank you as always,
Speaker 2: Sarah Hummett of Vampine Saxon Wood. George Sarah Vellos of
Speaker 2: Deutsche Bank saying euro dollar is a risk of parity,
Speaker 2: writing the drivers of euro dollar can be broken down
Speaker 2: into two parts, relative monetary policy and the tariff risk premium. George,
Speaker 2: John just now for more, George, welcome to the program.
Speaker 2: Let's talk about the second part, that tariff risk premium.
Speaker 2: How big is that?
Speaker 8: So, John, I.
Speaker 9: Think it's the key question for the next few months,
Speaker 9: and on our end, we're not spending much time trying
Speaker 9: to predict what President trub will do.
Speaker 8: I think the experience of the last few days has
Speaker 8: shown it's not a very fruitful exercise.
Speaker 9: It's all about trying to figure out what the market's
Speaker 9: pricing and therefore the risk distribution around its events. And
Speaker 9: when we look at the so called tariff risk premium,
Speaker 9: and you can see in many different parts of the market.
Speaker 9: You can see in the US inflation curve, you can
Speaker 9: see in the deviation.
Speaker 8: Of the dollar from fair value.
Speaker 9: You can even see in what's known as the EFP
Speaker 9: in COMEX futures for gold. When we look at all
Speaker 9: these tariff metrics, they've been send me a consistent message
Speaker 9: that the market's pricing a very limited tariff risk premium.
Speaker 9: It again tried to price more yesterday. It's now reverted back,
Speaker 9: but it's precisely because that tariff premium is still quite low.
Speaker 9: But we see the risk distribution skewed towards essentially pricing
Speaker 9: in more tariffs if and when they materialize.
Speaker 2: George, is that just the euro or can you say
Speaker 2: the same thing about the Chinese currency?
Speaker 8: I would say it's across the board.
Speaker 9: If you're looking at all global markets, whether you're looking
Speaker 9: at fixed income and the so called inflation hump that's
Speaker 9: pricing to break events. It is still that inflation hump
Speaker 9: is still very low. It is definitely valid for the
Speaker 9: dollar when you're looking at the euro, for example, when
Speaker 9: we mentioned parity, that is not a forecaster to speak
Speaker 9: at seven stone. It's just that if you get a
Speaker 9: reasonable outcome in terms of tariffs around the midpoint of
Speaker 9: the range that's been discussed, that's where we'd get to.
Speaker 9: Of course, if you're gett even worse outcomes, it could
Speaker 9: be bigger. China is more difficult because this is a
Speaker 9: policy determined currency. The market is not free floating, and
Speaker 9: I think this one is where the specific policy choices
Speaker 9: by the authorities will play much bigger role.
Speaker 4: George, you talk about the trade war risk premium, and
Speaker 4: that typically has been strong dollar. We've been talking on
Speaker 4: the show about at what point the hangover effect of
Speaker 4: the tip for tad of trade negotiations trade wars ends
Speaker 4: up with the rest of the world trying to withdraw
Speaker 4: money from the United States, not put money into the
Speaker 4: United States. How much and how closely are you watching
Speaker 4: what indicators to maybe suggest that the appetite for the
Speaker 4: dollar or serring to wane.
Speaker 9: That's a great question, and I think a very important one.
Speaker 9: So the way we think about it, first of all
Speaker 9: is relative economic impact. You have to think about currencies
Speaker 9: in that way, and the US possesses a number of
Speaker 9: unique features. It's the world's largest economy, it has the
Speaker 9: lowest share of trade, it has a big trade deficit,
Speaker 9: and it's very service is intensive.
Speaker 8: And President Trump, of course knows all these things.
Speaker 9: But what that means is that every time tariffs are threatened,
Speaker 9: it has an asymmetric impact on the rest of the world,
Speaker 9: and that's exactly why the dollar is strengthening. I think
Speaker 9: what you need to see for an unraveling of the
Speaker 9: inflows you allude to is essentially a big US centric
Speaker 9: growth slowdown that's more sharp than the rest of the
Speaker 9: world that causes the FED to become more dovish. And
Speaker 9: so far, especially given that tariffs are tied in with
Speaker 9: the fiscal negotiations, potentially in a fiscal expansion, we don't
Speaker 9: see any signs of that.
Speaker 4: In the meantime, there is the like we heard, as
Speaker 4: you said, the disproportionate effect in other countries that if
Speaker 4: tariffs do go into effect or even the suggestion of them,
Speaker 4: will slow economies like Canada. We heard that from the
Speaker 4: Bank of Canada or potentially in the European Union. On
Speaker 4: the margins, even though this is a single mandate ECB.
Speaker 4: Do you expect them to cut rates more aggressively to
Speaker 4: counteract some of that potential growth shock?
Speaker 8: Well, again, the ECB is a huge focus.
Speaker 9: And to go back to the point around the tariff
Speaker 9: screemom that was priced in uptil last week, the market
Speaker 9: was pricing the ECB to stop.
Speaker 8: Above two around two point one two point two. Now,
Speaker 8: if you think about that, that was the upper end of.
Speaker 9: The neutral range, which Leguard alluded to two twenty five
Speaker 9: to one seventy five. So of you on the ECB
Speaker 9: has definitely been more dubbish than market pricing. If you
Speaker 9: take a step back, European growth is below trend. Forwardlooking
Speaker 9: numbers of inflation are pointing at or below trend. You've
Speaker 9: got a net fiscal stances tightening and tariff risks.
Speaker 8: So we see the ECB potentially cutting down to one
Speaker 8: point fifty.
Speaker 9: The market has adjusted over the last few days, but
Speaker 9: I think especially versus the Fed, we see that rate
Speaker 9: differential widening again.
Speaker 5: Essent George mention it. I just want to jump in.
Speaker 2: I'm surprised that that's even somewhat contrarian right now. It's
Speaker 2: surprising to me that ECB officials are still talking about
Speaker 2: neutral and not talking about getting accommodative.
Speaker 5: When's that going to change?
Speaker 9: So it's a very interesting point in your age, John,
Speaker 9: because the narrative in the market is.
Speaker 8: That the ECB should be cutting more.
Speaker 9: But I always like distinguishing between the narrative and what
Speaker 9: ultimately matters, which is pricing.
Speaker 8: And if you look at market.
Speaker 9: Pricing for the ECB has been fairly hawkish, it's been
Speaker 9: above two. Why has that been the case? You have
Speaker 9: had sun rise and energy prices and the ECB sensitive
Speaker 9: to that. But I think crucially it's the ECB communication,
Speaker 9: especially from those hawkish members for example Governing Council member
Speaker 9: Shabul And I think what is required to change is
Speaker 9: for these members to gradually set that the ECB is
Speaker 9: going to need more, to do more, and I think
Speaker 9: we will get that over the next few months.
Speaker 2: Hey, George Clinic from you as always a foreign exchange.
Speaker 2: Appreciate your time, George Saravelos there of Deutsche Bank.
Speaker 5: Let's turn to the auto industry.
Speaker 2: Danaives have wet Bush is not overly concerned about Tariff's writing.
Speaker 2: The supply chain kind adjust to a near term shock
Speaker 2: and weather the storm.
Speaker 5: If these tariffs stand place.
Speaker 2: For thirty to sixty days, we see minimal impact to
Speaker 2: GM and to Ford Dan John's just now for more
Speaker 2: Dank and Monic greed to be here thirty days. If
Speaker 2: we got that in thirty days and they lasted thirty days,
Speaker 2: are we only saying there's only going to be like
Speaker 2: minimal damage? Does this not hold these companies back from
Speaker 2: making big decisions?
Speaker 6: I think it's the minimum. I mean, I'll be in Detroit,
Speaker 6: you know tomorrow. I think ultimately right now in terms
Speaker 6: of GM four, it's very continue. In terms of the impact,
Speaker 6: I think when you were good TAB so that's probably
Speaker 6: the one that's weezed impacted, especially given their supply chain.
Speaker 6: But our view is here bark worse than the bite,
Speaker 6: whether it's on the auto side, and I continue view
Speaker 6: on the China side, even on chips, even though that's
Speaker 6: pressuring names Nvidio and others. Just as we've navigated in
Speaker 6: twenty eighteen twenty nineteen. You don't sell these socks because
Speaker 6: of it, because I continue view, just like you talk
Speaker 6: about where is this spending? I think it's gonna be
Speaker 6: another robust number from Google tonight saw Palatine and other's
Speaker 6: AI revolution alive and well. Tariffs are not impact that
Speaker 6: in our view.
Speaker 4: One of the reasons why your analysis is particularly special.
Speaker 4: It's not just because you've been right about a lot
Speaker 4: of it, but also you travel a lot, you talk
Speaker 4: to people, you see the sentiment. Has there been, even
Speaker 4: in the past couple days, any sort of shift in
Speaker 4: the optimism because of the uncertainty.
Speaker 6: Yeah, I think less about like in terms of Mexico
Speaker 6: and what we're seeing Cana. It's more it's from a
Speaker 6: China tariff perspective combined with deep seek. I think there's
Speaker 6: just general meybium a little more adjita in terms of
Speaker 6: what that means in terms of US China cold tech
Speaker 6: war tariffs, what the next step is. Because part of
Speaker 6: the issue is if you go back to this last week,
Speaker 6: Nadella doubles down eighty million, Zuckerberg sixty five billion, you
Speaker 6: see just massive cap backs tonight from Google, pound tier
Speaker 6: and messy AI just another phenomenal quarter. I think the
Speaker 6: worry is could anything spoil the party? And the only
Speaker 6: thing that spoils the party is rattioning up in terms
Speaker 6: of US China tension. So I think in terms of
Speaker 6: the nervousness. That's why you're seeing pressure on Nvidia on
Speaker 6: overall tech here. You know, as this plays out.
Speaker 4: GM was supposed to be immune from this because they
Speaker 4: actually moved their operations and their business out of China,
Speaker 4: largely to Mexico.
Speaker 3: Now they're in the crosshairs.
Speaker 4: I just wonder if other tech companies in particular are
Speaker 4: moving operations out of China more aggressively to immunize themselves
Speaker 4: from this type of shock.
Speaker 6: Yeah, I mean like to that. Look in GM, it's
Speaker 6: been sort of one punch after another from the ev
Speaker 6: perspective in terms of from one administration to the other.
Speaker 6: The Mexico situation, I do believe, you know, marrying the
Speaker 6: team navigated that extremely well, and thing GM continues to
Speaker 6: be a start that we're bullsh on here in terms
Speaker 6: on the China side. Look, we talked about if Apple
Speaker 6: decided today, if timberog is like we're gonna move ten
Speaker 6: percent of our supply chain out of China, that would
Speaker 6: basically take about two years and ultimately something that could
Speaker 6: cost you know what, I think thirty forty billion if
Speaker 6: it ultimately translated. The point is that it's always easier
Speaker 6: said than done. And I think that's the conundrum because
Speaker 6: the reality is like when you look at Apple, you
Speaker 6: look at Tesla. That's why Cook must ten percent politician
Speaker 6: ninety percent CEOs.
Speaker 2: Let's talk about Elon Musk and the closeness to the administration.
Speaker 2: We've talked about the benefits of that closeness and what
Speaker 2: it could mean, the halo effectors you've talked about over Tesla.
Speaker 2: Foreign nations are starting to see this as a potential
Speaker 2: pressure point. We saw that from a Canadian province in
Speaker 2: the last twenty four hours threatening to cancel a Starlin contract.
Speaker 2: Is it a benefit or not?
Speaker 6: You know, there are definitely offsets, as we've talked about.
Speaker 6: But with the goal at the end of the rainbow
Speaker 6: is autonomous, I mean autonomous, we think that that's worth
Speaker 6: a trillion dollars in terms of that to the Tesla story.
Speaker 6: I think as you get a federal framework, and I
Speaker 6: think this is key in terms of the Trump administration,
Speaker 6: that is really that's the path for growth in terms
Speaker 6: of what I view as generational growth for Tesla. So Musk,
Speaker 6: he's someone he's not gonna ultimately peel back, right, So
Speaker 6: he's going to continue going down in this direction. There's negatives,
Speaker 6: no doubt, should I just think them positives? It was
Speaker 6: a bet for the ages on Trump and it continues
Speaker 6: to be that, and I think it's going to be historical.
Speaker 2: The President clearly wants to celebrate the national champions of
Speaker 2: American at Corporate America and Suwy should swe should Let's
Speaker 2: be clear about that. The question I'm asking is whether
Speaker 2: other countries begin to punish those national champions. We've seen
Speaker 2: that from the Europeans on tech. We've seen the tech
Speaker 2: plans not even be able to get into China. Test
Speaker 2: that's a round one.
Speaker 6: It's very rare. I mean Tesla and Apple you put
Speaker 6: on just a different perch because there is about with
Speaker 6: Google they have an operator in China who cares. China's
Speaker 6: actually the only two tech companies. It's Tesla and it's Apple.
Speaker 6: And that's why that's the tight groupe, right because for Musk,
Speaker 6: and that's also why even when it comes down to
Speaker 6: TikTok and we continue to think Musk or Allison is
Speaker 6: probably in the front runners in terms of what potentially
Speaker 6: is that asset sell. But for Elon right now, it's
Speaker 6: navigating this whole thing by continue viewing him more entrenched
Speaker 6: in the Beltway. Despite all the noise, is the best
Speaker 6: thing that ever happened in Tesla's shareholders.
Speaker 4: To your point, John, last month, Tesla sales fell sixty
Speaker 4: three percent in France. That is because in large part
Speaker 4: people were taking a look at the political backdrop.
Speaker 3: And saying, nahuh, this isn't our gig.
Speaker 4: I do wonder if there is some reputational damage being
Speaker 4: done in the longer term where people are looking at
Speaker 4: what's going on some of the tactics and they're saying,
Speaker 4: let's look elsewhere.
Speaker 3: Are you seeing that in any capacity?
Speaker 6: Look, I think it's contained in terms of the demand
Speaker 6: issues that may that they've seen from a negative perspective,
Speaker 6: you know, because of it. But Bogies, I think the
Speaker 6: most important thing is when you think about autonomous, you
Speaker 6: think about robotics. I mean, that's really the testlo star.
Speaker 6: I think ninety percent of the story today is about that.
Speaker 6: So there could definitely be some demand issues. We'll call
Speaker 6: it contained with the streets focused. And you saw it
Speaker 6: last week, right like the Bears scratching their heads like
Speaker 6: why is this stock not going down given numbers got
Speaker 6: low because the street is focused on autonomous robotics, and
Speaker 6: that ultimately, if you look where they are in the
Speaker 6: Trump administration, Musk is in a you know, he continues
Speaker 6: to play chess, others playing checkers. Relative to this situation.
Speaker 4: One of the big arguments, especially as the China US
Speaker 4: trade war really heats up, or trade dance, whatever you
Speaker 4: want to call it, there is a question about whether
Speaker 4: it pushes China even more to develop a parallel tech
Speaker 4: sphere to the US that becomes dominant in its own
Speaker 4: right that might be more amenable to a number of
Speaker 4: countries around the world. How realistic is that to you?
Speaker 4: Does that become more of a possibility.
Speaker 6: I think it's not realistic just because in video, I mean,
Speaker 6: we just continue at high scale GPUs in terms of
Speaker 6: true buildouts you need video. There's one red phone that
Speaker 6: goes to Jensen. Now obviously deep seat. That was kind
Speaker 6: of the white knock on moment. Everyone's like, does this
Speaker 6: change the whole narrative? But I think it's more has
Speaker 6: come out about that people realize, you know, maybe the
Speaker 6: barker's a lot worse than the bite. Look, you'll have
Speaker 6: a decoupling in terms of what's happened China in the US,
Speaker 6: but negotiations. It's so important because again US needs China
Speaker 6: needs US, and I think that's why it's very very important,
Speaker 6: especially when it comes to chips, that this could be
Speaker 6: the coupling. But not get in the way of what
Speaker 6: I've u as a generational tech environment in terms of
Speaker 6: you know what we see with AI in video months
Speaker 6: to run up over the last few years.
Speaker 2: Got to say that up front, but twenty two percent
Speaker 2: draw down in the past few months, why hasn't that
Speaker 2: stuffed recounted? We had a weight we worked out of the
Speaker 2: deep seek ITTs, maybe not what people thought it was,
Speaker 2: and here we are, we're still rolling over.
Speaker 6: And I think that there's a few reasons. One it's
Speaker 6: just like Microsoft has you know, Apple that they've sold
Speaker 6: even after I think better than fear numbers. I think
Speaker 6: there's there's worries just in general about like can they
Speaker 6: continue to sustain it if any little thing happens flying
Speaker 6: the ointment stock gets crushed. So you've seen a little
Speaker 6: bit of a risk off. But look, I just continue
Speaker 6: to view it. Six nine months from now, we look
Speaker 6: back at this as a golden buying opportunity, not the
Speaker 6: time where there's something structurally wrong and numbers.
Speaker 2: Going on, Oh, we've just found betef exos to the play
Speaker 2: the same, which is talents it.
Speaker 6: But to that point, that's why you look at like
Speaker 6: again that that's a if you look at that Pollenteer quarter,
Speaker 6: they could print that press release off put in the
Speaker 6: lover in terms of just how strong it was, and
Speaker 6: it shows what they're doing in terms of Pollenteers, I
Speaker 6: believe one of the best plays in AI. But to
Speaker 6: your point, there are look as a second third derivatives
Speaker 6: take hold from Google to Salesforce to others. There's gonna
Speaker 6: be other ways to play. It's not just about Mac seven.
Speaker 6: There's there's that play.
Speaker 2: Into this next to the Mona Lisa untamed Ai demand.
Speaker 6: Right to and then there's I think that that that's.
Speaker 2: Could be where Larco twin NFT special VP tickets something
Speaker 2: like that.
Speaker 6: It's twenty it's going to see you.
Speaker 5: Thanks, thank you.
Speaker 2: A lot to talk about in tech right now, that's
Speaker 2: for sure, Dan of Webish there. This is the Bloomberg
Speaker 2: Surveillance Podcast, bringing you the best in markets, economics, angiot politics.
Speaker 2: You can watch the show live on Bloomberg TV weekday
Speaker 2: mornings from six am to nine am Eastern subscribe to
Speaker 2: the podcast on Apple, Spotify or anywhere else you listen,
Speaker 2: and as always, on the Bloomberg Terminal and the Bloomberg
Speaker 2: Business app.